The growth of Binance Coin (BNB) has shocked the crypto industry, but has also contributed to the emergence of another prominent blockchain in the ecosystem. Binance Smart Chart or BSC is currently making the industry aware of this and, as illustrated, there is a strong rise in demand.
Taking an immediate example based on chain metrics, the Ethereum Daily Transactions reported on 20 February is 1.33 million. BSC registered 2.88 million, which is a small decrease given that it registered 3.22 million transactions on the 19th.
Binance Smart Chain: Unravelling objective with DeFi success?
Much like other blockchain networks, Binance Chain had inherent blockchain problems in terms of flexibility and smart contract implementations. Now, Binance Smart Chain (BSC) has been launched to boast smart contract features, but since its launch in September 2020, the DeFi market has grown further.
As BSC encouraged an efficient degree of versatility and interoperability, various DeFi protocols have begun to extend their development to the BSC network. The leading example remains PancakeSwap, a DeFi protocol that has seen liquidity growth of more than 1000 per cent since the beginning of 2021. The move to BSC also stems from the fact that demand for DeFi goods is growing at an affordable pace.
Eating Ethereum’s market?
Last month, BSC already had more than 100 parallel Binance Chain projects and that the team was planning to develop a DeFi infrastructure for these projects.
Increased migration or ventures on BSC could be due to the situation of transaction fees on Ethereum. ETH blockchain continues to struggle with high levels of congestion, which contribute to higher gas charges for all transactions.
It’s not the perfect situation for DeFi developers to think more about transaction fees than creativity. Thus, one big benefit of Binance Smart Chain is its EVM compatibility Ethereum Virtual Machine. As BSC is EVM-compatible, developers have access to the same Ethereum tools and dApps, making it easier for developers to switch their projects to Ethereum.
Is there a possibility of Ethereum and BSC flourishing together?
Although BSC is a side chain for Binance, it can act more or less as a side-chain for Ethereum as well. According to Ryan Watkins of Messari, he indicated that EVM compatibility could easily allow Ethereum protocols to extract ‘incremental’ value from the lower price-demanding structure of BSC.
As a result, though progress improves on BSC, the value captured from the DeFi protocol can be transferred back to the Ethereum chain where further financial operation can take place.
Cross-chain implementations between BSC, Ethereum and other interoperable blockchains can lead to collective growth across the industry and reduce congestion in Ethereum.
A more realistic example is yet to be seen, but Watkins stated that CREAM is already working in a way that is currently being deployed on the Binance Smart Chain.
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