Binance Demonstrates DeFi Speed: Launching Smart Chain, Spending $100 Million
Author | Qin Xiaofeng
Editor | Mandy Wang Mengdie
Produced | Odaily
Author | Qin Xiaofeng
Editor | Mandy Wang Mengdie
Produced | Odaily
For technology companies, the rapid growth of upper-level business is inseparable from the support of the underlying technology platform.
In 2019, Tmall's "Double Eleven" had a total turnover of 268.4 billion yuan throughout the day, and the peak order creation reached 544,000 transactions per second, which was 1360 times that of the first "Double Eleven" in 2009.
Being able to withstand such a huge traffic peak relies on the strong power provided by Feitian Cloud, which enables Alibaba to cope with more complex technical challenges.
If the blockchain wants to go further, and if DeFi (decentralized finance) wants to break the circle, the underlying technology is the key, and it also requires real technological innovation, not hype.
As the top player in the industry, Binance realized early on that "technology drives change" and has been iterating products at a high speed to lead the industry trend.
From the launch of Binance Chain last year to the recent launch of Binance Smart Chain (BSC), Binance is constantly exploring the boundaries of the blockchain on the road of technological innovation.
In addition to technical support, Binance is not stingy, investing real money to support the development of DeFi projects.
At the "The World of DeFi" online summit on September 11, Binance founder and CEO Changpeng Zhao announced that he will set up a US$100 million seed fund to support the ecological construction of the industry and create ecological synergy between CeFi and DeFi.
Binance, which has already become king in the CeFi world, once again fought against DeFi, and made extraordinary moves from the beginning.
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1. The challenge of breaking the DeFi circle, basic performance is the key
In the past few months, DeFi has been very popular, how popular is it?
DeFi Market Cap data shows that in the past five months, the market value of DeFi has grown explosively, an increase of more than 1,600%; the value of locked positions on the chain has also surged from US$1 billion to US$9 billion, an increase of as much as 800%.
What onlookers see is only prosperous data, but retail investors, developers and other DeFi witnesses have different feelings."Very expensive", "very slow", "difficult to operate", and "poor experience" are the words most often mentioned by those who have experienced it, which seriously hinders DeFi from breaking the circle and moving towards a larger market.
In order to prescribe the right medicine, the key is to find out what happened to DeFi?
One, very slow, that is, network congestion.At present, most DeFi projects are built on the Ethereum blockchain, and its throughput is not high, currently only 13 transactions per second. From the beginning of the year to the present, the total amount of transactions on the chain has continued to rise, almost doubling, especially with the popularity of DeFi, the increase in daily transaction volume has further expanded.
On the one hand, there is a huge transaction demand, on the other hand, the inefficient processing speed, which also leads to the aggravation of the Ethereum network congestion. Since July, the daily unconfirmed transaction volume has remained above 100,000.
2. "Very expensive", that is, the Gas fee is high.
For DeFi participants, the congested network means that transactions are difficult to complete, so they can only increase Gas fees in order to obtain fast packaging, which has also caused Gas fees to soar in the past few months.
(Note: Gas fee = Gas limit * Gas Price; the Gas limit defaults to 21000, and Gas Price mainly determines your Gas fee and the priority of transaction packaging.)
Previously, the Gas Price basically remained at 10 -20 Gwei, and occasionally reached 20 Gwei; but at present, it basically remains above 200 Gwei. On September 2, it even broke through the 500 Gwei mark, reaching as high as 514.54 Gwei, setting a new record high.
This allows users to charge more than 0.1 ETH ($30) for a single transfer when mining on DeFi; during peak periods, even 0.3 ETH or even higher is required. Before this DeFi boom, Ethereum Gas basically only needed 0.001 ETH ($3).
The rising gas cost not only affects the participants, but also further increases the testing cost of the developers. In the end, only the miners will benefit.
The above two problems are common problems of DeFi projects on Ethereum. In the final analysis, the underlying technical performance limits DeFi to a broader stage.
How to improve technical performance has become a difficulty in the development of DeFi?
One is to expand the performance of Ethereum itself, which is also the goal of ETH2.0. However, ETH2.0 phase zero has been skipping tickets since the beginning of the year. At present, it will not be launched until the beginning of next year at the earliest, and technologies such as sharding will not be available until at least one year after phase zero is launched. Far water can't quench near thirst, ETH 2.0 can't solve DeFi's urgent needs.
How to seamlessly connect, reduce the migration cost of Ethereum DeFi projects, break the island effect between various public chain DeFi projects, and enhance linkages are the keys to promoting the in-depth development of DeFi.
In order to meet this satisfaction, Binance launched the Binance Smart Chain (BSC) in September this year, which is compatible with the Ethereum Virtual Machine (EVM) and focuses on the development of DeFi. Through native cross-chain protocol communication and transactions, Binance Smart Chain can promote the integration of DeFi.
"It takes about 1-2 days for projects on Ethereum to be deployed on BSC. Because they are fully compatible, these project parties don't need to change any tools, even wallets." Zhang Xiaoguang, head of Binance Smart Chain, said.
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Although DeFi is only popular now, Binance has made a strategic layout in the DeFi field very early, and one of the focus points is the construction of the underlying infrastructure of the blockchain.Binance Smart ChainIn April last year, the Binance Chain based on Cosmos announced the official launch of the mainnet, and the DEX based on the Binance Chain was also officially launched at the same time; as of the end of August this year, 135 trading pairs were launched on the Binance DEX, and the cumulative transaction volume has exceeded 800 million dollars.
In April this year, Binance released the Binance Smart Chain white paper and launched the test network; in September,
Binance Smart Chain
The main network is officially launched.
Why do Binance Smart Chain, and what are the similarities and differences between Binance Smart Chain and the previous Binance Chain?
To put it simply, Binance Chain is more efficient in matching, but it does not support the construction of smart contracts, and focuses on the issuance and trading of encrypted assets; Binance Smart Chain has added an important function on the basis of retaining the original high-performance transactions—— — Compatible with EVM (Ethereum Virtual Machine), supports the creation of smart contracts, and focuses on decentralized applications (Dapp). The two complement each other and run in parallel.
Specifically, Binance Smart Chain’s friendliness to DeFi is mainly reflected in the following aspects:
(1) Performance advantages: Compatible with EVM, high performance, low handling fee
The Ethereum Virtual Machine (EVM) is an important foundation for building smart contracts. The previous Binance Chain and many other public chains do not support this function, which also hinders Ethereum developers from entering other ecosystems.
Now BSC is fully compatible with EVM, lowering the barriers to entry for developers, allowing more Ethereum projects and developers to enter the Binance ecosystem. And, this transition can be seamless.
Take Aave, a lending protocol, as an example. Its bottom layer is based on Solidity, and it also integrates oracles as a source for obtaining prices and fees; the oracles on the Binance Smart Chain have already been integrated, and Aave can be deployed directly on BSC. There is no need to change any tools, not even the wallet, and the entire deployment only takes 1-2 days.
Of course, if it is only compatible with EVM, at most it is a replica of Ethereum, which cannot be regarded as an innovation.
The second advantage of BSC is high-performance matching efficiency, which is better than Ethereum.
The consensus mechanism adopted by BSC is Proof of Stake Authority (PoSA), which combines the functions of Delegated Proof of Stake (DPoS) and Proof of Authority (PoA) mechanisms. This consensus algorithm is built on a network with 21 verification nodes, which can produce a block every 3 seconds (based on the current test network test data), and the TPS can reach thousands, which can establish a high-speed infrastructure for the DeFi protocol.
High-performance processing efficiency will effectively alleviate the current Ethereum congestion.
In addition, BSC transaction fees are also very low. According to official calculations, the transaction fee is as low as 1 cent, which is much lower than the gas fee of Ethereum, which greatly reduces the testing cost of developers and the entry threshold of DeFi participants.
(2) Scenario advantage: cross-chain
At present, each public chain operates independently, and they are like isolated islands with few connections. This obstacle also greatly limits the development of DeFi.
For example, if a user holding TRX or EOS wants to participate in the ETH lending agreement, he must first sell TRX or EOS, and then buy ETH to participate. The cumbersomeness of the process also further reduces the enthusiasm of users to participate.
Therefore, the demand for cross-chain came into being.
Binance Smart Chain retains the features of the previous Binance Chain and supports cross-chain communication and transactions.
In the future, Binance will implement the "Token Canal" plan, through the liquidity linkage between Binance Exchange and Smart Chain, to open up the communication channels of various encrypted assets and realize the interconnection of multiple DeFi protocols.
The goal of the plan is to bridge 1 billion US dollars of assets in the initial stage. The biggest highlights and advantages are: safe custody services, more comprehensive token cross-chain services, linkage liquidity and privacy protection (no KYC required), etc.
According to the announcement, the "Token Canal" plan, through the secure custody service of the Binance CeFi platform, can bridge tokens on other public chains to the Binance Smart Chain, including Bitcoin's BTC, Ethereum's ERC20 (ETH, LINK, USDT, DAI, etc.), XRP, BCH, LTC, ADA, DOT, XTZ, EOS, ONT, etc.; through bridging, Binance Smart Chain will be able to realize one-click asset transfer between different network tokens, and users It is easy and fast to transfer token assets into Binance Smart Chain, and reverse conversion is also possible.
"In the future, more chains will be needed to carry more applications. Different chains also have their own application scenarios. We will not say which public chain we are competing with, but how to integrate different chains in our Binance ecosystem. Connect various assets and see how to create greater value." Zhang Xiaoguang said that if the public chains are parallel highways, then Binance will become a bridge between the grafted highways.
(3) Policy advantage: US$100 million support
As far as the project is concerned, there is another important factor to consider when choosing the development of the exchange public chain, and that is to rely on the resources of the exchange.
This kind of resource is sometimes intangible, but this time Binance decided not to play virtual, but to invest in real money.
At the "The World of DeFi" online summit on September 11, Binance founder and CEO Changpeng Zhao announced that he will set up a US$100 million seed fund to support the ecological construction of the industry and create ecological synergy between CeFi and DeFi.
To put it simply, Binance and BSC will provide DeFi developers with support, early liquidity, security audits, and even one-stop services for listing coins. This is extremely attractive for start-up projects.
(4) Summary
Currently, five projects including Cream, ForTube, SpartanSwap, BakerySwap, and Bounce.finance have launched liquidity mining on BSC, and nearly 20 partners are deploying on BSC. Next week, Binance will announce 10 New partner project party.
According to Binance official news, BurgerSwap, one of the first batch of projects developed based on Binance Smart Chain, started its mining plan on September 11. BurgerSwap does not have LP tokens, allowing users to provide liquidity for BURGER trading pairs on BugerSwap. Currently, Burgerswap has been launched on the mainnet of Binance Smart Chain, and the first mine has been generated tonight. The first function of BurgerSwap fully supports swap, liquidity pool, and governance, and all functions can be used normally.
(4) Summary
In general, Binance Smart Chain not only lowers the threshold for ordinary players to enter the DeFi world, but also provides a more complete and efficient development environment for professional developers, shortens the development cost and cycle of high-quality projects, and promotes the development of the DeFi industry .
Of course, the advent of Binance Smart Chain is also good for BNB investors.
Binance Smart Chain adopts decentralized governance, and BNB users can control the governance rights on the chain and decide the future development direction of the project.
Both Binance Chain and Binance Smart Chain use BNB as an ecological token to further expand the usage scenarios of platform coins.
As Changpeng Zhao said, to some extent, BNB can also be regarded as a DeFi token.
“BNB is essentially a utility token. At our latest count, there are at least 112 use cases for BNB and counting. It’s a DeFi token by many metrics. Binance Chain launches native high performance DEX, while BNB is the native token on Binance Chain.”
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3. Binance’s DeFi ambitions
Binance has great ambitions, which is in its DNA.
Since its establishment in 2017, Binance's vision is not limited to the Chinese market. By implementing a globalization strategy, Binance has taken a seat among the top exchanges within a few months. By expanding a series of businesses such as OTC, contracts, options, and mining pools, Binance's dominance has become more and more stable.Recently, Binance has successively launched liquidity mining, including:
"DeFi Mining""New Coin Mining"
. : Also known as "staking mining", that is, users deposit USDT, BNB, DAI and other encrypted assets. Binance helps users put these assets into popular mining projects (Compound, etc.) in the market, and returns users after earning income. At present, the annualized income of USDT in "DeFi mining" can reach up to 60%, and the annualized income of BNB can reach up to 25%.
Binance Mining
": To provide liquidity for stablecoin transactions to obtain income, similar to Curve's model. However, the annualized income of "Binance Mining" on the 7th is generally maintained at around 18%, which is higher than Curve's current income (annualized 7.1% on the 7th).
On the one hand, using Binance as a traffic entry can effectively reduce the threshold for retail investors to enter the DeFi market, help more users directly access DeFi projects, and play a role in promoting the project; on the other hand, mining projects screened by Binance are of better quality. High, retail investors can directly participate in mining, without the need for a secondary market to take over, and prevent DeFi projects from becoming a tool for large players to harvest retail investors.
Binance's multiple measures have provided more convenient channels for many users who are still on the periphery of DeFi, and promoted DeFi mining to enter the 2.0 stage-exchange DeFi aggregate mining.
Afterwards, many CEXs also imitated and launched DeFi aggregation mining of exchange platform currency one after another. Binance once again led the DeFi 2.0 era.
In addition to liquidity mining, Binance has also launched multiple DeFi token spot, derivatives transactions, and wealth management to meet users' trading needs in the first place.
In addition, Binance has also invested in the development of many high-quality DeFi projects.
