"Big but not strong": On BSC's Dilemma, Future and Opportunities

Binance Smart Chain (BSC) has been successful, but it’s not hard to feel it’s getting sidelined. From stablecoins, Bribe, derivatives to the recent liquidity staking, many hot spots in the past year have little to do with BSC. The version of BSC seems to be stuck two years ago, and its innovation ability is still weak. "Big but not strong" is the best interpretation of the current situation of BSC. Why is this so? What opportunities will BSC's recent move to "reform and open" bring? And see below:

The reasons why BSC is currently stepping into the swamp can be boiled down to:

1. Isolationism: Playing on your own, reinventing the wheel, you can’t keep up with the rhythm in a bear market
2. Unstable foundation: Under the trend of complex DeFi portfolio, the impact of gaps in infrastructure projects is exponentially magnified
3. Competition is out of order: the relationship with Binance is more important than the team's ability, bad money drives out good money, further deteriorating the ecology

Isolationism: At first glance, BSC TVL is still good, but comparing ETH and BSC’s DeFi head projects, it is not difficult to see that BSC lacks in stable currency, liquidity pledge, and Bribe, and the centralized liquidity on DEX is also developing slowly , Venus on Lend has not even dealt with bad debts. BSC's long-term isolationism has not actively introduced mainstream projects, but supports local Fork, and resources are scarcer under the bear market, and the market is not interested in reinventing the wheel, which makes BSC unable to keep up with the rhythm of relying on Fork projects.

Unstable foundation: At the moment when the development of DeFi is gradually maturing, most new projects will use the existing project portfolio when they are launched, which is the so-called standing on the shoulders of giants to see far. Taking the cutting-edge projects on OP and Arbi as examples, the OP -based options platform Lyra is built on the basis of the synthetic asset platform SNX , and SNX ’s atomic swap involves three-party collaboration: Curve provides Stableswap, and SNX provides synthetic assets and predictions machine transactions, and OP provides mining incentives on Curve.

Not long ago, Rage_Trade, a stable currency income product, was launched on Arbi, which is also built on the three protocols of GMX, Uniswap, and AAVE . Although GMX is the most important foundation, the high efficiency of AAVE V3 and the safety and reliability of AAVE are also indispensable. If this is done on BSC, GMX Fork will not be able to reach the scale, Pancake's low efficiency and Venus' unresolved bad debt threat will become important obstacles.

Innovation under such a complex combination will exponentially magnify the disadvantages of BSC, which is slightly inferior in almost all important links. Assuming that the risk of the BSC Fork project is twice that of the mainstream project, then the project that relies on the combination of 3 projects will bear 222 = 8 times the risk. In addition, BSC forked the code, but forked the team, and the difference in team capabilities determines that the gap will widen in the long-term iteration.

For example, Lido/FRAX and Curve/Convex built a LSD competitive ecosystem on ETH . BSC also tried to support ANKR and Wombat to build a complete ecosystem of LSD, stable coins, and Bribe, but what was the result? Binance’s focus on supporting the infrastructure-level project ANKR ’s team is poor in ability and conduct. Not to mention the flaws in the contract design, it also guards against itself. In the end, it turned into a clown and stabbed the opponent who jointly built the liquidity pool, successfully bankrupting this grand plan. The picture below is "24 Filial Piety: ANKR Bell to BSC"

Competition disorder: In the above plan, Wombat is a DEX that allows single-currency pledges. ANKR , ANKR , and Stader jointly built an LSD liquidity pool. The family only pays half. At the right time, only ANKR was listed on Binance among the three, and Binance's support is naturally capable of coping with the crisis. The other two were small and unable to deal with ANKR backstab, and were sadly out of the game. The classic bad money drives out the good money. That is to say, the relationship with Binance basically determines who is the winner. Compared with the projects that have experienced market competition, there is a gap in team ability between the projects selected in this way.

(The picture below shows the changes in BNB LSD TVL in the month of each crisis. ANKR fell by less than 30%, while the other two fell by 60%/80%.)

Recently, the BSC team has frequently released signals towards "reform and opening up", and promoted the "introduction of foreign capital" either explicitly or implicitly, throwing an olive branch to mainstream projects such as GMX and Uniswap. If BSC is completed in terms of infrastructure-level projects in the end, although BSC has centralization problems, the strong support brought by Binance is enough to make it a piece of the next round of bull market. The introduction of these mainstream projects is as important as the last round of BSC supporting EVM, the previous round of projects built on top of EVM, and the next round of projects built on top of this round of infrastructure projects.

If this matter can be achieved, it will naturally bring opportunities for innovative projects to BSC, coupled with BSC's unique traffic and other advantages, it has a relatively large imagination. However, although this is good for the development of BSC, for Binance employees personally, launching new projects will bring greater benefits; for mainstream protocols such as GMX , the community also has certain differences on whether to deploy to BSC. There are still many difficulties in the reform.

To sum up, at a time when innovative projects are increasingly dependent on combinations, BSC under isolationism has stepped into a swamp due to unstable foundations, and turning to reform and opening up may make BSC Great Again. It will take some time for this day to come, so continue to observe the opportunities patiently.