Binance Smart Chain (BSC) – Signs of Saturation and Opportunity for Long-Term Investor
Get an overview of the BSC ecosystem with each piece and project inside, thereby projecting the future and looking for investment opportunities with BSC
Binance Smart Chain is one of the ecosystems that attract the most cash flow in recent times, and an ecosystem with many outstanding features and products.
So in today’s article, I will help you learn most thoroughly about the Binance Smart Chain ecosystem and what features make BSC successfully conquer users with their DeFi world.
Overview of Blockchain BSC
Definition of Binance Smart Chain (BSC)
Binance Smart Chain is a blockchain built by the “big man” Binance on Ethereum’s EVM mechanism. Binance Smart Chain (BEP20) and Binance Chain (BEP2) are two blockchains that operate independently of each other, brothers often confuse at this point.
Although there is no outstanding infrastructure compared to other blockchains on the market like Solana, it is EVM compatibility that makes it very easy for projects built on Ethereum to migrate to Binance Smart Chain.
Binance Smart Chain has a native token of BNB – also the token representing the Binance exchange. It is this that has helped the BNB token have an influence outside of Binance and have a lot of applications in the DeFi space of BSC.
Token BNB (June 11, 2021)
- Marketcap: ~$61 billion (1 BNB = $367)
- FDV: ~$61 billion
- Rank: #4
- ATH Price: $690 (May 10, 2021)
- ATL Price: $0.096 (August 1, 2017)
- Circulating: 168,137,036 BNB (100/100%)
- Total Supply: 168,137,036 BNB
- BNB listing exchange: Binance, FTX, Gate, MXC, Kucoin,… (Centralized liquidity at Binance)
Blockchain Binance Smart Chain (BSC)
- TPS: 100
- Blocktime: 75s
- Total Tx: 359 million
- Avg. Tx fee: $0.5
Number of Dapps on BSC
The number of Dapps built on the BSC ecosystem is still unknown because new projects are deployed every day. The estimated number can be up to 450 projects. In there:
- Infrastructure: ~ 100 projects
- DeFi (DEX – Liquidity): ~ 200 projects
- Lending: ~ 25 projects
- NFT: ~ 200 projects
- GameFi: ~ 50 projects
- Metaverse: ~ 50 projects
- IDO Platform: ~ 20 projects
- Others: ~200 projects
BSC is an ecosystem with many partners to strengthen its platform. Some notable partners (excluding dApp builds on BSC):
- Security: CertiK, Quantstamp.
- Oracle: ChainLink,…
- Storage wallet: Coin98 Wallet, Math Wallet, Trust Wallet,…
Binance Smart Chain is an improved product from Binance Chain and was officially launched from September 2020. BSC’s biggest backer is the Binance exchange, which is also an experienced investment fund when it officially entered the crypto market in 2017.
Highlights of the Binance Smart Chain Ecosystem
- As one of the ecosystems with DeFi TVL ranked in the top #2.
- Backed by giant Binance.
- Easy to attract developers because it is EVM blockchain.
- The ability to catch trends and keep up with the market very quickly.
Current situation and roadmap of BSC
Period 4/2020 – 9/2020
This is the period when the Binance team publishes the whitepaper for Binance Smart Chain and improves the BSC from Binance Chain. During this period, they launched Testnet with cooperation from ChainLink, Ankr, Band Protocol,….
By September 2020, BSC was officially launched with the application of BNB token.
Period 9/2020 – 3/2021
During this period, the cash flow in DeFi is mainly in the Ethereum system. DeFi at Binance Smart Chain is still very “empty”. However, BSC has had a lot of smart strategies including the Most Valuable Builder program, Build Reward Program with a total prize of up to million dollars to attract developers from the BSC system.
Until about February 2021, when the transaction fees on Ethereum were too high, the Binance Smart Chain ecosystem formed a clear DeFi Stack, and the money flowed into BSC was very large. TVL in BSC DeFi has grown strongly at times to 40 billion dollars.
Period 3/2021 – 6/2021
March 2021 is the time when DeFi in BSC system develops very strongly, most notably PancakeSwap, starting from an AMM DEX, PancakeSwap has become the liquidity center for the whole BSC system and also expanded into many other areas.
By June 2021, DeFi at BSC was somewhat saturated, this is also the time when the NFT trend is taking over. Binance also announced that by the end of June 2021, Binance will launch the NFT Marketplace. This is one of the biggest reasons why the cash flow hasn’t left the BSC system.
But in the end, the launch of Binance NFT Marketplace did not create any opportunities or trends for investors. The biggest drawback is that they are very Centralized, which is a big barrier that prevents Binance NFT Marketplace from reaching many users.
Period 6/2021 – 9/2021
The “calm” of the BSC ecosystem continued until the end of July, when the GameFi trend, also known as Play to Earn, was born, led by Axie Infinity in the Ethereum ecosystem. In less than 1 week, the BSC ecosystem has taken over with GameFi in the market.
GameFi is the perfect combination of NFT and DeFi trends. This has brought the ecosystem back to life. However, they were only active for less than 2 weeks and were gradually forgotten (detailed analysis below).
The last trend takes place at the end of August, which is the Metaverse trend. Metaverse is also “shilled” by CZ – the man behind Binance. Immediately, projects in the GameFi array immediately added the “tag” Metaverse.
However, they do not bring too many positive changes to the BSC system. As of the end of September, the Binance Smart Chain system is still far behind the expectations of the BSC community.
Period 9/2021 – 12/2021
From September 2021 to December 2021, Binance has continuously launched many programs to help the BSC ecosystem grow, but without much success. In order not to be surpassed by other ecosystems in pumping money for the DeFi Incentive Program, the BSC system has launched a DeFi Incentive Program worth $1 billion.
Of this $1 billion, there’s $500 million for an investment program, a $300 million Incubation Program, $100 million in Liquidity Mining Incentive, and $100 million in Talent Development. Meanwhile, Binance also tried to create new trends such as Initial Game Offering, Fan token platform but did not receive too much attention.
On the blockchain side, Binance has successfully implemented BEP95, which is a mechanism that allows to burn 1 amount of BNB when making a transaction, which will promote the scarcity of BNB faster.
In terms of blockchain scaling, Binance is more actively expanding BSC than ever before. Typically, issue many non-BSC tokens on Binance Smart Chain, thereby attracting assets and increasing the presence of BSC system in the market.
Overview of the BSC ecosystem
Notable milestones since the birth of Binance Smart Chain
Binance Smart Chain officially turns 1 year old in September 2021.
As of September 2021, Binance Smart Chain has just turned one year old. Let’s review the outstanding events that Binance Smart Chain has implemented recently:
- September 7, 2020: The $100 million prize was officially launched.
- September 24, 2020: Secure link with CertiK and Peckshield.
- October 15, 2021: Launch of BUIDL Reward Program Phase I (prize 3.25 million USD).
- February 1, 2021: Growth 1,000% to reach 1 million Unique Active Address.
- February 8, 2021: Launched Most Valuable Builder I.
- April 23, 2021: Released Most Valuable Builder II.
- June 22, 2021: Launch of the BSC Martians Program.
- July 26, 2021: Funding 10 million USD for Priority ONE Bug Bounty program.
- August 20, 2021: Reached 90 million Unique Address milestone (90 times increase compared to February).
- October 12, 2021: Binance Launches Fan Token Platform
- October 22, 2021: Binance Launches BEP-95 Mechanism
- October 25, 2021: Binance Launches First Initial Game Offering.
Based on the above events, you can see that the BSC system is constantly attracting developers with the ambition to surpass Ethereum in the future. In terms of Incentive aspect, BSC is also the ecosystem with the highest Incentive for developers with a $100 million prize and many other benefits.
In the near future, Binance Smart Chain will definitely stay at #2 and not be easily surpassed by other ecosystems, because in terms of diversity, there is no dapp-diverse ecosystem yet. like BSC, as well as being able to catch Trend as fast as BSC from NFT, GameFi to Metaverse.
Most Valuable Builder Program
To continue to be the second largest TVL ecosystem in the market, it is impossible not to mention the contribution of the Most Valuable Builder program. This is a program that has been launched since BSC built the DeFi ecosystem.
Thanks to the MVB program, BSC has attracted many developers to build projects, diversify projects on the ecosystem and attract a large number of users from Ethereum. Up to now, the MVB program has reached season III, and each season BSC will focus on promoting a different area:
- MVB I: Focus on DeFi projects.
- MVB II: Focus on NFT projects.
- MVB III: Focus on GameFi + Metaverse.
If you win, the rewards for the projects will be very attractive, which include:
- $10,000 grant package.
- Support Audit of the entire platform.
- Opportunity to be directly invested by Binance.
- Opportunity to list on Innovation Zone of Binance exchange.
- Participate in seminars with advisors and experts in the market to develop better products.
Roadmap of MVB III program.
Pieces of the BSC ecosystem
Overview of TVL of puzzle pieces
From about March 2021 until now, the BSC ecosystem has grown very strongly and attracted a huge cash flow to its system. BSC DeFi TVL has grown by $50 billion in just two months.
This proves that the money flow from Ethereum has flowed to the BSC system a lot. It is also a stepping stone to attract many developers to start launching products on BSC.
DeFi TVL of BSC system from April 2021 to December 2021.
However, since peaking around May 10, 2021, the TVL of Binance Smart Chain has experienced a decline, which can be explained by 3 reasons:
- The project in the BSC system is being saturated, no longer releasing new features (more details in the projection).
- The project in the BSC system is having security problems (more details in the security section).
- Strong correction of the entire market on May 19, 2021.
Because of the above reasons, the token value, total TVL value and the performance of the puzzle pieces in the BSC system are also affected.
Up to now, the market has had a slight recovery, key projects are still operating and improving. But it seems that the Binance ecosystem is still short of breath in this DeFi race in Q3/2021.
More specifically, the majority of DeFi TVLs of DeFi ecosystems broke ATH:
- Ethereum surpassed the old peak of $103 billion, reaching $140 billion.
- Solana surpassed the old peak of $ 1.5 billion, reaching $ 11 billion.
- Terra surpassed the old peak of $ 4.5 billion, reaching $ 8 billion.
However, Binance Smart Chain has not yet been able to break through its old peak at around $40 billion. This shows that the BSC system is not attracting cash flow from the market. This is a huge pity for such a strong growth season.
New ecosystems are continuously launching Incentive Programs for the DeFi space.
In the near future, the DeFi game will have more players and they are spending a lot of capital to expand the DeFi ecosystem:
- Fantom spends $370 million FTM
- Avalanche spends 180 million dollars
- Celo spends $100 million.
- There are also Algorand, Polygon, Harmony, Terra,…
Without a plan to attract money back, Binance Smart Chain is very vulnerable to attacks from other ecosystems. Worse, if it is not possible to attract users to stay, users to another ecosystem will also lead to the departure of developers,…
Infrastructure & Tooling
In order for the BSC ecosystem to be a solid foundation for many other dApps to build-on, BSC has integrated many projects in the field of infrastructure. This includes prominent projects such as:
- Oracle: ChainLink, Band Protocol,…
- Audit: CertiK, Quanstamp, Bison Trails, Peckshield…
- Graph/Query: The Graph, Bitquery,…
- Bridge: BCS Bridge, Anyswap, My Wish, Celer…
- DeFi Tools: DeFi Station, BSCProject, DeBank, DappRadar, Dapp.com,…
- Blockchain Monitoring: PARSIQ, Tenderly, BSC Scan,…
- Smart Contract & API Creator: MyWish, ChainIDE, NowNodes,…
It can be said that BSC is one of the systems with very solid infrastructure projects and reinforced with many outstanding functions developed by 3rd parties.
Developers only need to focus on project development, Oracle provides pricing, Security audits, Bridge helps to transfer assets, … all have been provided by BSC partners.
Projects work in the Infrastructure and Tooling arrays in the BSC system. Source: idolmeta.net
Stablecoins are electronic money designed with the aim of minimizing the impact of price fluctuations (volatility). Stablecoins on the BSC ecosystem include:
- BUSD: Is a Fiat-backed stablecoin created by the partnership of Binance and Paxos. Although it was only launched in 2019, BUSD has a market capitalization of up to 12 billion dollars (Rank #13). This shows that Binance knows how to apply BUSD to the ecosystem and increase the demand for BUSD among DeFi users.
- VAI: This is a Crypto-backed stablecoin created by Lending Venus platform, similar to MakerDAO (MKR & DAI).
- There are also Algorithmic Stablecoin projects, but they are not very popular and have not had a big impact on the entire DeFi space of the BSC system.
Projects working in the Stablecoin array
AMM DEX Liquidity
AMM DEX are decentralized exchanges according to the automatic market-making protocol, ie with this mechanism, we will not have a seller, but instead, a smart contract will act as an intermediary, who Sell assets into a place called a liquidity pool, then buyers will swap their assets with assets in the pool through a smart contract.
Featured AMM DEXs on BSC include:
- Pancakeswap: Since its launch so far, Pancakeswap has performed very well as a true Uniswap for the BSC system. There have been many times when Pancakeswap’s trading volume topped the DEX in the market.
- Other prominent AMM DEX: BakerySwap (specializing in NFT), DODO, 1Inch Exchange, MDEX,…
- Stablecoin AMM DEX: Ellipsis Finance, Belt Finance, Nerve Finance,…
You can see an overview of the entire AMM DEX Liquidity through the Infographic below.
Projects working in the DeFi array in the BSC system
Lending is one of the other key areas for increasing capital efficiency in an ecosystem. This field has proven its need through the Aave project, MakerDAO on Ethereum.
- Venus (XVS & VAI) is the most prominent project in the BSC system with TVL ranked #2 only after PancakeSwap and has the same operating method as MakerDAO.
- There are also other projects noticed by Binance such as: Alpha Finance, Cream Finance, EasyFi, ForTube,…
Projects operating in the Lending array in the BSC ecosystem
Launchpad is one of the focus areas to help attract money flow and users from other ecosystems, because this is one of the fastest ways to bring profits with low risk if you find a project. good.
In the recent uptrend, you have seen that Launching platform projects have been active. In just 3 months, the BSC system has had more than 25 projects, more than any other ecosystem including Ethereum.
It also includes:
- Projects from other fields: PancakeSwap, ApeSwap, DODO,…
- Projects from other systems: Polkastarter, DAO Maker,…
Overview of Launchpad projects on the market
Yield Aggregator is one of the areas that users are very interested in because they can optimize profits by different methods. The appearance of Yield Aggregator is also a sign that Protocol Layer applications have grown very steadily, especially AMM Liquidity projects.
Here are some outstanding projects such as Pancake Bunny, Autofarm,… In which, Beefy Finance is a project launched on 5 different ecosystems, and is one of the Platforms with the most diverse Vault Farming.
Active projects in the Yield Aggregator array in the BSC ecosystem
From the end of May 2021 up to now, the BSC system is focusing its resources on NFT projects a lot, this is the preparation step for Binance’s NFT Marketplace this June.
It can be said that BSC is one of the systems that have filled the NFT stack, including Infrastructure, Gaming, Collectible, NFT marketplace,… However, I will summarize them into two arrays.
- NFT Issuer: The platform that creates NFT products. For example: BakerySwap, Bondly Finance,…
- NFT Marketplace: NFT (combined DeFi) trading platform. For example: Bounce Finance, Treasureland,…
However, the NFT trend did not receive much attention from the community. By the end of July 2021, the Game segment in BSC has applied NFT and combined them with DeFi to create a new trend, called GameFi or Play to Earn.
GameFi has made the BSC system vibrant in a short time, notably a number of games such as CryptoBlade, MyDefiPet, Mobox, X World Game, Faraland,…. most of them have a growth rate of over 1,000% or more.
However, GameFi was quickly forgotten because everyone who played GameFi originally wanted to Earn from Game, but during that time, DeFi TVL of BSC system did not grow at all, which shows no cash flow. New in, so GameFi is sinking again even though they get a lot of support from Binance Smart Chain.
The last trend to be born was Metaverse, this is a trend that received great support from CZ – the tycoon behind Binance. GameFi and NFT projects quickly added the “Metaverse” label to their projects.
However, to achieve Metaverse technology, it takes a combination of many areas from hardware to software and certainly no project has reached the level of Metaverse at present. The most advanced still only stops at VR & AR technology to create its own virtual space.
The field of Metaverse certainly has a lot of potential, but to do that, projects need to receive more support.
Projects working in the GameFi & NFT array in the BSC ecosystem
Security issues of the Binance Smart Chain ecosystem
Along with attracting a large number of users and developers, Binance Smart Chain also attracts the attention of hackers. Since April 2021 until now, the BSC ecosystem has experienced a total of nearly 20 hacks with a total loss of up to 437 million USD.
The most prominent hacks in the BSC system since the beginning of 2021.
Most of the cases of hacking are caused by two reasons: Flashloan and Exploit Smart Contract of the project. This has caused great concern to the user community participating in DeFi in the Binance Smart Chain system.
Attempts to resolve from BSC
Therefore, Binance Smart Chain has continuously increased security by cooperating with many Audit units such as CertiK.
In addition, Binance has launched the “Priority ONE” program, allowing whitehat hackers to find vulnerabilities and split rewards up to 10 million USD. Currently, Binance is supporting debugging on the previous 30 dApps and will expand to 100 dApps in the near future.
Binance Smart Chain’s PRIORITY ONE Program for White Hat Hackers.
If you look more objectively, most users do not lose capital because the project has a plan to prevent risks. However, the majority of tokens representing the project have a very heavy discount.
Pancake Bunny (BUNNY) has dropped more than 20 times its original value ($230 ⇒ $11) after the hack.
I have some tips below to minimize the risks when participating in DeFi:
- Create multiple wallets to store capital, transfer assets to new wallets periodically.
- Farming capital allocation on various platforms.
- Check the credibility of the project through multiple evaluation channels.
Future projections of the Binance Smart Chain system
In terms of DeFi, the Binance Smart Chain system has worked very well when the projects have high users and TVL. However, the projects seem to have grown “max room” and are showing signs of saturation. Therefore, the growth rate of TVL and the number of new users is not as much as in March 2021.
This is the stage when users in the BSC system will eliminate inefficient projects and wait for new elements of the game.
NFT & GameFi + Metaverse
NFT + GameFi + Metaverse is the trio that Binance Smart Chain has focused on in recent times. However, in order to develop perfectly, they need further investment on the part of Binance Smart Chain.
The good news is that between July and August 2021, after BSC announced that it would support GameFi projects, they received a lot of attention from the community.
GameFi is the segment with the strongest growth in the number of wallet addresses.
Above is a statistical chart of active wallet addresses by category, you can see the strong growth of the pink patches, representing the number of wallets participating in Gaming platforms in the ecosystem BSC state.
The 2-dimensionality of GameFi platforms compared to the 1-dimensionality of the NFT.
Up to now, Gaming is having more prominent marks than the NFT segment. Perhaps for this reason, Binance also focuses more on GameFi projects. because it has a two-way interaction between the community and the community, and the community with the platform instead of just one-dimensional like the NFT array.
In fact, I cannot comment on the distant future because the crypto market changes so quickly. However, I still have great faith in the vision of the BSC team because they have the ability to catch trends very quickly and operate them very well. You can watch the events below:
- 2017 Trend ICOs ⇒ Binance converted them to IEOs in 2019 and are still doing well to this day.
- 7/2020 DeFi in Ethereum ⇒ Binance launched BSC in September 2020 and caught up to Ethereum DeFi scale in about 5 months.
- 2021 trends NFT, GameFi, Metaverse ⇒ Binance all caught up very quickly in just 1 week.
Therefore, I will not try to predict what they will do, instead I will try to enter the market with solid knowledge for each trend.
Investment opportunity in the Binance Smart Chain ecosystem
Invest in tokens
Tokens of the Binance Smart Chain Ecosystem
According to CoinMarketCap statistics, the number of tokens belonging to the BSC system is very large, up to 200 tokens and divided into different fields. Currently the entry point is not as good as early 2021.
However, if you are a long-term investor, this is a much lower price than before the market crash on May 19, 2021 and December 4, 2021. This means that the position at the moment is much better than at the beginning of May 2021.
From a personal perspective, you should invest in tokens belonging to the leading projects of key fields because these will be the projects with the most potential to deploy new products as well as the first attention when The market is vibrant again.
- AMM Liquidity: PancakeSwap (CAKE), 1Inch Exchange (1INCH),…
- Lending: Venus (XVS), Alpha Finance (ALPHA),…
- NFT: BakerySwap (BAKE), Dego Finance (DEGO),…
Participating in IDO projects
Participating in the IDO sale
Joining IDO is one of the ways to earn profits with low risk if you find a good project. Below is the ROI of projects launched on PancakeSwap.
The projects all have quite good growth and bring positive ROI despite the recent crash on May 19, 2021. Some prominent IDO Platforms in the BSC system: PancakeSwap, Polkastarter, KickPad,…
ATH ROI of projects opened for sale on Pancakeswap
Buy and hold coins of the IDO platform
In the uptrend, buying tokens belonging to IDO platforms is one of the wise decisions. Most of the good launchpad tokens go up in price because:
- The demand to buy tokens to participate in IDO increases.
- The number of tokens required to participate in IDO often increases.
Therefore, when holding tokens belonging to IDO platforms, you not only have profit but also have the right to participate in the sale with a high growth probability.
However, when the market is not clear of the current trend, IDO token is not a wise choice. Because most projects usually won’t open for sale when the market is not excited.
Launchpad projects in the crypto market
Join Farming, Staking, Lending
Most of the tokens in the BSC ecosystem can be Farm, Stake or Lend to increase assets. Their mechanism is quite similar, you need to know how to use a non-custodial wallet to deposit your assets into the project’s Vault or Pool.
Here is a popular background:
- Lending: Venus, Cream Finance, ForTube, Alpha Finance,…
- Farming: PancakeSwap, BakerySwap,…
- Yield Aggregator: Beefy Finance, AutoFarm, Value DeFi, Acryptos,…
This is the main method for long-term holders, please see more details in the article below. The article will be more specific and lead to tutorial articles for you to easily manipulate.
Read more: 7 ways to optimize profits for Crypto Holder
I will summarize some key points about the Binance Smart Chain ecosystem through the outlines below:
- Binance Smart Chain is an ecosystem with diverse products and spread evenly DeFi Stack ⇒ Attracting many users and developers to BSC.
- The DeFi sector is showing signs of saturation and there are no breakthrough products yet ⇒ TVL’s growth slows down.
- Users show no sign of leaving the BSC system, they are waiting for the “trend” of NFT from the big giant Binance ⇒ NFT could create a short bullish wave.
- Invest with a long-term vision in tokens of the BSC system ⇒ Choose the most prominent projects in key industries and participate in asset optimization methods.