Should we explore launching on Binance Smart Chain? Venus protocol endangers DAI!

Binance Smart Chain (BSC) is an Ethereum Virtual Machine-compatible blockchain launched by Binance back in September 2020. BSC achieves ~3 second block times since it uses a Proof of Stake consensus mechanism which permits for better speeds and lower fees. In terms of technology, it doesn’t offer the huge scalability and amazing features as Cardano or Ethereum 2.0 will do, but it solves one of the biggest issues which is stopping retail users of having access to DEFI: GAS fees in BSC are around $0.20 in average at the moment of writing.

Since January, DEFI dapps in BSC started to lock a reasonable amount of value, and in a few days these have grown to levels comparable to the best of the DEFI dapps on Ethereum.

Following the ranking on Dappsradar, 2 of these apps on BSC have scaled to be between the 10 with higher total value locked (TVL) on the DEFI space. Specifically:

Venus

Venus is an algorithmic money market which also creates a synthetic stablecoin VAI, which as imagined competes directly against DAI. You can borrow VAI directly against collateral, with a list of collaterals which includes Stablecoins (DAI, USDC, USDT), BTCB, ETH, XRP, DOT, FIL, BNB… as seen some of the top coins by market cap on the space.

It also permits lending and borrowing similar to AAVE. At this moment the protocol has a TVL of $1.9billions!, and keeps growing (I’ve been following it on the last days).

They have emitted a total of 164millions VAI.

Pancakeswap

Another fork from Uniswap; it has grown at alarming pace in last weeks due to being on BSC. Swaping between several coins costs only 10 cents.

At the moment they have a TVL of $920millions and growing at alarming pace

Autofarm

As we can imagine, both protocols above (and others new appearing in the chain) are incentivizing with their tokens which have seen an increase in value of 10x on last month alone. Autofarm is an automated yield farming platform, similar to Yearn and Harvest but running on BSC.

With $500 million TVL and growing, it is one which could rivalize with the main one on Ethereum.

Serious competency for MakeDAO

The sole fact of having very low GAS fees makes all these apps huge rivals for their counterpart on Ethereum blockchain. BSC as explained above is EVM compatible, in fact, the experience using these apps is similar with the difference of the extremely low GAS fees (paid in BNB) and very quick transactions (~5 secs wait time).

Platforms like Harvest.finance have already started to make their move toward BSC.

Given that BSC is fully compatible with EVM, it is a question of deploying the same solidity contracts over there. I’m not sure how big of a job this could be, but we should seriously start thinking in a move like this.

I got worried TBH when I saw Venus, their VAI, and how easy and cheap is to borrow there. The liquidity in BSC is growing in the billions already, and it could continue to grow parabolic if Ethereum GAS fees continue as they are (which we know they will, since solutions are still months or even years away).

Wanted to share all this info with the community, and start a discussion on the topic, and the risks that MakerDAO could affront if we don’t move at the speed of the competency in this area. I can see many other protocols moving toward BSC as quick as possible if the flow of money continues migrating toward the Binance Smart Chain

4 Likes

Wanted to add also that Binance Smart Chain (BSC) Surpassed The Daily Transaction Volume of Ethereum. Definitely a huge achievement for a chain that was launched just 6 months ago.

You do realize that its a centralized chain that can cheaply spoof transactions right? The entire chain even went down the other day. CZ is essentially a signatory of all transactions. Not really part of the ethos of what MakerDAO stands for.

8 Likes

This. Binance controls all the validators. Meaning they’re paying the (much lower) fees to themselves whenever they make a transaction, this means there is little to no cost for them to fake transactions to make the network look busier than it is. I would be very surprised if the volume was genuine.

5 Likes

All valid points. I’m aware of BSC whitepaper being heavily criticized when it was proposed last year. It was simply another clone of Ethereum.

This above doesn’t mean that it didn’t gain traction specially with the boom of DEFI. It was placed online in the right moment (DEFI summer), and several projects started to be built over it. CREAM finance also run over it.

Currently it has only 21 validators which definitely makes its decentralization questionable. My question for you is though: what would happen if suddenly we see half or more of DEFI TVL moving toward BSC, will we simply ignore it? Binance complete market cap will not support a crazy amount of value controlled there, with 4 billion assets already, that doesn’t seem like Binance-controlled assets.

I guess we cannot debate this one without proofs, but I was just checking that day the huge % on Pancakeswap statistics those sounded very strong like for suggesting false transactions, at least a lot of tokens where being swap there (meaning that they’ll be giving 0.2% of all those transactions to the liquidity pool providers?, they’ll have to control most of those pools themselves for this being of any profit, sounds hard to believe, but not impossible of course)

I’ll keep researching on the topic, and happy to go over any article shared here with any profound analysis of their centralization problems. But I wonder what would happen if we are slow to react… specially worried by the fact that MakerDAO is a platform for less than 90% of the common people (yes, less than that don’t have 2k USD to open a Vault), and Ethereum GAS fees turns the flame of DEFI off for the commoner. I don’t see those big institutions buying ETH and BTC in the DEFI game anytime soon (not yet), ratail “investors” are the main one out there IMO in this game.

BSC is definitely offering them a different story… in fact, the story that the people want to hear, that’s very dangerous! I definitely recommend to be careful here and keep a critical eye on what is going on at the moment there.

Take a look at NEAR–although I think it will be difficult to deploy & govern two separate protocols, in any other Layer 1. Plus anytime you leave Ethereum, and come back you’re going to pay a nice Fee (depending of Gas prices). Same goes for L2s – try out Loopring, Matic, xDAI and let me know how much you pay to go and come back :wink:

Also, Solidity for front-end development will soon be available on Solana. Let’s see where that takes the ecosystem.

3 Likes

No, it’s a waste of time. The network effect and the MCap effect of ETH is too strong, no other chain has a chance to succeed. That is especially true for a chain which is not fully decentralized.

Don’t be fooled by any metrics - it can be manipulated. Sure, MKR can make some money by playing with other chains but at the expense of its users who will get less and less useful features.

Maker has no choice but to move to L2 or die.

5 Likes

I know many of us don’t enjoy @bit comments, but many of them have a strong point. The biggest protocols in Ethereum - DEFI right now are working or in L2 solution, or expanding to other blockchains. I feel we’re being too slow in this regard, and that’s a huge risk for MakerDAO as a whole, for the complete ecosystem.

I’ll keep monitoring BSC and let you all know if I have stronger points to defend it, so far it has been a crazy month for it, similar to the DEFI summer on Ethereum back in late July:

https://www.defistation.io/

If the tendency continues I think it’ll be harder for us to simply ignore it.

Respect to an L2 solution, I don’t feel we’re doing our best here sadly. I know that we have limited resources when it comes to workforce, but a reality is that we are collecting $60 millions annually in fees and we’re burning it without bringing any positive price impact to MKR, grow there hasn’t been exactly because of we burning it (in fact, seems to grow much more when we don’t do it, odd). I would put out there 1 million DAI as a prize to any team who brings us an L2 implemented solution than continue pushing it further and putting all our ecosystem in risk from being forgotten for not adapting to the DEFI needs.

Once again, I’ll do my best to help MakerDAO in all what I can. And I’ll keep sharing any relevant info that can be of our help, and propose solutions or ideas if I realize any.

3 Likes

IMHO this will be an issue as far as there is no relevant liquidity in those Chains / solutions. But once liquidity grows, the question is: why do you need to bring those assets back to Ethereum? I’ve seen more than one comment of people going to BSC and saying that they’ll return to Ethereum once ETH 2.0 is out there. If any of these new chains gets similar level of liquidity than the TVL on DEFI projects, offering lower fees and faster transactions, they would have won the battle (which I know will put a lot of pressure in Ethereum developers to bring ETH 2.0 alive sooner, or ETH is going to suffer the consequences).

Disclaimer: I’m definitely enjoying low fees on BSC at the moment, and I’m a DEFI gamer, playing there is 100x times more enjoyable just because of fees, no other reason, but that’s a very strong one! But I know there are big risks, I would not move more than 10% my assets over there for sure, I like and trust Ethereum will get rid of this detriment caused by GAS fees… but the adoption of other chains could change mine and everybody here perception on those chains if things go for the worst on Ethereum.

1 Like

You know what the amazing part of this is? That the majority of people in Asia don’t care about decentralization. It’s only a “thing”in the West. So enjoy it, make money and be safe.

And tbh — I also think there are more people in the west that don’t care about decentralization. At least not yet. Once they feel the easiness of being their own bank, and not having to wait days to get money—they’ll come around. But FEES have to be yesterday’s news.

For now. It’s easier for most to use PayPal, CashApp, or Venmo TBH. And hey, no fees :man_shrugging:t2:

P.S. I also think the High Ethereum TX Fees are protecting the small & new investors from getting hurt. And that’s a good thing. I heard an attorney say it’s like protecting unaccredited investors.

5 Likes

I will just share this for interesting discussion. There are few dApps that are on both ETH and Binance chain such as Cream Finance. If you look at Cream Finance,
for ETH side it’s

Total borrow in USD: 60,934,135.876
Total supply in USD: 259,757,126.537

For Binance Chain side it’s
Total borrow in USD: 14,154,622.272
Total supply in USD: 48,475,791.060

So I think this shows that even though Binance chain might be faster and cheaper, most of users and liquidity remain on ETH side. I think its integrations with ETH based projects like YFI helped to cement that as well. But is potential extra 10-20% worth the effort? I personally think there are many alternatives that can be done on ETH ecosystem to increase that much.

5 Likes

Personally I’d rather focus on how to make Maker multi-chain, rather than try to pick L2 or sidechain winners/losers. If the community believes there’s actual demand for MakerDAO on Binance Chain (I personally don’t), then I believe we should explore opening a Vault that mints Dai directly to that Chain - where it can then be managed by a money-market protocol or Maker Governance directly.

10 Likes

Yes, I agree with your vision. I would love to see your opinion of exploring opening Vaults that mint DAI directly to another layer 1 like, Solana, NEAR, or a parachain (PolkaDot) like the Acala Network come into fruition. I know the Roadblock here is that we don’t have the resources/human-power to get it done.

I will say that Solana is looking to integrate Solidity into their front-end (currently Rust), and I believe they’re doing it to attract talent like Andre C., and others. But just my 2 gwei.

However, if I was a betting man I would bet that the Solana/Alameda connection have drawn this roadmap behind closed doors, and will throw money at this front-end integration of solidity.

2 Likes

I think it’s a pretty simple calculus:

(1) How much do we trust the security of the other chains?
(2) Is there demand for Dai generation on the other chain?

5 Likes

Maybe we shouldn’t think only about the demand, but in fact “create that demand”.

We have turned our Vaults inaccessible for most of the retail investors. Setting the dust parameter in $2000 was a decision made uniquely due to the GAS issues on Ethereum. If we recommend those retail investors to use the Vaults in a cheaper to use chain, we could keep them within our system (plus we’ll be contributing to the expansion of that chain which could be something positive for the space).

I would not think that much in demand for DAI, as in Liquidity in that Chain and DEFI dapps… if there is a ton of assets to play with in the chain, it’ll be already enough indication that we should facilitate the generation of DAI in that chain. We’ll be solving 2 problems in one shot:

  1. Keep retail investors
  2. Keeping up with the competency in a growing chain.
2 Likes

What do you think about Cardano?

It is about to move to their Goguen phase, with support for Smart Contracts, and they’re already working as well in an Ethereum Compatible Virtual Machine with support for solidity

2 Likes

After using binance smart chain (bsc) the last couple days. The bsc venus and pancakeswap are the equivalent of aave, makerdao and sushiswap. The transaction fees in the pennies and dimes in lieu of tens even hundreds of dollars on ethereum have changed my view on bsc and other potential side chains/platforms Their exponential growth are reflected in their total value locked (tvl) per defistation.io.

In my opinion, the reason that makerdao thrived the past year was due to lack of competition. However as other chains have picked up steams and tvl, makerdao seems to slow to react due to the extreme high fees on the ethereum network at the moment.

I love ether for its decentralized and want it to succeed, but its really expensive right now and over 90% of the potential users cant use ethereum network due to fees cost. For normal folks they could care less about decentralized when its out of their reach. Also nobody can said for a certain that eth will beat out all other platforms in the future, or become the next blockbuster or blackberry.

Even with 1000x increase in tps are not going to support the whole ecosystem in the future. Even if eth won out, there will still be other side chains/platforms to pick up the slack.

The synergy of maker platforms across multiple platforms will bring other competective advantages to usd and euro dai.

Therefore, i would like to propose makerdao should agressively invest and expand the maker protocol onto other chains/platforms. An idea could be that Mkr tokens will own 100% of mkr protocol on ethereum network, and 40% of bsc mkr, cardano mkr, xdai mkr, dot mkr, etc… The other 45% to be used for attracting yield farmimg and dai generation, and last 15% for team expenses.

Eventually the 40% or so fee from other mkr protocols could greatly increase the mkr token burn rate and value.

Welcome,

We already have a similar post about this here - Should we explore launching on Binance Smart Chain? Venus protocol endangers DAI!

I appreciate everyone’s passion for worrying about other projects/platforms taking market share from Maker but let’s not make this start to feel spammy.

Thanks

1 Like

@Mikkkkk To some degree I see where you are coming from. The transaction fees on Ethereum are ridiculous right now and this risks becoming a real problem if the situation persists. We could see a situation where new and promising dapps have no choice but to try other platforms.
Regarding solutions I trust Ren to build sufficient bridges between the most relevant chains over the next 18 months to enable DAI to be bridged over to chains that shows some traction. How exactly pegs would be maintained on other chains is more of an open question.
The Maker community will however need to be on our toes, it would be tragic if some copy-paste team beat us to global success just because we would not move on from Ethereum at some point.

Merged the other thread here, apologies if things get a little confusing.

1 Like