Binance Coin (BNB) saw an absolute rally in February. It traded at $ 48.93 on February 1 and was trading at $ 304 as of press time., the A Up 521% so far this month and 707% so far this year.
This rise in price has resulted in the BNB becoming the third largest cryptocurrency with a market capitalization of $ 46.5 billion.. BNB reached his All-time high of $ 342.88 on February 19th. This rise in price and the rise in market capitalization are due to the Popularity of the Binance Smart Chain in the decentralized financial markets and other macroeconomic factors that drove the growth of flagship assets like Bitcoin (BTC) and Ether (ETH) to new all-time highs this week.
When the price of Ether hit its all-time high on February 19, Binance announced on Twitter that the withdrawal of Ether and all Ethereum-based tokens was “temporarily suspended” due to an “overload problem”.. This resulted in users being unable to trade these tokens for almost an hour and the community speculating on what had actually happened. That hiatus raised BNB another $ 60 during that time, while Ether stayed in the same range..
Is Binance Smart Chain the main engine?
Aside from macroeconomic factors like the price of BTC and ETH, which hit an all-time high this week and drove the price of BNB, Binance Smart Chain has also gained prominence in the crypto community.. BSC was launched in September 2020 and acts as a blockchain parallel to the Binance chain and at the same time enables the intelligent contract functionality and the BNB staking mechanism that supports the Binance chain as a native token.
Cointelegraph further discussed this with a Binance spokesperson, who commented on the unique benefits BSC offers users:
“BSC provides a high-performance, low-cost blockchain network that is compatible with Ethereum’s virtual machine. Developers can be less concerned about transaction fees and more focused on innovation while using all of the developer tools they are familiar with. They are familiar with the Ethereum ecosystem. ” . “
The entire Binance ecosystem is operated by BSC. As a global cryptocurrency exchange with extremely high user traffic Scalability and low transaction rates go hand in hand with the BSC ecosystem. BSCs are widely used by DeFi protocols, and the latest means of bringing Ethereum to the blockchain was the multi-service platform Value DeFi and the yield aggregator Harvest Finance, which cited cross-chain yield farming as the main reason for the change.
The influence of BSC has expanded to include various DeFi protocols. Venus, an algorithmic money market and synthetic stablecoin protocol designed specifically for BSC, witnessed how The price of the Venus (XVS) token rose more than 750% after its launch on the Binance Smart Chain, from a low of $ 10.04 on February 2 to an all-time high of $ 95.90 on February 20.
Another DeFi protocol in BSC is PancakeSwap, which later became the first billion dollar project on the blockchain. That number quickly doubled, surpassing the $ 2 billion market cap due to the growth of its food token, CAKE.. Data from Cointelegraph Markets shows that the price of CAKE rose 973% from a low of $ 1.89 on February 3 to its all-time high of $ 20.33 on February 19.
Ilia Maksimenka, CEO of PlasmaPay – a DeFi investment platform – spoke to Cointelegraph about this PancakeSwap could be one of the main reasons behind BNB price rally::
“PancakeSwap traded over $ 400 million a day and briefly became the second largest DEX in the world. Its unique offerings [de BSC] The lottery service and the non-fungible token art platform drove PancakeSwap use cases forward. “
BSC is gaining ground given the high Ethereum fees
Another reason for the popularity of BSC is the lower transaction fees compared to Ethereum, which in its high-demand state excludes private investors in DeFi markets and makes them more adapted to whales.. While Eth2 is proposing to solve the transaction fees problem through its scalability solutions, the network is currently heavily congested due to the increasing popularity of DeFi protocols, resulting in high gas rates for all transactions on the Ethereum network.
William Quigley, crypto fund manager at Magnetic Capital – a cryptocurrency-focused investment firm – told Cointelegraph as much The increase in BNB is due to an overload on the Ethereum blockchainadding, “Ethereum has an overhead pricing mechanism similar to Uber. When the demand in the chain is high, the price of quickly completing a transaction increases“.
ANDOn February 18, BSC recorded 2.5 million transactions on its network, compared to 1.3 million transactions in Ethereum. The Binance spokesperson told Cointelegraph why this could be:
“BSC’s daily transaction volume is up 300% year over year, strengthening an ecosystem of more than 100 DeFi projects. In addition, the platform has managed to keep GAS costs at just $ 0.04. Compared to 5.53 Ethereum dollars is BSC 135 times less expensive! “
While Eth2’s phased rollout promises a speed for the proposed roadmap, history suggests these launches often miss the deadlinewithout it being clear when the actual updates will be made. Given that Ethereum will take some time to implement its scaling solutions, which by then should lower gas rates on the network, Blockchains like BSC benefit the most from their delays.
The speed of the Ethereum network compared to BSC could also be one of the reasons DeFi protocols migrate to BSCbecause it is comparatively faster. BSC allows 300 transactions per second, while Ethereum can only process 15 transactions per second despite its higher transaction rates.
Lower transaction fees and network speed may not be the only reasons some DeFi protocols migrate to BSC. The fact that BSC is 100% compatible with Ethereum, DeFi’s flagship blockchain that allows protocols to deliver their application through BSC without additional changes, is a design victory for Binance.. The Binance spokesman went further on other reasons:
“The feedback we have heard is that DeFi protocols are becoming increasingly chain-independent. BSC’s rapid growth shows that users are preferring lower transaction fees. BSC also offers a variety of assets, many of which in DeFi protocols on Ethereum are not Are available.”
While other blockchains like Cardano and Polkadot are trying to break Ethereum’s hegemony in the DeFi and NFT markets, none have succeeded at the breakneck pace that Binance Smart Chain is experiencing.. Disruptive blockchain innovations will drive the industry forward by challenging the status quo and prompting blockchain developers to focus on building well-connected, universal blockchains.
Billy Adams, head of ecosystem development at XinFin – an open source hybrid blockchain platform – told Cointelegraph that he sees blockchains like BSC as beneficial to the entire ecosystem:
“The market is showing appetite for new solutions for DeFi that can provide investor protection, sufficient liquidity for micro and small and medium-sized enterprises (MSMEs) and support interoperability between other blockchains as well as with traditional systems.”
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