I. Introduction to the Binance DeFi ecosystem
Decentralized finance (DeFi), an emerging financial technology, is constructed on cryptographically secure distributed ledgers similar to those utilized by cryptocurrencies. DeFi makes traditional financial institutions a competitive option by doing away with the requirement that customers pay any form of fee in order to gain access to their own money. Anyone who has access to the internet may use DeFi to store their money in a secure digital wallet, make rapid international money transfers, and pay their bills all from the convenience of their own home.
The bear market slowed down the velocity of transactions involving decentralized financial systems. In spite of this, there is still a significant amount of protocol development taking place on leading ecosystems such as the BNB Chain.
Binance, which holds the number one spot in the cryptocurrency market, has developed its own ecosystem, named Binance Smart Chain. Despite being constructed later than other ecosystems, Binance Smart Chain has quickly attracted funding, initiatives, and users since its inception.
Binance Chain and Binance Smart Chain, two blockchain platforms released by the world’s largest cryptocurrency exchange in 2019 and 2020, were rebranded as BNB Chain in February 2022. The BNB Chain team explains that they are no longer affiliated with the Binance exchange, but they want to strengthen the BNB token’s position as the primary medium of exchange on the network.
Even in the presence of censorship, Binance’s BNB Chain can function as a blockchain because it is community-driven and decentralized. It consists of the BNB Beacon Chain, which is compatible with EVMs, as well as the BNB Smart Chain, and it is able to handle a wide range of chains. The concept of MetaFi will serve as the foundation for the infrastructure that BNB Chain aims to develop for the world’s first parallel virtual ecosystem.
BNB Chain is an acronym for “Build and Build,” which is taken from the names of Binance’s two different blockchain efforts. In 2022, BNB Chain lagged behind Ethereum for most of the year. According to DeFiLlama, the locked value of BNB Chain is currently estimated to be about $4.8 billion. To be fair, this is in line with the bear market in general, which has caused prices to fall by nearly 80% from their all-time high.
Over the course of the past year, BNB Chain has seen a meteoric rise in popularity, propelling it to the position of the third most widespread DeFi ecosystem. Due to its high throughput, low fees, and fast transaction completion times, BNB Chain is often viewed as a low-cost alternative to Ethereum. As a result, well over a thousand applications and tokens have already been deployed on the platform.
II. Overview of the Binance DeFi ecosystem
Binance DEX and other decentralized exchanges within the ecosystem
The rising popularity of cryptocurrency has had a major effect on the market for purchasing, selling, and keeping crypto on hand. Therefore, selecting a reliable, secure, and reasonably priced trading platform is crucial. In this gathering, Binance DEX is the name to remember.
In 2019, Binance introduced a decentralized cryptocurrency exchange called Binance DEX. Binance DEX eliminates the need for third-party intermediaries when exchanging cryptocurrencies, listing new tokens for sale, etc., between users’ personal wallets.
With more than a hundred different cryptocurrencies listed and available for trading at the time of writing, Binance is a cryptocurrency exchange that runs on its own blockchain and is fueled by its own cryptocurrency, BNB. Due to trading limitations, Binance DEX is now unavailable in 29 countries. This includes the United States.
Many users have expressed gratitude for the platform’s security, quickness, and ease of use. Anyone who has transacted on decentralized exchanges like EtherDelta or Idex will find Binance DEX to be intuitive and simple.
But what really sets Binance DEX apart from the competition is that it has its own chains and is backed by Binance’s extensive community ecosystem.
In order to connect to Binance Chain’s vast network, the Binance DEX exchange now provides users with secure and high-quality hardware and software wallets. Coinomi, Ledger Nano S, Exodus, Atomic Wallet, Trust Wallet, Infinito Wallet, Enjin, Guarda, and many others are just a few of the numerous high-tech wallets compatible with this platform.
BNB is the first currency used on Binance DEX to buy, sell, and trade tokens and other coins. At the same time, BNB is a coin that has many incentives on Binance DEX and lowers fees than other coins.
Despite this, PancakeSwap is the most popular DEX on BNB Chain due to its higher trade volume and superior TVL.
On PancakeSwap, the current TVL is over $2.2 billion. PancakeSwap’s TVL has dropped by nearly 60% from the beginning of 2022 ($5.58 billion). When compared to other native DEXes like TraderJoe or Ref Finance, this exchange is superior and on par with UniSwap’s (about 58%).
Currently, BNB Chain remains the primary focus of TVL on Pancake. This DEX uses multi-chain technology on Aptos and Ethereum, but thus far, it has yet to have much of an impact. Although Pancake’s trading volume has declined significantly since the beginning of 2022, it still exceeds $100 million daily.
Other DEXes within the Binance ecosystem are 1inch.exchange, AirSwap, DexGuru, Dodo, KyberSwap, Matcha, Multichain, OpenOcean, ParaSwap, Slingshot and SushiSwap.
Binance DeFi products and services
More than a billion US dollars in TVL in Lending on BNB Chain are still held by the Venus project, with over 43% of the total TVL being used to lend (around 432.5 million USD).
On Venus, USDT, USDC, BUSD, and BNB are among the most borrowed assets. The current annual percentage yield (APY) range for lending assets on Venus is 2% to 5%.
Venus Protocol is performing admirably in terms of capital efficiency, with an efficiency of around 43%. The results for other major lending protocols like MakerDAO or AAVE are only slightly better, at 52% and 50%, respectively.
At present, Ankr has the highest TVL of any staking solution on BSC, at over 73,000,000 USD. Still, this sum is negligible in comparison to the entire amount of BNB being staked.
As of this writing, the total worth of BNB being staked is approximately $5.7 billion, according to data on BNB Chain. That means that the total amount of BNB staked using Ankr’s method is merely 0.0013%. This is an extremely low total. This demonstrates that people still need to trust BNB Chain’s liquid staking options fully.
GameFi has consistently been one of the most rapidly expanding sectors of BNB Chain because of its low transaction prices, high transaction processing speed, and vast user base.
When compared to other ecosystems, BNB Chain clearly has the most active and engaged users. Despite the fact that GameFi is no longer fashionable, BNB Chain has a steady user base thanks to its many benefits and continues to draw new projects to its ecosystem.
In contrast to Ethereum’s focus on well-known collections, the primary inspiration for the development of NFT on BNB Chain has been GameFi (games that involve trading, selling, or purchasing things or characters). So, in 2022, when GameFi has many problems, and prices are dropping dramatically, NFT on BNB Chain also has many issues.
The top three are Ethereum-based markets (OpenSea, LooksRare, and x2y2), with Polygon-based Magic Eden (also a marketplace) rounding out the top four.
III. Key players in the Binance DeFi ecosystem
Since every day, there is a new project set up on the Binance DeFi ecosystem; there have yet to be any concrete statistics available. It is estimated that around 450 projects fall under that category.
DeFi (DEX & Liquidity): more than 150 projects
NFT: more than 80 projects
Lending: more than 25 projects
IDO Platform: more than 15 projects
An automated market maker protocol employs algorithms to determine a token’s price at the time of purchase. In AMM, the smart contract will play the role of a middleman instead of a seller. The assets of the seller will be placed into the liquidity pool, and the assets of the buyer will be exchanged with those of the pool via a smart contract. Binance Smart Chain’s highlighted AMM projects are:
– Token-swapping platform Bounce works in a manner analogous to Balancer.
– PancakeSwap AMM is based on a model not dissimilar to Uniswap; it employs the mechanism of incentivizing users through Liquidity Mining.
– DODO A comprehensive Dex to eliminate trading risks is formed when AMM is combined with Oracle.
Some additional great AMM initiatives on BNB include ApeSwap and BakeSwap.
The value of an underlying asset is used as the basis for creating a product known as a derivative. Traders on this platform don’t need to own the things they’re trading because they can buy and sell vast quantities. The spread and resulting price movement of that underlying asset will be the source of the profit margin. Binance Smart Chain is showcasing the following Derivative projects:
– MCDEX is an Ethereum-based decentralized derivatives exchange that intends to integrate with the Binance Smart Chain.
– Hedget is a mechanism for creating options tied to a certain asset. After the vote was passed, Hedget began incorporating more BSC.
When it comes to real-time data governance for blockchains and smart contracts, Oracle is unrivaled. Oracle allows blockchain and smart contracts (on-chain) to communicate with off-chain information (off-chain). Binance Smart Chain’s highlighted Oracle projects are:
– Oracle’s market-leading Chainlink platform has connected with Binance’s Smart Chain infrastructure.
– When looking at the market cap, Band Protocol stands out as Chainlink’s main competitor in the Oracle space. Binance Smart Chain was just integrated with Band Protocol.
– Gravity is an Oracle Network that spans many chains and has implemented Binance Smart Chain.
Lending is the practice of lending one’s assets or money to another party (the Borrower) at an agreed-upon interest rate. The principal and interest are paid to the property owner at the end of the loan term. Other users or institutions like exchanges can act as borrowers. Binance Smart Chain’s most notable Lending projects include:
– Venus is a Defi Platform built on the Binance Smart Chain that facilitates the lending and borrowing of certain crypto assets and the minting of stablecoins using a variety of other crypto assets.
– Fortube: A Lending Platform developed by The Force Protocol.
– Kava Labs’ Hard Protocol is a lending-focused decentralized application (dApp).
Investors & Partnerships
Regarding supporting its platform, Binance Smart Chain has a wide variety of collaborators. A few famous collaborators (not counting dApps built on BSC):
– Security: CertiK, Quantstamp.
– Oracle: ChainLink
– Binance Smart Chain Wallet: Coin98 Wallet, Math Wallet, Trust Wallet, etc.
IV. Binance DeFi development tools
Resources for developers building on the Binance DeFi ecosystem
– Venly: Wallet creation by social accounts.
– Sequence.app: Wallet creation by social accounts.
– Web3Auth: Wallet creation by social accounts.
– BSC Connector: This code snippet shows how to implement a specialized connector for use with the Binance Chain Wallet.
– NodeReal: Completely optimal Web3 infrastructure.
– Ankr: Ankr connects developers with a unified network of nodes across the globe that operate on 18 distinct blockchains.
– Chainstack: Chainstack’s tools and APIs are used by hundreds of companies of all sizes to develop, manage, and expand blockchain-based applications.
– NowNodes: Access over a thousand other coins and tokens in addition to the 40+ blockchain networks (such as BTC, ETH, and BSC) that your crypto API provides you with.
– QuickNode: They simplify the process of developing blockchain applications and enable their scalability. Everything you need, from flexible APIs to robust tools and analytics, is at your fingertips via a single dashboard.
QuickNode makes it ridiculously easy to boot Binance Smart Chain nodes with clients. The easy-to-use interface allows you to get links in the chain via WebSocket-based APIs that accept JSON-RPC requests. QuickNode also provides a robust analytics dashboard to track how your tokens are used and speed up your releases with features like 1-click WebHooks for smart-contract events, NFT, and ERC20 token APIs.
– BlockVision: BlockVision is an all-in-one dev platform and on-chain data retrieval portal with lightning-fast speeds and near-zero latency.
– Covalent: To make the billions of Web3 data points accessible, Covalent offers a uniform API.
– InfStones: The blockchain technology behind InfStones is extremely user-friendly.
If a blockchain protocol has been fully created and deployed, cryptocurrency transactions can be broadcasted, validated, and stored on the distributed ledger technology known as the “mainnet”.
With the mainnet of BNB Smart Chain, users can launch production-ready dApps on the BSC blockchain and conduct live financial transactions. Since this is the real deal, using the network will necessitate the purchase of actual BNB tokens.
The BSC mainnet can be accessed in a variety of ways. Becoming a complete node on the mainnet is one option. Connecting to the mainnet is also possible through the provided RPC endpoints. Direct communication with a node is possible via RPC endpoints using protocols like HTTP and Websockets. You can do things like broadcast a transaction or view the current state of the network or the consensus with RPC, all of which are low-level activities. Even online wallets like MetaMask employ RPC endpoints to communicate with the BSC mainnet.
The testnet is a network allowing developers to experiment with the BNB Smart Chain in a controlled setting. The BNB Chain development community manages it. The majority of the testnet validators are developers themselves.
V. Use cases for the Binance DeFi ecosystem
If you’re trying to buy DeFi or NFT tokens on Binance Smart Chain, your best decision is to put your money into promising companies with high valuations, well-known supporters, and promising development teams that can draw in plenty of customers and capital.
Here are a few examples of successful DeFi projects built on Binance Chain: PancakeSwap (CAKE), 1Inch Exchange (1INCH), Venus (XVS), Alpha Finance (ALPHA), BakerySwap (BAKE), and Dego Finance (DGO) (DEGO).
VI. Future outlook for the Binance DeFi ecosystem
To compete in the decentralized financial sector, Binance Smart Chain has the backing of Binance, the industry’s most powerful firm.
It is expected that the ecosystem will expand horizontally, bringing in a wide variety of decentralized apps, as more and more developers construct DeFi applications on top of BSC, and consumers continue to do the same. connect new and/or existing BSCs to the network.
A rapid rate of on-chain adoption in the first three months, fueled by Binance’s $100 million seed fund for developers working on BSC, makes it difficult to foresee the present growth trajectory slowing down soon.
Even though it’s highly doubtful that BSC will become a “Ethereum Killer,” the chain’s interoperability with the original smart contract platform, paired with its low transaction costs and fast settlement times, might make it a market leader in its own right for decentralized applications.
When it comes to market innovations, BNB is first to the punch. Particularly when led by Binance, emerging trends and ideas quickly become market mainstays. Binance is developing and releasing MetaFi as a new fad in the near future.
MetaFi’s future is also gradually emerging, but several applications are already clear. Users will have easy access to their identities and digital assets thanks to decentralized identity and reputation management systems, in which MetaFi will play a crucial part. But they’re all in their infancy and very early phases.
In addition, from January through April, the leading dApps and builders in the BSC ecosystem will be given a boost through a series of MVB Programs centered on the topic of MetaFi. There is no denying its significance in propelling development across the BSC ecosystem and the blockchain sector as a whole.
Thereby showing the ambition of Binance and BNB Chain is determined to build an unprecedented new ecosystem trend.
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