Traders and investors, especially those new to the scene, are flocking to centralized Ethereum alternatives in order to avoid getting stung with sky-high transaction fees.
The entire ethos of cryptocurrency and DeFi is to gain distance and freedom from centralized banks and corporations. However, these virtues appear to have been lost at the moment as Ethereum fees are driving users to centralized providers such as Binance.
The Rekt Blog has taken a deeper dive into this potential paradigm shift by asking the vital question; has the game changed or is it the players?
An Ethical Ethereum Suspension?
Binance suspended Ethereum and ERC-20 withdrawals on Feb. 19 in what it claims was “a congestion issue.” However, many industry observers pointed out that the network was running just fine.
The report points out that Binance and its enigmatic CEO, Changpeng Zhao, have not been shy when it comes to criticizing Ethereum in order to promote its own competing product, which has gained a lot of momentum recently.
Galloping gas fees on Ethereum have just added fuel to the Binance machine and made it easier to plug its Smart Chain and the growing number of smaller DeFi projects and yield farms building on it.
Rekt rightly pointed out that industry experts see these products from the inside, but newcomers seem more interested in finding quick gains without the fees.
The report included an interview with Calvin Chu who was asked about Binance’s plans to usurp Ethereum. Zhao even commented that BNB’s market cap could surpass ETH’s when it surged into the third spot late last week).
When asked about increased adoption of products such as Binance Smart Chain having a negative impact that of more decentralized systems, Chu responded;
“I think that in the long run, the market will realize the value of decentralization and that products that are censorship resistant will command a rightful premium. But if crypto is about giving the power of choice to the user, it should also be about giving users a “freemium” model to dip their toes into DeFi and learn the ropes without having to pay hundreds of dollars per transaction.”
Newbies Sticking with BSC
The report added that many new users starting out with BSC remain there because the platform is easier to use and is much cheaper than the Ethereum-based alternatives. At the time of press, the average transaction fee had surged to a record high of over $30.
These newcomers seem much less concerned about centralization than the crypto stalwarts that have been in the industry since the early days.
Many now view Ethereum as a “whale chain,” especially now that it can cost as much as $50 to carry out a token swap on Uniswap. Until major gas-saving solutions such as Layer-2 or even EIP-1559 are implemented, the flow of crypto rookies dabbling in DeFi is going to continue in the direction of centralized corporate giants such as Binance.