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Is Binance New Smart Contract Layer a threat to Ethereum?

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The New Binance Smart Chain To Be An Ethereum Killer?
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  • Binance recently published Smart chain whitepaper, the platform is expected to bring a competing impact to the crypto-market with the introduction of new projects.
  • Binance was perceived as a significant competitor to the Ethereum arena during its introduction in 2019.
  • Ethereum itself is considering moving to PoS soon, via an upgrade informally dubbed Ethereum 2.0.

According to a recent smart chain white paper published by Binance recently, the platform is expected to bring a competing impact to the crypto-market with the introduction of new projects. Binance was perceived as a significant competitor to the Ethereum arena during its introduction in 2019. However, the platform lose to create a mark in the field due to the lack of an important feature that defines blockchains, viz. smart contracts.

The circumstances of this condition has been modified with the new Binance Smart Chain (BSC) that is proposed in the white paper. The feature was kept aside during the introductory stage for two reasons. Firstly, the introduction would have accompanied risk factors with it, thereby threatening Binance DEX. Secondly, the competing advantage of Ethereum would make it nearly impossible for a new platform like Binance to gain traction. 

What makes it better?  

The Binance Smart Chain launch is a standalone blockchain that can function independently to that of the Binance Chain. The new blockchain is reported to be embedded with a matching engine capable of executing fast trade transactions and a new consensus mechanism designed to combine quick confirmation times with strong on-chain governance.

The efficiency produced by the platform is predicted to outrun the Ethereum masterpiece itself, according to the whitepaper. The platform utilizes a Proof of Authority in addition to Delegated Proof of Stake hybrid consensus. This addition is said to increase the productivity of the platform to the next level. The platform is reported to work at a speed of 5 seconds block times and about 75 seconds finality, something which can be accounted for quite fast. Meanwhile, on a side note,  it is a fact that Ethereum itself is considering moving to PoS soon, via an upgrade informally dubbed Ethereum 2.0.

The platform is suggested to provide a user-friendly experience to its customers when compared to Ethereum, where scalability limitations have sometimes created bottlenecks leading to expensive transaction fees and extended confirmation times. 

Will it outrun Ethereum in the long run?

Though Binance does not express their competing intentions, the white paper hints the new smart contract layer could perform better on several key metrics. Indeed all Ethereum based applications run on the platform. However, all the payments shall be made through BNB rather than ETH. There exists a cross-chain interoperability between Binance Chain and BSC for the reason that any tokens can be immediately traded on Binance DEX. Adding on to the above, it needs to be emphasized that there is a high probability for Ethereum itself to run its future applications in the BSC platform, a forecast made keeping in mind the potential of the said platform.

Comments from the alleged competitor

However, at the onset of the introduction, Binance spokespersons stated that the platform would work harmoniously with Ethereum (by providing a suitable environment for the platform) to produce an efficient infrastructure, thereby increasing the productivity of the Blockchain ecosystem. One of the main problems that Binance has to confront is that it becomes a herculean task to convince existing dApps to move away from Ethereum. The process can be long and exhausting. Developer teams have to familiarize themselves with a new protocol and codebase. With all that, there is no surety that existing users will opt for the new platform.

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