Alex Valaitis (the Layer-1 guy)
Alex Valaitis (the Layer-1 guy) 10 minutes reading from Binance Coin

BNB Chain: A Discussion on the BNB Chain

bnb chain is the 3rd largest blockchain by Market cap outside of Bitcoin and Ethereum.

Yet, despite its size, there is surprisingly very little content covering it.

I spent the past 3 weeks researching the BNB blockchain in depth. Here are my findings 👇

In order to make it easier to digest I focused on 3 main aspects of BNB Chain:

⚙️ The underlying tech/protocol 📱 The BNB Smart Chain dapp ecosystem 🤝

The BNB Community

Let's dive in!

For starters, it's important to note that BNB Chain stands for 'Build N Build'

This was a recent rebranding exercise to move away from the Binance naming

It's also worth noting that the BNB Chain actually consists of multiple different chains...

1.

BNB Beacon Chain (previously Binance Chain) - BNB Chain for Governance (Staking, Voting)

2.

BNB Smart Chain (BSC) (previously Binance Smart Chain) - EVM compatible, consensus layers, and with hubs to multi-chains

3.

BNB Sidechain

4.

BNB ZkRolllup (Coming soon)

It's worth understanding the history of how BNB Chain launched, specifically the Smart Chain.

Back in 2020 during 'DeFi summer' new projects like @compoundfinance and @Uniswap took off on Ethereum.

This congested the Ethereum network leading to high fees + slow confirmations...

@compoundfinance @Uniswap Binance (the exchange) noticed this opportunity and pounced.

Unlike other Layer-1s, instead of trying to rebuild from the ground up, they hard forked Go Ethereum protocol, and changed the consensus mechanism to 'Proof of Authority'.

@compoundfinance @Uniswap As part of the Proof of Authority they only have 21 validators who are all running high-end hardware.

This makes the network faster & cheaper.

However, it comes at a major cost... CENTRALIZATION!

@compoundfinance @Uniswap In terms of BNB, the coin has been migrated to the BNB chain after launching as an ICO in 2017 on Ethereum

It had initial max supply of 200M

40% went to founders, 10% went to angel investors, 50% went to public sale

Note: This ICO is the subject of scrutiny by US regulators

@compoundfinance @Uniswap The BNB price has done well due to favorable tokenomics. Binance burns a set amount of BNB based on a defined formula.

They will do this until BNB reaches 100M total supply.

This is good for holders because this makes BNB a DEFLATIONARY asset.

@compoundfinance @Uniswap However, the BNB coin has major centralization concerns. 4 of the top 10 wallets are owned by Binance & many speculate that @cz_binance owns the largest wallet with ~20%

So far he has been 💎

🤲

but that is a massive concentration

No wonder he is the richest person in crypto

@compoundfinance @Uniswap @cz_binance 1 major advantage that the BNB Smart Chain has is that it is 'EVM compatible'. This means smart contracts written on Ethereum can easily be ported over to BNB.

This has allowed BNB to bootstrap a large number of dapps & developers.

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum The majority of BNB Chain's dapps are direct copies of dapps launched on Etheruem.

Take for instance @PancakeSwap . It is THE top ranked dapp in the world by users. However, it is a DIRECT fork of @Uniswap 🤔

Also the majority of the dapps have very few MAUs

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap There are some familiar names on BNB such as @Stepnofficial , @1inch , etc. But for the most part, the apps seemed to be low quality cash grabs.

This was also apparent in the fact that most of the dapps didn't seem to have active communities:

DappBay - Find Top dApps on Best dApp Store on BNB ChainDappBay - Find Top dApps on Best dApp Store on BNB Chain

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch Speaking of community, the BNB Chain community seems to be pretty much non-existent.

If you simply search bnb

in your discover feed, you'll find it littered with scammy promos and bots.

There doesn't seem to be any sort of real conversation happening anywhere

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch This isn't just isolated to Twitter either. The official Discord for BNB Chain has hardly any activity.

I even went to a BNB Chain IRL event at Consensus 2022. After talking to 40+ people, I didn't meet a single one that was still actively involved with BNB Chain 🤯

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch At this point you may be asking how BNB Chain has managed to grow to such a large market cap despite seemingly not having a passionate base of builders and users?

I believe that there are a few reasons for this...

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch The 1st, is that Binance has cut corners to make their blockchain easier & cheaper to use

Specifically, they have completely brushed off centralization concerns in order to have a smoother experience

This is attractive to many mercenary builders/users who want to make quick

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch The 2nd, is that they have a massive backer in Binance/CZ behind them. Binance is the largest crypto exchange in the world.

So they are able to pump liquidity into the ecosystem directly & indirectly by inflating coin price by holding their coins/burning existing supply

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch The last is that Web3 is still largely speculative at this point and CZ knows it

That is why he has focused so much effort on the tokenomics and making the BNB Chain attractive for speculative activities

The 'Build N Build' naming is just a head fake to distract from the truth

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch To conclude, BNB takes the title of the 1st blockchain that I have walked away from with a bad taste in my mouth. These feelings are driven by the fact that the blockchain embodies centralization, speculation & a mercenary culture.

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch Please note: I do not have anything against BNB, Binance, CZ or anyone using the blockchain personally.

I try to be as objective as possible in my analysis and ultimately, all I want is to see the Web3 space grow in a healthy manner.

@compoundfinance @Uniswap @cz_binance @DappRadar @ethereum @PancakeSwap @Stepnofficial @1inch And for those of you that do not like to read, you can listen to my Twitter space recording here:

TwitterTwitter
This post is based on this twitter thread.

Comments

Please login to comment.