Ethereum price has soared to a new all-time high of $1,950, however, the mounting gas fee on the network has made many defi protocols barely usable. Defi ecosystem that works on top of the Ethereum network is one it the biggest success story from crypto last year and it has continued its boom in 2021 as well, but Ethereum seems to be losing its market to Binance Chain.
Ethereum’s High Txn Fees Acting As Growth Catalyst for Binance Smart Chain
Ethereum’s crisis has become Binance’s opportunity as its native blockchain called Binance Smart Chain (BSC) that mimics the Ethereum network has become the go-to choice for many traders including defi and spot markets owing to high gas fees. As a result of BSC’s rising popularity, the native token BNB has also skyrocketed to a new ATH of $280 has gained more than 400% over the past month.
Binance Smart Chain’s trading volume is nearly double that of Ethereum, a clear shift of the market from Ethereum to Binance Chain.
There are almost 2x more transactions on #BSC than on ETH.
— CZ ???? Binance (@cz_binance) February 18, 2021
Many Defi Protocols Considering Moving to Binance Smart Chain
The popularity of BSC can be understood from the fact that the on-chain trading activity has led to several market clippings over the past 24 hours where BNB made its way into the top 3 cryptocurrencies only behind Bitcoin and Ethereum. In the Defi ecosystem which seems to be worst affected by the rising gas, the fee has also seen several flipping where BSC-based PancakeSwap replaced Uniswap for the second spot in terms of the trading volume.
Many Defi protocols are already considering shifting from Ethereum to BSC in light of the growing gas fee that could put the ETH network in the back seat in the defi market owing to the scalability issues.
— CZ ???? Binance (@cz_binance) February 19, 2021
The scalability issue and mounting gas fee have been Ethereum’s long-drawn Achilles heal and Vitalik Buterin has promised that these issues would be resolved with ETH 2.0, however, the complete rollout of the network would take another 2 years. However, the scalability crisis couldn’t have hit ETH at the worst time as the market is on the brink of mainstream adoption and the defi ecosystem is booming.
This has propelled BSC to become the primary choice of traders and even defi protocols. While Ethereum holds no immediate ‘threat’ as such from BSC, in the short term it could lose a significant portion of its market to the Binance chain.
Unpopular opinion :
BSC saved our ass in the #Ethereum ecosystem.
We're late on scalability and many are priced out by transactions fees
Good guy CZ built nice UX and "(Ce)DeFi" training grounds for newcomers
But If we keep stalling, he'll just keep them forever. Focus on work
— Marc '五 Billy' Zeller (@lemiscate) February 19, 2021