Cryptonomics: How to Avoid Ethereum Gas Fees, Can Binance Smart Chain Replace ETH?

Users are showing that key elements to the ETH network, like decentralization, are interchangeable for ease of use and cheaper fees.

By
Kyle Heise
on
June 29, 2021
Category:
Cryptonomics

Synergistic Chains?

The gas fees on Ethereum are out of control. The high barrier to entry seems daunting for many newbies to Decentralized Finance (DeFi). To be a significant player on the Ethereum chain, you must be a big player. For this and other reasons, alternatives to Ethereum have emerged. Ethereum, as the largest blockchain, still swings a big stick in the industry, but chains like Binance Smart Chain (BSC) and Polygon [Matic] are quickly carving out a more accessible foothold into the world of DeFi. 

BSC emerged as a modified hard fork of the Ethereum chain in September 2020. Its arrival has been hailed as an “Eth Killer” by some. Although birthed from a similar entity, the chains have important differences, leading many users to jump cross-chain and adopt BSC. So much so, that BSC has been the fastest growing chain in DeFi over the last few months and has seen record volume numbers. So far, the chains have been seen to be synergistic, offering more throughput for the whole of DeFi. With the influx of users on BSC it is apparent the chain has helped from increased congestion on ETH.

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Why Switch to Binance Smart Chain 

At its core, BSC is a cheaper and more efficient version of Ethereum. Many tokens are compatible with both ETH and BSC networks. Using tokens on BSC is smarter than Eth due to the low fees. These low fees afford users more opportunities to move funds around while investors worry less about high gas fees. 

BSC is also attractive for protocols that have similar liquidity but less slippage than Eth. A decentralized exchange like Pancakeswap has comparable liquidity pools to UniSwap on Ethereum. The tokens available on BSC are pegged to those on Ethereum. It’s almost a no-brainer to hold assets in the cheaper, more efficient system, at least for now. 

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Fast and Furious

One of the main attractions of BSC is the fees or lack thereof. Transactions fees on BSC are mere pennies compared to the scores, often hundreds, seen in fees on Ethereum. The high fees on Ethereum are not worth it when they are higher than the assets being traded. 

This also opens up the ecosystem to cheaper and more accessible Non-fungible tokens (NFTs) and retail options. Binance has just launched their own NFT marketplace complete with 100 unique creators that should rock the NFT world. The launch will include the first Esports NFT as well. Esports is a niche Binance hopes to grow as well. 

The reasons for the low fees come from the number of validators of the chain. On BSC, there are only 21 validators on the network versus the over 90,000 or so on Ethereum. BSC is a far more centralized protocol. This centralization is contrary to the common denominator of ‘decentralized finance.’ This has lead to the term CeFi, or ‘centralized decentralized finance.’ Efficiency and decentralization appear to be negotiable for crypto investors as the tradeoff. 

Users can now switch their assets over cross-chain easily as well. Cross-chain bridges, like the Binance Bridge. Swaps are fast but should be done with care. The reasons are plentiful to be jumping over to BSC right now. The NFT Marketplace is open and APYs are through the roof.


Crypto is Fickle

It may seem like it, but the Binance Smart Chain was not meant to replace the Eth chain. CZ, the CEO of Binance, expressed this in a Tweet in February. BSC would not exist without Ethereum and the path is paved. It is still way too early to count Ethereum out, especially since Ethereum 2.0 is coming. But the longer fees on Ethereum stay sky high, it is impossible not to see BSC as the chosen alternative. 

For the time being, BSC appears the most cost-friendly and efficient way to engage in DeFi. The massive growth seen on the chain is undeniable and appears here to stay. Crypto is fickle and users should not even get complacent with BSC. More chains like Polygon and Solana have emerged as potential Eth “slayers” as well. It’s safe to say the DeFi growing pains are just beginning.

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Kyle Heise

Born and raised in the East Bay of California. He has studied and worked on three continents and lived in eight countries. Kyle resides in San Francisco. Go Giants!

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