BNB Smart Chain (BSC, formerly known as Binance Smart Chain) is one of the earliest and most developed DeFi ecosystems in crypto. In competition with Ethereum, BSC has the second biggest and most vivid DeFi landscape, with over 1,000 dApps in operation.
In this article, I will dive deep into the BNB Smart Chain ecosystem, along with its sectors, development history, opportunities, and my personal projection.
BNB Smart Chain Overview
What is BNB Smart Chain (BSC)?
BNB Smart Chain is a blockchain built and strongly related to Binance Exchange - One of the biggest Centralized Exchanges at the moment. Initially, BNB introduced Binance Chain (BEP2-standard) in 2017. However, in order to focus primarily on DeFi, Binance released Binance Smart Chain in 2020, operating in parallel with Binance Chain.
Moving forward in 2022, Binance has put a name for both Binance Chain (BEP2) and Binance Smart Chain (BEP20) as BNB Chain.
BNB, formerly called Binance Coin, now stands for “Build and Build.” BNB is not only the native coin of both Binance Chain and BSC but also the native token of Binance. This has created a
Binance Chain comprises:
- BNB Beacon Chain (previously Binance Chain) - BNB Chain Governance (Staking, Voting).
- BNB Smart Chain (BSC) (Previously Binance Smart Chain) - EVM compatible, consensus layers, and with hubs to multi-chains.
You can read more details about this change HERE.
In this article, we will focus primarily on the latter which is BNB Smart Chain, where the DeFi of Binance lies.
Build and Build Token (BNB) Key Metrics
- Name: Build and Build.
- Ticker: BNB.
- Token standard: BEP-20.
- Token type: Utility, Governance.
- Max supply: 168,137,035 BNB.
- Circulating Supply: 168,137,035 BNB.
- Market Cap: $73,155,017,589 (#4).
- FDV (Fully Diluted Valuation): $73,155,017,589.
BNB Smart Chain Statistics
- TPS: 160.
- Blocktime: 75s.
- Avg. Tx fee: $0.5.
- Number of unique addresses: 147,462,387.
BNB Smart Chain dApps
There are a massive number of applications on BNB Smart Chain, and it is increasing daily. Even though it may be difficult to track the correct number, there are approximately over 1,000 projects on BSC, including:
- Infrastructure: ~ 100 projects.
- DeFi (DEX - Liquidity): ~ 300 projects.
- Lending: ~ 30 projects.
- NFT: ~ 300 projects.
- GameFi: ~ 100 projects.
- Metaverse: ~ 50 projects.
- IDO Platform: ~ 20 projects.
- Others: ~200 projects.
BNB Smart Chain highlights
- Currently having $13B in TVL, standing at rank #3.
- Backed by Binance - one of the most popular CEXs.
- EVM-compatible, allowing dApps from other EVM-compatible blockchains to be deployed easily.
- One of the fastest platforms to catch up with trends and markets.
Most Valuable Builder
To achieve such success, the MVB (Most Valuable Builder) program plays an important role. Ever since DeFi on BSC existed, MVB has been running to attract more projects and builders into the ecosystem.
Up to this moment, 4 seasons of MVB have been introduced with over 900 projects participating. The detailed theme of each season is:
- MVB I: DeFi.
- MVB II: NFT.
- MVB III: GameFi + Metaverse.
- MVB III: MetaFi (Metaverse + DeFi).
Participants in this program will receive numerous benefits, including:
- Direct investment from BSC Fund.
- MVB Incubation Program.
- Marketing & Community Support.
- Security & Audit Support.
- Potential opportunity towards the Binance Labs Incubation Program.
And the rewards will even increase in value for top projects.
BNB Smart Chain History & Roadmap
April 2020 to September 2020
During this period, the Binance team announced the whitepaper of Binance Smart Chain and introduced it as an innovation from Binance Chain, and will be used specifically for DeFi. At the same time, they released the testnet of the blockchain, along with the cooperations from big names like ChainLink, Ankr, Band Protocol,...
In September 2020, Binance Smart Chain was officially released with the use cases of its native token - BNB.
September 2020 to March 2021
This is the time when Binance Smart Chain developed its DeFi landscape, although it was still primitive compared to Ethereum. To make up for its inferiority, BSC was smart with its strategies of announcing programs like Most Valuable Builder, Build Reward Program,... with millions of dollars in rewards to attract more developers and users.
Thanks to that, BSC was able to quickly develop its DeFi ecosystem. And then in February 2021 when retail investors realized that DeFi on Ethereum was nearly unusable, the cash flow started pouring into Binance Smart Chain as it has already possessed a vivid DeFi landscape.
This led to the tremendous growth of BSC, hitting $40B in TVL.
March 2021 to June 2021
This is the time when BSC took the spotlight in DeFi. PancakeSwap was the leader of the ecosystem as an AMM and a liquidity center. With smart product design and clever tokenomics, PancakeSwap became the most developed and popular DeFi suite, with numerous products within: Lottery, Prediction, IFO,...
Until June 2021, Binance Smart Chain began to show signs of saturation. The number of transactions and users has decreased, and nothing new appeared inside the ecosystem. Fortunately, that was when NFT started to rise, and Binance took a good chance from it by introducing an NFT Marketplace. This is the main reason why BSC was able to maintain its users.
Nevertheless, that plan didn’t quite work out. As it was centralized, investors could not speculate upon it in any kind of way, and hence could not make any profits. As a result, investors were gradually leaving the ecosystem.
June 2021 to September 2021
Binance Smart Chain remained “silent” until the end of July 2021. GameFi and Play-to-Earn emerged with the lead of Axie Infinity, and BSC, as usual, did not miss out on this trend. Within just 1 week, the whole BSC ecosystem was fulfilled with GameFi projects to catch up with the hype.
However, the hype couldn’t maintain for long, and neither did Binance Smart Chain. Although it was able to quickly hop on new market trends, it also went down as fast. It was no different with the Metaverse trend 1 month later, when BSC was also able to extract its hype but only for a really short time.
The growth of Binance Smart Chain was slower than expected. The community went to find other opportunities in other and more attractive ecosystems, namely Solana, Terra, Fantom or Avalanche.
September 2021 to December 2021
In this period, blockchain platforms started releasing various incentive programs at the same time. In order not to fall behind, BSC was of no difference. A $1B DeFi incentive program was released, including:
- $500M for Investment & Incubation Program.
- $300M for Builder Program.
- $100M for Liquidity Incentive Program.
- $100M for Talent Development.
At the same time, Binance was working on new features like IGO - Initial Game Offering or Fan Tokens. Even though they were creative and attempted to go on their own way, the market had yet to follow, and such features could not become the market trend, regardless of them being pretty supported by the community.
Furthermore, BEP-95 was also a notable implementation of the network. It is a mechanism that allows BNB tokens to be burned after every transaction, making the token scarcer. This was added to the platform after the Bruno Hard Fork occurred on November 30th, 2021.
December 2021 to March 2022
It is obvious that the DeFi ecosystem of Binance Smart Chain was getting more saturated over time. So what were their actions against this?
In February 2022, Binance announced the birth of BNB Chain, comprising Binance Chain (BEP-2) and Binance Smart Chain (BEP-20) which will put the main focus on MetaFi (Metaverse + DeFi).
They have also put out a clear vision of “what’s next” for them, with some primary “Investment Focus” categories. BSC will attract more developers in a few specific fields, then develop and make them outstanding uniqueness for the network. By bringing about MetaFi as the pivot, it will be the game changer for BSC in the future.
1 year of BNB Smart Chain
September 1st, 2021 marks the first birth anniversary of Binance Smart Chain (previous name). Some notable events up to this date:
- Sep 01, 2020: BSC Mainnet Launches.
- Sep 07, 2020: 100,000,000 Incentive Fund Launches.
- Sep 24, 2020: Peckshield and CertiK Security Partnership.
- Oct 15, 2020: BUIDL Reward Program Launches.
- Feb 08, 2021: BSC Kicks off First Most Valuable Builder (MVB I).
- Mar 15, 2021: Binance.com Distributes $3,250,000 in BUIDL Rewards.
- Apr 20, 2021: 1st Round of BSC Grants Finishes, Distributing $780,000 to 108 Projects.
- Jun 22, 2021: BSC Martians Program.
- Jul 26, 2021: BSC Community Announces $10,000,000 Priority One Bug Bounty.
- Aug 02, 2021: BSC Learn and Earn Reboots With $45,000 in Prizes.
- Aug 12, 2021: MVB II and Incubation Program are Announced.
BNB Smart Chain never stops growing. Since then, BSC has released a few major implementations, namely:
- Oct 12, 2021: Binance announced a $1B Incentive Program to promote the growth of BSC, aiming towards 1 billion users.
- Oct 22, 2021: BSC introduced BEP-95.
- Oct 25, 2021: Binance introduced Initial Game Offering (IGO).
- Feb 15, 2022: Binance released BNB Chain as the combination of BNB Smart Chain and BNB Beacon Chain, with the main focus on MetaFi.
BNB Smart Chain (BSC) Ecosystem Overview
BNB Smart Chain has the biggest and most versatile DeFi ecosystem, only behind Ethereum Ecosystem. However, the ecosystem has become more saturated over time and lost its TVL to the hand of other ecosystems.
In the next part, I’ll analyze the BSC ecosystem in details, and explain to you the reasons why.
Infrastructure + Tooling
BSC has one of the most solid Infrastructure landscapes among DeFi ecosystems, which firmly sets the foundation for the growth of dApps underneath. Some infrastructure products on BSC are:
- Oracle: ChainLink, Band Protocol,...
- Audit: CertiK, Quanstamp, Bison Trails, Peckshield,...
- Graph/Query: The Graph, Bitquery,...
- Bridge: BCS Bridge, Anyswap, My Wish, Celer,…
- DeFi Tools: DeFi Station, BSCProject, DeBank, DappRadar, Dapp.com,...
- Blockchain Monitoring: PARSIQ, Tenderly, BSC Scan,...
- Smart Contract & API Creator: MyWish, ChainIDE, NowNodes,...
Stablecoin is one of the most important DeFi legos for any ecosystem that help smoothen the inflow and outflow of cash. Understanding that, BSC has developed its Stablecoin landscape pretty well.
- BUSD: A Fiat-backed Stablecoin by Binance. After 3 years of launching, BUSD has had a Market Cap of nearly $18B (#13), showing how well Binance has applied its Stablecoin into its ecosystem.
- VAI: A Crypto-backed Stablecoin created by Venus, a lending platform with the same mechanism as MakerDAO (MKR & DAI).
- There also exists other Algorithmic Stablecoins, but they are not as popular and do not have much influence on the DeFi space on BSC.
AMM DEXs are decentralized exchanges with the Automated Market Maker (AMM) mechanism. In short, AMM means there will be no intermediary between trades, but instead, smart contracts will play such a role. Liquidity derives from “Liquidity Pools”, which are added by users themselves.
Some top performers in this niche on BSC include:
- PancakeSwap: Ever since its release, PancakeSwap has achieved various milestones to be considered “the Uniswap of BSC”. PancakeSwap has been in the top rank of all AMMs in terms of trading volume.
- Stablecoin AMM DEXs: Ellipsis Finance, Belt Finance, Nerve Finance,...
- Other notable AMM DEXs: BakerySwap (NFT-specialized), DODO, Mdex, 1Inch Exchange,...
You can take a look at the whole landscape in this Infographic here:
Lending & Borrowing
Lending is one of the most important sectors in DeFi behind AMM DEX, as it does not only complement liquidity for the ecosystem but also supports leveraging that liquidity. Its necessity has been proved through the Ethereum ecosystem with Aave and MakerDAO.
Some notable projects:
- Venus (XVS & VAI) is the most outstanding project in BSC with the amount of TVL only behind PancakeSwap. The protocol works similarly to MakerDAO.
- There are other top-notch projects inside the ecosystem, such as: Alpha Finance, Cream Finance, EasyFi, ForTube,...
Launchpad helps the ecosystem attract more investors as it gives birth to a massive number of new and potential projects. Especially during bull markets, Launchpad is usually the go-to place for retail investors as they can have the highest ROI (Return on Investment).
Among other DeFi platforms, BSC has the most flourishing Launchpad landscape.
Yield Aggregator is also another attractive niche for users. It is the higher layer of DeFi by making use of the liquidity AMM DEXs provide. The existence of Yield Aggregators indicates the strong growth of AMMs in particular and of the whole liquidity layer in general.
From May 2021 up to this moment, BSC has been spending lots of effort on developing the NFT sector. This is the preparation of Binance prior to its NFT Marketplace release in June 2021.
It can be clearly seen that BSC has fulfilled its NFT Stack, with full of projects varying from Infrastructure, Gaming, Collectibles, NFT Marketplace,... Nevertheless, they could not have gained any significant traction from the community.
In July 2021, BSC was able to apply NFT into Game and DeFi, which is to this day called GameFi, or you might have heard it as Play-to-Earn. This was a successful strategy from BSC as it has been able to transform GameFi into a new market trend.
As mentioned above, GameFi used to be a new narrative of the crypto market for a while, and BSC was the one to ignite it. There is no doubt that GameFi has had a great effect on the BSC ecosystem with a large number of games like CryptoBlades, My DeFi Pet, Mobox, X World Game, Faraland,... most of which have grown over 1,000% in price.
Nevertheless, it also died out almost as quickly as it skyrocketed. The reason behind this is that the “Earn” factor has been heavily pointed out for GameFi as everyone only wants to play the game to “Earn”, rather than actually “playing”.
At the same time, BSC could not attract more cash flow into the ecosystem as the TVL remains at the same level, along with the fact that the “Earn” factor was not sustainable for those games. People came to those games as they can “Earn”, and left as fast when the yield went down, which normally happens only after a few days or weeks.
The last and latest trend in the market up to date is Metaverse. This sector has been strongly supported by Changpeng Zhao - the man behind Binance.
As a result, myriads of GameFi and NFT projects have put the “Metaverse” tag into their products. Nevertheless, actually reaching the Metaverse level is an impossible task at the moment. The technology background has not allowed us to do so, as VR/AR technologies are currently the farthest we can get to.
Metaverse is a promising market category but needs a lot of improvement to be successful. Such projects require more support in order to develop their products.
Predictions on the BNB Smart Chain (BSC) Ecosystem
BSC has developed DeFi really well and has been able to receive a massive number of users and TVL. However, it seems that there have been too many projects, leading to saturation. At the same time, little to no new innovation appears in the ecosystem, preventing BSC from getting more attraction like in March 2021.
During this period, the ecosystem will expel all ineffective products, maintain all the core protocols and continue finding new innovations.
NFT + GameFi + Metaverse
NFT + GameFi + Metaverse may be the best play for BSC in the future, but it needs more development to be complete.
Fortunately, from 7-8/2021, BSC has been supporting GameFi projects, which is arguably the right way.
With the MVB III and III programs, GameFi and Metaverse on BSC are expected to rise even more dramatically.
Foreseeing the future is an impossible task. However, from my perspective, the BSC team is one of the most “sensitive” ones in the market, and they have done a great job in catching up with trends and applying them to their products.
- The ICO trend in 2017 ⇒ Binance transferred them to IEO in 2019 and sustained them to this moment.
- DeFi trend on Ethereum in July 2020 ⇒ Binance released BSC in September 2020 and caught up with Ethereum’s DeFi after 5 months.
- NFT, GameFi, and Metaverse trend in 2021 ⇒ BSC updated it in its ecosystem within a week.
Hence, rather than predicting what they are going to conduct, I will personally follow them along with each market trend.
Investment Opportunities on BNB Smart Chain (BSC) Ecosystem
Invest in tokens
After the recent market decline, there are numerous opportunities to invest in BSC tokens at much cheaper prices. Some promising projects and tokens to keep an eye on:
- AMM DEXs: PancakeSwap (CAKE), DODO (DODO), Mdex (MDX),...
- Lending: Venus (XVS), Alpha Finance (ALPHA),...
- NFT: BakerySwap (BAKE), Dego Finance (DEGO),...
- Launchpads: DAO Maker, KickPad, Seedify,...
Participating in IDOs
As mentioned above, participating in IDOs is a great way to gain profits at low risk, especially in bull markets. You should check the performance of each and every Launchpad before “aping” in.
Here is an example of PancakeSwap with its IPO.
Skin in the game
Skin in the game is a native way to say how you are diving deep into the ecosystem along with its projects to invest in. This can be done through Farming, Staking, or Lending in order to gain profits.
You can skin in the game in BSC in a few different ways:
- Lending: Venus, Cream Finance, ForTube, Alpha Finance,...
- Farming: PancakeSwap, BakerySwap,...
- Yield Aggregator: Beefy Finance, AutoFarm, Value DeFi, Acryptos,...
Disclaimer: However, such actions involve extreme risk and you need to be aware of it. DYOR before investing in any kind.
To conclude, here are some main points about the BNB Smart Chain ecosystem:
- BSC has a versatile DeFi ecosystem with fulfilled DeFi stacks.
- DeFi on BSC is getting saturated with little to no situations ⇒ TVL is getting stuck and declining.
- However, users are staying in the ecosystem with their faith in Binance and CZ. Should a new trend appear in the future, BSC may be among the very first to take the chance.
What is your opinion on the BSC ecosystem? Do you think that BSC can get out of the saturation and come back stronger in the future?
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