The development journey of the BNB Chain platform (Part 2)

• BNB Chain Ecosystem
• Current status
• Ecosystem
• Competitive landscape
• Development roadmap
• Conclude

BNB Chain Ecosystem

Current status

Like many other Layer 1 smart contract platforms, BNB Chain has experienced exponential growth throughout 2021. However, similar to other platforms, this ecosystem has depreciated in value approximately 60% as of now. 

Daily revenue has also fallen from about $4 million at the end of 2021 to just about $1 million recently. Despite the drop in average daily revenue, cumulative revenue has taken a larger share of the value of BNB Chain. This relationship signals that fundamentals such as cumulative revenue are closing the gap with the value of the network.

You may be interested : BNB Chain Platform Development Journey (Part 1) .

The trading volume of BNB coins on exchanges has decreased along with the decline in value and revenue. The top three trading pairs by volume are trading on Binance (USDT, BUSD) and FTX (USD), which currently account for about 25% of total BNB trading volume. 

Although the trading volume has decreased, the liquidity of BNB is still very well maintained. Its daily trading volume ranges from $100 million to over $1 billion.

Network usage as measured by daily transactions also tends to decrease. At the beginning of 2022, the network averaged around 6 million transactions per day. The current average of daily transactions is around 5 million, which is well below the long-term average during the bull market at the end of 2021.

In addition to financial metrics and network usage, the infrastructure of BNB Chain remains stable with 21 active validators. Although BNB Chain is decentralized, the network can still process transactions quickly with relatively low costs.

On the other hand, contrary to popular belief, none of the network's validators are operated by Binance. The seven validators, including those run by independent third parties such as HashQuark and CertiK, contribute to just under 33% of the network's total shares. 

According to nakaflow.io, BNB Chain has a Nakamoto coefficient of 7, which is average. BNB Chain can ensure its greater security and reliability by extending the validator set with inactive validators.

Ecosystem

The BNB Chain ecosystem has grown with its architecture. Throughout the years, the ecosystem has been constantly expanding and there are already a wide range of applications, infrastructure, wallets, and development tools on the network.

Notably, their development momentum stems from the launch of DeFi applications. More than 400 DeFi projects and around 1,400 projects are built on the BNB ecosystem, showing how amazing the platform is. At the moment, BNB Chain is the second largest ecosystem after Ethereum in terms of total value locked (TVL) and number of applications running on the chain.

Immediately after the launch of BNB Smart Chain, PancakeSwap (CAKE) was born and it is now the most used application on the network to date. PancakeSwap is a DEX that uses an automated market maker (AMM) system. Since its launch, PancakeSwap's trading volume has surpassed $6 billion and raked in a TVL of over $6 billion at its peak. It is clear that BNB Chain's DeFi ecosystem is heavily dependent on the continued success of the DEX as it accounts for approximately 50% of the TVLs across the ecosystem.

Venus (XVS) also contributed to the initial growth. Venus is a synthetic stablecoin protocol and lending platform. Users can lend or borrow from any group of assets on Venus even without permission. Furthermore, interest on Venus is set by protocol and automated based on user needs. Venus currently accounts for about 10% of TVL in the BNB Chain ecosystem.

The third largest DeFi application on BNB Chain is Alpaca Finance. This is BNB Chain's first leveraged Yield Farming protocol . Lenders can earn interest and the protocol provides borrowers with capital efficient decentralized loans for leveraged yield farming positions. Alpaca Finance currently accounts for about 6% of the TVL of the entire ecosystem.

Despite the initial growth of the applications mentioned above and the DeFi ecosystem of BNB Chain, the TVL of this ecosystem has also recorded a decrease of 61% compared to the beginning of 2022.

Unlike the lagging DeFi sector , 2022 is a breakout year for BNB Chain's NFT sector. Both NFT secondary selling volume and unique NFT buyers have grown exponentially. NFT's activity on BNB Chain has shown that the development potential of this ecosystem is huge, despite the time of the market going down.

Competitive landscape

In this article we will benchmark BNB Chain's key metrics against the top EVM-compatible chains by TVL and DeFi protocol count. 

Compared to other chains, BNB Chain has outperformed in a number of financial, network, ecosystem and development metrics since the beginning of 2022. Notably, BNB Chain is less prone to decline in network value. and more TVL. 

Example: Since June 20, 2022, Ethereum has lost about 69% of the network value and TVL, while BNB Chain has only decreased by about 60%. Other notable metrics include BNB Chain's larger average daily number of new unique addresses, daily transactions, and verified contracts compared to its competitors. However, BNB Chain’s decentralized metrics are currently behind in terms of validators and stake distribution.

Ultimately, the key to BNB Chain's position above its competitors is the continuous development and expansion of the modular design, to provide developers with flexibility. in building custom sidechains. Implementing growth strategies will help BNB Chain maintain its position during a bear market.

Development roadmap

The next BNB Chain roadmap focuses on new innovations to make it easy for users, projects, and developers to connect with the BNB Chain community. This includes implementing growth strategies to drive large-scale applications in the areas of GameFi, SocialFi and Metaverse. 

In addition, the roadmap also includes the implementation of technical developments such as scaling solutions, boosting throughput of BNB Chain, and extending the validator set of BNB Beacon Chain and BNB Smart Chain.

Most notably, the BNB community plans to extend BNB Chain with solutions similar to Layer 2. Plans include the launch of Zk-Rollup for high-performance scaling and sidechains for solutions. blockchain solutions are more customizable. 

Furthermore, purported steps of BNB Chain are being taken towards greater decentralization. The development team intends to open-source the BNB Beacon Chain validator and introduce a different approach to both the election stage and the elected validators of the BNB Smart Chain.

Growing in this competitive market can come with challenges for many different networks. For BNB Chain, the barrier may not come from technology or strategy but could be due to regulatory issues. 

In early June 2022, Bloomberg reported that the SEC was investigating whether the BNB coin was an unregistered asset. It is important to note that BNB Chain is a public blockchain separate from Binance. However, it can still face many regulatory risks and challenges, as the exchange deals with BNB.  

The biggest challenge may be implementing growth strategies to achieve the set goals in the near term. As a result, BNB Chain and Binance Labs introduced the MVB V developer program, a BNB-focused program to help projects grow. MVB V incubator will start in July 2022 and last 6-8 weeks. This program is designed to help leading project teams deliver a useful product to users.

In Q4 2021, Binance announced the launch of a US$1 billion ecosystem fund. This fund is dedicated to four main categories in the BNB Chain ecosystem:

• Talent Development (allocated $100 million)
• Liquidity Incentive Program ($100 million)
• Developer Program ($300 million)
• Investment and Incubation Program ($500 million)

In summary, BNB Chain is planning to continue to grow its network and ecosystem. To do so, the platform will carry out technical solutions and sidechain development, and it will have to use the ecosystem funds and project development program as mentioned in this article.

Conclude

While Ethereum continues to redesign its architecture, the race for adoption and market share may be far from over for Layer 1 smart contract platforms. 

New use cases continue to require alternative solutions, and BNB Chain can continue to be one of those solutions. With an evolving architecture and implementation of Zk-Rollup and sidechain, BNB Chain promises to provide many additional value propositions to its large user base. 

If BNB Chain can successfully implement its plans, the platform will be better positioned in the race for Layer 1 market share, as one of the most valuable networks in the world. market.

As BNB Chain expands its user base with applications in new areas such as GameFi and Metaverse , technical and regulatory challenges may emerge on the journey. BNB Chain has specific strategies in place to address these obstacles.

While many Layer 1s like BNB Chain have grown exponentially in 2021, the market volatility and Bear Market in 2022 have put downward pressure on the usage and performance of projects on the platform. there. 

In order to stay afloat through such tumultuous times, BNB Chain is required to ensure network reliability and security. Although the network has introduced validators to ensure network reliability, using a small group of active validators can also introduce many unforeseen risks. 

Thus, to achieve that goal, BNB Chain is required to focus on building validators in the near future. After having a safe and sustainable network system, BNB Chain will continue to develop by connecting users and developers to gradually assert their position in the blockchain space.

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