Hello Defiers! Here’s what we’re covering today:
BSC is blowing up but Ethereum remains DeFi king
Crypto market slumps sparks record liquidations
EulerBeats is latest NFT trend
Cosmos enables cross-chain transactions
Bitfinex & Tether settle with NYAG for $18.5M
and more :)
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TLDR The DeFi world is abuzz with the following question: Is Binance Smart Chain taking over Ethereum as the ecosystem’s base layer?
We looked at the numbers and the answer is not by a long shot —at least not yet— and this is assuming that BSC can actually be considered DeFi, which some Ethereum advocates will argue it shouldn’t be.
HOW DO THEY STACK UP Ethereum has 30x the number of unique addresses at almost 140M accounts, compared with BSC’s 5.2M, according to Etherscan and BSCScan. Ethereum processed $112B in transactions last month, compared with BSC’s $15B, according to DappRadar. Total Value Locked in DeFi is at $54B on Ethereum, or more than five times TVL in BSC, according to data compiled by The Block.
NODES MATTER The second cryptocurrency by market cap has about 10,000 nodes making up its proof-of-work network, while BSC has only 21 in its proof-of-staked authority network. Validators with the most BNB staked are elected as validators every 24 hours. This means Ethereum s more censorship-resistant while nodes on BSC can be more easily coerced or corrupted.
OPTIMIZING FOR SCALING The lower node count is by design. Binance, the world’s largest exchange by volume, wants to optimize for scaling with its network. Fewer nodes enable a faster and cheaper network.
HIGHER TX COUNT On the surface, it looks as though BSC’s daily transaction count has started dwarfing Ethereum’s rate by two to one. On Friday, BSC’s total transactions breached 3M according to BSCScan. By comparison, Ethereum daily transaction count has never been above 1.5M.
DEVIL IN THE SMART CONTRACTS Twitter user ChainLinkGod.eth has pushed back on Binance CEO Changpeng Zhao’s celebration of BSC’s success, pointing to a smart contract which has generated over 100K transactions in the last two days and over 750K total as an example of how the company may be manipulating the metric.
“The hundreds of thousands of failed transactions on BSC I posted about are from an PancakeSwap arbitrage bot with a very low success rate,” ChainLinkGod told The Defiant. “It appears to be inflating the transaction volume metric which is often used to promote the amount of user activity on BSC versus Ethereum.”
PANCAKESWAP PancakeSwap, an automated market maker (AMM) and fork of Uniswap, also briefly passed the latter to become the number one DEX in 24-hour volume terms on Feb. 19. The forked DEX now sits squarely behind Uniswap’s $1.6B mark with $1.2B of 24-hour volume.
WAITING FOR L2 Anecdotally some traders in The Defiant’s Discord channel said yesterday they are using BSC as they wait until Ethereum’s Layer 2 scaling solutions are more widely adopted among DeFi dapps. They plan on going back to Ethereum as soon as they can.
TLDR DeFi is in its biggest market rout of the year and borrowers are feeling the pain. Liquidations in decentralized finance spiked to a record $133B in the past day, according to Debank data.
ETH DIVES Liquidations were triggered by a 34% drop in ETH price from an all-time high of over $2k on Feb. 20, down to $1.4k at the time of writing, the lowest in three weeks, and the biggest three-day drop since September. ETH has dropped by more than 30% in a three-day period only eight times since 2016.
DEFI TOKENS DeFi tokens are following suit, with the DeFi Pulse Index also plunging 34% from its high on Saturday, to a three-week low. DeFi tokens declining by more than 30% in the past week include CREAM, KeeperDAO, BadgerDAO, NFTX, Hegic and Harvest Finance.
PERSPECTIVE Even after this correction, ETH is still up by 2x this year, and so are DeFi tokens measured in the DPI index, while Bitcoin is up by almost 70% YTD. After such a huge run-up, analysts and investors will agree this pullback was to be expected.
TLDR Cosmos’s Inter-Blockchain Communication (IBC) protocol, released last Thursday as part of the network’s so-called Stargate upgrade, enables token and data transfer across Cosmos-based blockchains.
SO WHAT With the launch, Cosmos goal of creating a universe of interconnected blockchains can now become a reality. Over $6B in value, of which $2.8B comes from the Terra blockchain, can now move freely across chains built with the Cosmos SDK, according to Tendermint, core contributor to the Cosmos Network
TLDR EulerBeats is a new NFT project that has emerged at the intersection of audio collectibles and algorithmically-generated art. For high-end collectors, EulerBeats might offer the chance to own a piece of NFT history, too.
HEATING UP The EulerBeats market is new, and already heating up with one original having just sold for 115 ETH (around $200k) and one of the more popular tracks currently costing close to 18 ETH just to print. Even Mark Cuban owns two, going so far as to call EulerBeats “the most genius idea ever.”
👩⚖️ Bitfinex & Tether Settle with NYAG for $18.5M'
iFinex, the firm behind Tether and Bitfinex, reached an agreement with the New York Attorney General to pay $18.5M in penalties, cease further trading activity with New Yorkers, in addition to requiring a number of steps to increase transparency.
“Bitfinex and Tether recklessly and unlawfully covered-up massive financial losses to keep their scheme going and protect their bottom lines,” Attorney General Letitia James wrote in a statement. “Tether’s claims that its virtual currency was fully backed by U.S. dollars at all times was a lie.
📺 Watch our quick take:
On Balancer V2 all tokens are held in a single Protocol Vault. Any pool can put its capital to work when it is not being used as swap liquidity, allowing idle assets to earn yield on Aave.
“Although it may seem counterintuitive, our hypothesis is that the best strategy for [Ethereum] miners is to support the deployment of EIP-1559,” write researchers Hasu and Georgios Konstantopoulos. “While we don’t deny that EIP-1559 has the potential to reduce one of those three sources of revenue, miners will still have enough future revenue “at stake” to protect Ethereum and its users. Even with the entire basefee being burned, MEV and the block subsidy will still be a significant source of revenue for miners. Finally, the deployment of this upgrade could also mark a turning point in user demand for Ethereum, ultimately growing the Ethereum economy as a whole.”
✊ Head to THEDEFIANT.IO for more DeFi news 📰
🧑💻 ✍️ Stories in this newsletter were written by Owen Fernau and Dan Kahan, and edited by Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila and edited by Alp.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content. Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($10/mo, $100/yr).