Nowadays the popularity of Defi projects and smart contracts has resulted in the average crypto investor spoilt for choice. Like a kid in a candy store, investors are having difficulty deciding on which coins will satisfy their sugar cravings next.
The Binance Smart Chain has opened up a portal of imagination that may be mistaken for a child’s coloring book. Planets, puppies, and baked goods are just some of the types of themed cryptocurrencies made possible thanks to the BSC.
Almost a year ago today, Binance CEO Changpeng Zhao, had offered up a $100 million USD seed fund for new DeFi projects that chose to migrate their operations to the recently released Binance Smart Chain.
The ambitious move from the Binance CEO was thought to be necessary to gain early BSC adopters. To the surprise of CZ, the BSC was an immediate success, and the popularity of the recently founded blockchain had meant that the majority of funds were not even necessary to boost the ecosystem.
More and more DeFi projects found themselves choosing the Binance Smart Chain over other competitors, and soon the BSC had found itself as one of the most celebrated up-and-coming Defi platforms at the time.
Since then, the BSC has already supported many successful projects and has grown to be one of the most well-known DeFi platforms to date. The rise of the BSC is one of the greatest crypto success stories as of recent.
What is the Binance Smart Chain?
From Day One, The Binance Chain has kept its integrity intact. The weight of this is significantly substantial in the crypto space and has proven to be one of the key underlying factors that have separated the exchange from other competitors. This has led to the result we see today. A 12 billion dollar daily trading volume, 258 cryptocurrencies listed, 13.5 million active users, and over 50 different fiat currencies supported. Binance is seen as the undisputed king of crypto exchanges by many.
However, after dominating the crypto exchange market, Binance had decided that they were finally ready to move up a weight class and conquer yet another division of the crypto space.
In September of 2020, the Binance Smart Chain was introduced to the public as a building platform for individuals and entities to develop decentralized applications, also known as dApps.
The Binance Smart Chain (BSC) is a blockchain that operates parallel to the Binance Chain. The support of cross-chain compatibility allows for seamless asset transfer between the two blockchains.
Although similar, the BSC is not reliant on the Binance Chain and can be fully operational even if the Binance Chain were to go offline.
The BSC is also compatible with the Ethereum Virtual Machine (EVM), allowing for possibilities such as dApps from the Ethereum network to be easily migrated onto the BSC. For the average crypto indulger, this also means that traditional supported Ethereum apps, like MetaMask, can be easily utilized on the BSC network.
Why the Binance Smart Chain has become so successful:
By far one of the key contributing factors that have seen the recent Binance Smart Chain reign over the DeFi space, is their advantages in scalability. In comparison to the next heavyweight contender, Ethereum, the BSC is simply quicker and cheaper to operate on a larger scale.
With this years’ surge in dApp users, an increase in traffic and transactions has created heavy congestion on the Ethereum network. This has caused more users and developers to move onto the BSC where higher traffic amounts can be handled while still keeping gas fees low.
A large number of users and developers have found a home on PancakeSwap. An alternate DEX to the popular Ethereum based dApp, Uniswap. Again, this has seen the birth of multiple large PancakeSwap coins, due to lower fees and faster block times. Safemoon, Bunny and altcoins, all use BSC contracts and were originally offered through the PancakeSwap exchange.
The recent trend of PancakeSwap coins may be seen as a contributing factor to the current success of the Binance Smart Chain. These types of new cryptocurrency projects have served as a gateway for demographics that previously did not entertain the idea of blockchain technology. Due to the substantial amount of new individuals investing in cryptocurrency, the number of active wallets has surged in the last five months.
An exponential increase in unique addresses can be seen from mid-February.
In correlation with this, liquidity for PancakeSwap coins had begun to quickly climb around the same time in February, indicating significant amounts of trading and activity.
PancakeSwap has reached over $3 billion in liquidity at the time of writing.
The Binance Smart Chain on the right path?
Investing in the cryptocurrency market has increased in popularity in recent months and because of this, found more users turning to the number one exchange, Binance. In a recent study, Binance reported there are now over 100 million crypto users since Q3 of 2020. As demand grows for crypto trading, so does the demand for new cryptocurrency products.
The introduction to multiple financial instruments and derivatives, such as leverage, staking, futures, and loans, has only cemented the multiple use cases that BNB already possesses. This may have had a great influence on the price of BNB, indirectly influencing the recent success of the Binance Smart Chain.
Although the Binance Smart Chain has only been live for less than a year, the evolution during this time has been rapid. The Binance Smart Chain has proven to be a key player in the DeFi market. This has allowed for multiple new cryptocurrency projects to flourish, where in typical circumstances, these projects would struggle from a lack of exposure and limited sole resources.
With the introduction and success of the BSC, Investing in cryptocurrency is now much different from what it was a year ago and will only continue to grow from here.