Why Binance Smart Chain and PancakeSwap remain an important part of DeFi
The Nansen blockchain analytics platform has analyzed user activity on Binance Smart Chain (BSC) and revealed the most interesting trends in a new research report.
Created as a “parallel blockchain” for Binance Channel, BSC has provided programmability and smart contracts to developers interested in launching their tokens on the network, ushering in hundreds of projects, such as PancakeSwap (CAKE), Venus (XVS), Automatique (AUTO) and Beefy Finance (BIFI), to only cite a few.
BSC’s competitive advantage
BSC is working on a Proof of Staker Authority (PoSA) consensus mechanism, where participants bet Binance Coin (BNB), the native coin of Binance Chain, to become validators.
Although compatible with the Ethereum virtual machine (EVM), the blockchain which “was created as a scalable infrastructure to manage a large number of Challenge transactions without compromising speed ”, is supported by the wide variety of Ethereum tools and decentralized applications (dApps).
As the report points out, “a competitive advantage of BSC over Ethereum (ETH) is that the price of gas, or rather the cost required to complete a transaction on the network, is significantly cheaper.”
At its peak, the number of transactions on BSC was around 10 times higher than on Ethereum, indicating an inverse relationship between the price of gas and the number of transactions.
Adoption of stable currency
According to the report, Tether (USDT) is traded almost twice as much as USD Coin (USDC) and IAD combined in terms of volume and dominates stable currency circulation by a huge margin on the Ethereum network.
“One would probably guess that Binance USD (USD), the 1: 1 USD stable coin issued by Binance would completely wipe the floor in terms of daily transaction value and daily unique active users, ”according to the report, which found that this was only the case during the early stages. by BSC.
“When the Binance Bridge was launched, which supported ERC-20 and TRC-20 cross-chain transfers, USDT was introduced into the system. People could seamlessly convert an ERC-20 USDT token on ETH to a BEP-20 USDT token on BSC, which would allow USDT to gain traction, ”as the analyst team explains. Nansen.
“The single daily chart of active users paints a similar picture for the BUSD and the USDT,” the report read, revealing that the USDT managed to outperform the BUSD on several occasions, while the DAI was in third position, with 40 to 50 times fewer users.
“This is possibly attributed to the native currency advantage that BUSD has,” according to the report, which pointed out that most pools on the BSC network consist of token pairs with BUSD and BNB.
The daily stablecoin trading volume peaked in mid-late April and fell significantly thereafter.
As stated in the report, “this period definitely rings a bell for many crypto freaks like Bitcoin (BTC) hit an all-time high before plunging more than 50%, showing the correlation between Bitcoin and stablecoin activity on BSC or DeFi as a whole.
General capital / portfolio size of BSC users
According to Nansen’s research team, “the average value of stablecoin transactions is a good indicator of the overall capital / portfolio size of BSC users.”
In April, PancakeSwap’s CAKE increased by over 120% and the token’s total daily trades reversed Ethereum.
At the same time, the value of stable trades worth $ 1 million and above consistently accounted for more than 90% of the total volume traded.
“This could possibly indicate that deep pockets or even ‘whales’ were in action during this notable month for CAKE and BSC,” Nansen’s research team noted in the report.
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