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Binance Smart Chain overtakes Ethereum DeFi

Posted by
Ian Kane

3 of the top 5 DeFi dapps are running on BSC in the last 24 hours

In a historical moment, Ethereums DeFi crown has been shaken by newcomer Binance Smart Chain. Looking at the top 5 DeFi dapps ranked by volume over the last 24 hours reveals that 3 Binance dapps, Venus, Autofarm, and PancakeSwap, are in first, second, and fifth place respectively. A combined volume of almost $29 billion compared to a combined volume from dYdX and Compound of approximately $2.3 billion shows the divide more clearly. 

Furthermore, the performance of these relatively new Binance Smart Chain dapps looks even more impressive compared to Ethereum’s leading exchange Uniswap where we see a 24-hour volume of just under $1 billion.

Source: DappRadar

Rewind to this time last year and the story was very different. Ethereum truly dominated the DeFi landscape and the DeFi rankings on DappRadar and It is quite refreshing to see a challenger mounting such a serious effort and all signs would indicate BSC isn’t finished yet. Interestingly, DappRadar did see this on the horizon last year

Of the 71 decentralized applications (dapps) currently operating from Binance Smart Chain, 52 of them are in the DeFi category and 6 in the exchange category. Meaning that over 80% of the dapps currently on BSC are focused on DeFi services. 

How did this happen? 

Since its launch, Binance Smart Chain has incubated its DeFi ecosystem and has been openly attempting to go head-to-head with the Ethereum ecosystem whilst offering users lower costs. A strategy that would appear to be working in Binance’s favor.

Recently several BSC dapps have shown impressive growth. The biggest contributors in January 2021 were two DeFi dapps: PancakeSwap and Venus. These generated $1 billion and $14 billion respectively of the total transaction volume of $15 billion in January 2021. Venus was responsible for the majority of the volume in January and continues to show its move upwards in February 2021. With over $70 billion in transaction volume in the last 7-days, Venus is now the largest dapp in terms of transaction volumes, according to the DappRadar Rankings.  

One other DeFi dapp making noise right now is Autofarm. Autofarm is a decentralized finance app that has overtaken Ethereum competitors to climb to second place in the overall DappRadar dapp rankings across all blockchains and categories. Ironically, second only to another BSC DeFi dapp, Venus. In the last 7-days, Autofarm has generated over $40 billion in volume and usage is up by almost 170%. 

Moreover, looking at the active user base of the top blockchains, BSC already surpassed WAX and EOS in January. At the time of compiling the 2021 report, Binance Smart Chain has more than 50,000 active wallets per day, which is only 18,000 less than Ethereum.

Summary 

Binance Smart Chain considerably extends the functionality of the original Binance Chain and bridges the gap between blockchains. The strength of the community surrounding Binance and the charismatic leader CZ means that their entry into the world of blockchain and DeFi has been relatively smooth and successful. 

Arguably, luring people over to a service offering the exact same services as Ethereum DeFi for a lower fee and with faster transactions shouldn’t be that difficult. The real test will be the longevity of Binance Smart Chains’ successful run and if it can now retain these users and more importantly gain brand loyalty even if gas fees on Ethereum decrease. 

Another important factor will be the developer community. Binance Smart Chain has made it easy and quick to port dapps from Ethereum to BSC giving developers an incentive to make the switch and users the impetus to try copies of their favorite services on the Binance Smart Chain. 

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