Binance Coin (BNB) has been on an absolute tear in the month of February. It traded at $48.93 on Feb. 1 and grew to trade at $304 at the time of publication, amounting to a 521% month-to-date gain and 707% year-to-date gain.
This price rally has led BNB to become the third-largest cryptocurrency, with a $46.5 billion market capitalization. BNB achieved its all-time high of $342.88 on Feb. 19. This price rally and leap in market capitalization could be attributed to Binance Smart Chain gaining popularity within decentralized finance markets and other macroeconomic factors driving the growth of flagship assets like Bitcoin (BTC) and Ether (ETH) to new all-time highs this week.
While Ether price was rallying to it’s all time highs on Feb. 19, Binance announced on Twitter that they have “ temporarily suspended” withdrawals of Ether and all Ethereum based tokens due to a “congestion issue.” This led to the users not able to trade these tokens for around an hour and left the community speculating what actually happened. This pause led BNB to rise by another $60 in that time while Ether staggered around the same range.
Binance Smart Chain is the main driver?
Apart from macroeconomic factors such as the price of BTC and ETH reaching all-time highs this week, spilling over to drive up the price of BNB, Binance Smart Chain also has been gaining significant traction among the crypto community. BSC was launched in September 2020 and acts as a parallel blockchain to Binance Chain while enabling smart contract functionality and the staking mechanism of BNB, which powers Binance Chain as its native token.
Cointelegraph discussed this further with a spokesperson from Binance, who elaborated on the unique benefits that BSC offers users, saying:
“BSC offers a high-performance and low-fee blockchain network that’s compatible with the Ethereum Virtual Machine. Developers can worry less about transaction fees and focus more on innovating, while using all of the existing developer tooling they are familiar with in the Ethereum ecosystem.”
The entire Binance ecosystem is powered by BSC. Being a global cryptocurrency exchange with extremely high user traffic, it’s highly essential for scalability and low transaction fees to go hand in hand with the BSC ecosystem. BSC is now being used extensively by various DeFi protocols, with the latest to leave Ethereum for the blockchain being multiservice platform Value DeFi and yield aggregator Harvest Finance, which cited cross-chain yield farming as the prime reason for the shift.
The influence of BSC has extended to various DeFi protocols. Venus, an algorithmic money market and synthetic stablecoin protocol designed specifically for BSC, saw the price of its Venus Token (XVS) surge over 750% after it was launched on Binance Smart Chain, from a low of $10.04 on Feb. 2 to an all-time high of $95.90 on Feb. 20.
Another prominent DeFi protocol on BSC is PancakeSwap, which went on to become the first billion-dollar project on the blockchain. It quickly doubled that to pass $2 billion in market capitalization, owing to the growth of its food-themed token, CAKE. Data from Cointelegraph Markets indicates that the price of the CAKE has surged 973% from a low of $1.89 on Feb. 3 to its all-time high of $20.33 on Feb. 19.
Speaking with Cointelegraph, Ilia Maksimenka, CEO of PlasmaPay — a DeFi investment platform — indicated that PancakeSwap could be one of the main reasons for BNB’s price rally:
“PancakeSwap traded over $400 million in daily volume and briefly became the world’s second-largest DEX. Its [BSC’s] unique propositions of a lottery service and a non-fungible token art platform have furthered PancakeSwap’s use cases.”
BSC gaining amid high Ethereum fees
Another reason for the popularity of BSC is the lower transaction fees when compared with Ethereum, which in its state of high demand sidelines retail investors in the DeFi markets, tailoring it more for whales. While Eth2 proposes to…
Read More: cointelegraph.com