The price of Binance Coin (BNB) exploded upward over the last 30 days, going up 560% from about $40 to a new all-time high above $340 before it started correcting. Crypto analyst and trader Nicholas Merten weighed in on its rise.
On a new DataDash video, first reported on by Daily Hodl, Merten told his 390,000 YouTube subscribers about the cryptocurrency’s meteoric rise over the Binance Smart Chain (BSC), an Ethereum Virtual Machine (EVM) compatible blockchain with much lower fees.
Demand for BNB has been going up as the decentralized finance (DeFi) space on the Binance Smart Chain has been gaining new users at a rapid pace, as most are trying ot escape the high fees seen on the Ethereum network.
As CryptoGlobe reported, BNB became the third-largest cryptocurrency by market capitalization, surpassing Tether’s USDT stablecoin and Polkadot’s DOT at about the same time PancakeSwap (CAKE), a leading decentralized exchange on the BSC, saw its trading volume surge to the point it surpassed that of Uniswap, the leading decentralized exchange on Ethereum.
Analysing whether the Binance Smart Chain could overtake Ethereum and become the go-to blockchain for smart contracts and decentralized applications, Merten pointed out the similarities between ETH and BSC, noting that it’s easy for developers to move an application from the former to the latter. He added:
The big difference here as well is that Binance Smart Chain in this case has a few select validators. Unlike Ethereum that goes through a mining process and has the thousands of nodes across the world in a very decentralized format, Binance is a lot more centralized. That’s not inherently a terrible thing immediately
As more assets are added to the network, he said, the greater the cause for concern. Fees are, however, “practically non-existent” on the Binance Smart Chain, which benefits from the influence of Binance over the network.
Ethereum may survive, he added, thanks to the implementation of layer-two scaling solutions which will “determine Ethereum’s dominance on the market when it comes to DeFi.” Major protocols like Uniswap have already been working on scaling solutions like Optimism, he highlighted.
Ethereum 2.0’s initial phase has also been launched, with the Beacon Chain now running alongside the main Proof-of-Work blockchain. The launch of ETH 2.0 is set to help the network process more transactions per second.
Looking at BNB’s price, which has since dropped to $260 at press time, Merten noted it looks exhausted but investors could add exposure to it, if they believe there’s at least a 10% chance of it dominating the DeFi space.