I remember several months ago writing an article about how an "ETH Killer" chain was possible, but also highly improbable. And then, it seemed like out of nowhere the Binance Smart Chain took DeFi by storm and quickly rose to be a top 3 crypto with serious DeFi potential. In this post, I'd like to share a little bit about the Binance Smart Chain, some of the services it offers, and share why I think it is a net positive for DeFi and crypto in general.
People come to crypto for many reasons including the technology, the privacy, and the philosophical belief in sound money, but at the end of the day, we lend crypto for one reason....to make money. With that being said, I think one of the main reasons that ETH has been so successful is that the large availability of DeFi related dApps allowed everyday investors a way to earn money without having to bow to the existing financial system.
However, simply processing dApps doesn't help people make money if it costs so much to use the apps that normal people are priced out of using them. For the past several months, ETH gas fees have been so high that unless you are making a very large trade, you would spend more in transaction fees than you could possibly hope to earn as a reward for participating in a DeFi protocol.
ETH Was Slow To React
Although I do like ETH, I felt that the reaction to the high gas fees was more of a "Let them eat cake" attitude instead of an earnest desire to fix the problem and lower fees. Although the fees were unbearable, there simply weren't a lot of other options (JustLend on Tron maybe????) for people that wanted to use DeFi, so we were more or less forced to accept the gas fees while we waited for The Day That Never Comes (ETH 2.0 Rollout).
BSC Is Here
In the space of a few short months, it seemed like all that changed. The #1 DeFi app on DappRadar (by user volume) is no longer an ETH app, but rather Pancake Swap on the Binance Smart Chain.
Not just one, but several BSC based dApps have snuck into the top 20 including Goose Finance, Autofarm, and Venus Protocol.
In my opinion, BSC takes the best of ETH and fuses it with the low fees and fast confirmation times. At the time of writing, it cost about $23 USD to unlock an asset on Compound Finance (ETH) while the same action only cost about $.16 on Venus Protocol (BSC).
It's Not Just The Fees
I have been experimenting with the Binance Smart Chain for about a week, and I have to say that although the low fees and fast confirmation times are a welcome benefit, that's not the only advantage. The Binance Smart Chain seems to have a very innovative approach of combining the best features from different products and presenting them in an easy to use way.
For example, take the Venus Protocol. This BSC based DeFi project combines the features of Compound (lending and borrowing) with the features of Maker (minting stablecoins) into a single protocol that lets you deposit collateral, take loans, mint stablecoins, and earn governance tokens all in one consolidated location.
Likewise Pancake Swap takes all the functionality of Uniswap (trading and liquidity providing) while also adding the ability to farm, stake, earn governance tokens, and participate in a lottery system directly within the exchange.
I Still Like ETH
I do like ETH. That's where I got my start in crypto, and I think that is where all of us started in DeFi. There are a lot of great apps on ETH that are incredibly useful and have a lot of potential. I don't hope that ETH crashes, but I also don't want to waste hundreds of dollars on transaction fees. I don't know what will happen with ETH, but my hope is that BSC will put pressure on ETH to find ways of reducing fees and improving itself.
I consider myself chain agnostic, and I will follow whatever chain has the best value for me personally. At the same time, I recognize that choice and options are important, and I'd ideally like to see both BSC and ETH co-exist and give people different options.
Other "ETH Killer" chains may have had lower TXN fees than ETH, but at the end of the day, their suite of DeFi apps simply wasn't there. Not only does BSC have the lower fees, but the DeFi suite is very robust. Although I wouldn't exactly say it has a better DeFi ecosystem at this point, it at least has enough that it can pose a respectable challenge and be a viable second option.
Of course, it remains to be seen what will happen with BSC. Will it replace ETH? Will ETH 2.0 be accelerated and come roaring back? At this point, I couldn't tell you, but I do have to say that I had kind of lost a bit of enthusiasm for DeFi when fees were upwards of $20 for a simple transaction, and BSC has given me the ability to get back into trying out DeFi protocols for less than a few dollars. It has definitely rekindled my interest in DeFi, and I'm excited to see how the BSC story unfolds.