BSC to Ethereum cross chain

Binance Smart Chain (BSC) went live, ushering in a new era of exchange blockchains and quickly attracting a large number of projects. In just one or two months, AMM, lending, stable currency, NFT and other tracks have basically taken shape. In December last year, Huobi’s Heco chain detonated the second wave of exchange chains. Next, after the OKEx chain has launched the transfer, transaction and mining functions, it will also launch the EVM module to support Bridge Smart Contract Development Services.

The exchange chain is currently a hot spot in the industry and will continue for a long time. BSC is a leader in the exchange chain . Since its launch, BSC has quickly attracted a large number of users and decentralized projects, and the data on various chains has grown significantly. The total transaction volume has reached 1.2 billion US dollars in just one month of launch. . The goal of BSC is to make the interconnection and asset transfer between different blockchains more convenient and faster, and will support DApps and more application cases in the future. We are also very much looking forward to the implementation of the second-layer expansion technology of Ethereum as soon as possible with “PK”, and work together to create a better user experience.

And this year, BSC’s goal is to Cross chain bridge development financial infrastructure, unlock the Internet of Value, and build solutions that support more interconnection between blockchains. The bridging service through BSC enables different DApps to interact and transfer assets. Today, BSC is spending more energy on the subdivisions of DApps, such as algorithms, aggregation solutions, cross-chain and multi-chain, gamification, community and social tokens, synthetic assets, institutional DeFi, infrastructure and tools, etc. This also provides a huge space for more and more projects to choose to migrate to BSC.

As more and more projects choose to migrate to BSC, we believe that the relationship between BSC and Ethereum can be compared to Kusama and Polkadot. Startup projects can be tested in a real production environment with a large number of users at low cost. At present, the development momentum of the second-layer network camp is not as strong as that of the exchange chain. Compared with the migration to the second-layer, the migration of projects and users to BSC is a more obvious trend (all of which benefit from the congestion of Ethereum) . The rising star has undertaken a large amount of traffic overflow of Ethereum, and has become a public chain ecology that cannot be underestimated. In our opinion, BSC itself will be more decentralized in the future, and encourage the community to run nodes and encourage BNB holders to pledge to the nodes to obtain benefits.

As the exchange’s response to the rapid development of Ethereum’s DeFi ecosystem, the exchange chain can be described as mixed. IOSG believes that a chain led by exchanges like BSC will remain very popular in the short term. The main reasons include:

Large user base. Compared to Ethereum, exchanges have a much larger user base. In fact, many users of BSC (including other exchange chains such as Heco) have never even been exposed to Ethereum before, have not installed a MetaMask wallet, let alone participated in DeFi. With the strong customer service force, even the founders themselves, and high subsidies and support, the exchange chain has quickly established a large user group. Low transaction fees, fast confirmation speed and considerable wealth effect also bring good user stickiness.

A lot of funds are deposited. In terms of the type and quantity of assets, the exchange chain has great advantages over Ethereum and other public chains. The exchange has built a low-cost cross-chain method, which brings a very smooth user experience, and also allows old players who hold the previous generation of “mainstream coins (such as XRP, EOS, BCH, etc.)” to have the opportunity to participate in DeFi. When BSC went online, the slogan “Unification of Ten Thousand Chains” was proposed, which is true in a certain sense.

Technological iterations are fast. Currently, both BSC and Heco nodes are directly based on Ethereum’s code with some modifications. However, we also saw a lot of technical highlights on BSC. For example, it comes with a very easy-to-use native cross-chain function when it goes online, and realizes IBC-like functions between the smart chain and the original Cosmos SDK-based Binance Chain. The architecture is remarkable. The technical competition between exchange chains is a bit like the “U.S.-Soviet Cold War”. Compared with decentralized development methods like the Ethereum Foundation, exchanges are undoubtedly more efficient.

Exchange Chain vs Ethereum

The advantages of the exchange chain are obvious, but it is not perfect at present, and there are many problems. We think the main ones include:

High degree of centralization. Strictly speaking, the current exchange chain cannot be called a public chain, but only a consortium chain or even a private chain. The number of block-producing nodes of BSC is 21, which is relatively small. Although the community operation node has been opened, the level of participation is low due to the high threshold for staking BNB. Therefore, the exchange chain is inevitably criticized and centralized by the “fundamental” Ethereum community. With the gradual implementation of the second-layer expansion of Ethereum, Build a cross chain bridge users’ requirements and “taste” for decentralization will rise. I believe that both parties will have relevant plans to gradually increase the degree of decentralization.

Nodes are heavily burdened. BSC currently directly follows the code of EVM, and achieves a dozen times the capacity of Ethereum by adopting PoA consensus, increasing the block size and shortening the block time. However, such a simple and crude expansion method will bring about a more serious “state explosion” problem than Ethereum in the face of rapid user growth. Similar to the super nodes of EOS, the nodes of the exchange chain have relatively high requirements on the operator’s equipment and operation and maintenance, and will become higher and higher over time. The state explosion will bring a bottleneck to the decentralization and performance limit of the exchange chain, and we think it is an urgent problem that needs to be solved.