The recent increase in cryptocurrency prices must have attracted a fair share of cheerleaders and critics, but the reality of this climb is that the increase in transaction volume also increases network fees.
Binance is condemned for deliberately stifling the Ethereum network to attract more users to use its platform
The resulting transaction volume has blocked networks such as Ethereum, and the cost of natural gas has risen nearly 20 times in the past 12 months. For the growing DeFi market, these high costs have aroused great criticism from the community and mobilized the ecosystem to seek more affordable options. Enter Binance, which may replace Ethereum as a new DeFi hotspot due to its interoperability and lower transaction costs.
Compared to the fully decentralized method of Ethereum, the Binance Smart Chain (BSC) based on the proof of authorization (POA) model is centralized (Binance chooses to run the authority of each node). This has prompted some users to criticize the method, believing that Binance has abused its influence and market power to deliberately block the Ethereum network. However, this sharp criticism did not capture the greater prospects.
A quick glance at the wallet and gasoline data shows that Binance is the largest single gasoline consumer. E.g, The picture above was tweeted by Nansen AI The highlight of February 12-18 was that Binance spent nearly 5,000 ETH on natural gas alone. Although many users quickly criticized the public data of Asian exchanges that are known for inflated trading volume, Etherscan data can confirm the data.
The data shows that in terms of gas consumption and transaction volume in the past 7 days, wallets attributed to Binance accounted for 6 of the 10 most active wallets in the entire Ethereum ecosystem. Although it can be inferred that Binance’s transaction volume is driving the cost of Ethereum up, and intentionally doing so to attract more transaction volume into its smart chain, this argument does not think about the blockchain interoperability that Binance promotes. In addition, Binance has not cut off the watershed on Ethereum, making its claims about Ethereum blocking the network somewhat boring.
Binance Pancakeswap has surpassed Uniswap
The cost of switching from Ethereum to Binance is very low, especially for smart contracts and Dapps. By improving interoperability and reducing switching costs, as well as rebates for developers who bring valuable projects online, Binance has established itself as a powerful destination for various activities.
Given the amount of DeFi, any reduction in network fees and costs may attract more adoption. By filling this gap faster than competitors or more mature chains, Binance is now the location of PancakeSwap, which has surpassed Uniswap (based on Ethereum) in number.
Since the barriers to switching from Uniswap to PancakeSwap (actually a copy of Uniswap on BSC) are very small, it is no wonder that DeFi users are so eager to try. In addition, it has caused the valuation of Binance Coin (BNB) to rise sharply, making transactions on its own local chain more expensive.
However, unlike Ethereum, Binance is actually incentivizing the development and use of smart contracts by building a more cost-effective ecosystem that rewards smart contract developers without having to use its market power to plug other competing networks.
FTX quick criticism
However, this was not enough to silence critics such as FTX, who criticized Binance for the default chain responsible for sending transactions.in a Recent tweet comments, The cryptocurrency derivatives exchange FTX quickly integrated Binance’s withdrawal process, which does not promote its own chain development by default, and conflicts due to the fees charged.
As a result, FTX paid a high price for sending coins to the wrong chain. Therefore, the service has decided to pass on the additional fee to users in the form of a 5% deposit for tokens sent to the wrong chain. However, compared with Binance’s default settings, this parameter is more indicative of user errors.
Although the Binance World is undoubtedly growing, and exchange trading volumes have told credible facts about this reality, the self-promotion of its own tools will continue to trigger the same condemnation as the debate on decentralized and centralized exchanges. In the end, the voice of public utilities is loudest.
What do you think – did Binance deliberately kill the Ethereum network to gain more users? Let us know in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons, Binance, Twitter user NanshenAI, Etherscan