2021 was clearly the year the Binance Smart Chain took off. In the following we analyse the progress that was obtained by the BSC so far and take a look at what to expect from the future.
Total Value Locked
TVL (Total Value Locked) on the BSC increased from 400 million USD to 35 bn USD in 2021. The growth of TVL was impressive with PanCakeSwap and Venus emerging as the dominant protocols on the BSC.
In May we entered a consolidation period in terms of TVL. This consolidation became necessary to keep the growth of TVL on the BSC sustainable. The growth was so explosive in Q1 that eventually the TVL on the BSC started to approach the TVL on Ethereum.
If you remember Ethereum’s DeFi summer 2020 then you should also be aware of what followed afterwards. TVL on Ethereum stagnated for around one quarter after the peak of DeFi in late September 2020. It is therefore obvious that the growth of TVL on the BSC won’t be linear either.
Number of Active Addresses
The daily active BSC addresses peaked on April 21 before experiencing a cool off phase. However, in May the active addresses count started increasing again:
The fact that active BSC addresses are still growing despite this number almost being on par with Ethereum is a bullish indicator. It lets us conclude that the BSC still has tremendous momentum on its site. Therefore we can expect significant upside from the price of $BNB and the BSC’s leading protocol tokens such as $CAKE or $XVS.
Another way to visualize the growth of addresses is to look at unique addresses on the BSC. By doing so you are able to observe the parabolic growth the network has undergone in February 2021:
Transaction Fees
Transaction fees are what have caused enormous attention on the Ethereum network as fees started to approach levels at which transactions for ordinary users became inaccessible. Transaction fees on the BSC in comparison are still manageable and expressed in Gwei have not increased considerably. However, since gas on the BSC is priced in $BNB and $BNB appreciated significantly against the USD gas prices in USD terms have also considerably increased on the Binance Smart Chain.
$BNB Performance
$BNB iterated from being only the exchange token of the Binance Exchange to being additionally the network token of the Binance Smart Chain. Its value increased since the beginning of the year by almost a factor of 20 due to the impressive traction of the BSC.
Since the adoption of the BSC is still ongoing and the overall metrics look healthy it is only a matter of time until $BNB will reach 1,000$ per coin. That said, not all of the tokens on the BSC have reasonable token economics and it remains to be seen which BSC protocols will end up as the market winners along with $CAKE and $XVS.
Conclusion
Demand and network activity on the BSC have entered into a consolidation period in Q2 2021. However, a consolidation became necessary after the astronomic rise of the BSC in Q1 2021. Since the most important metrics on the BSC remain bullish it can be assumed that yet another high growth period for the BSC should start in the next couple of weeks. $BNB, $CAKE and $XVS will clearly be among the winners of the next growth phase.
