Why are we Building Octopus Protocol on Binance Smart Chain (BSC)?
The multitude of use-cases of blockchain technology across several industries, including DeFi has accelerated the development and growth of Ethereum, Binance Smart Chain (BSC), and Polkadot ecosystems in recent years.
While the growth of all these networks has been spectacular, we have taken several careful considerations for choosing the Binance Smart Chain (BSC) as the blockchain network for the development of Octopus Protocol. In this article, we list down the several factors taken into consideration for choosing BSC for Octopus Protocol.
Overview of BSC
Binance Smart Chain is a blockchain network that originated from Binance and runs parallel to the Binance Chain — blockchain enabling creation for decentralized applications. However, unlike Binance Chain, BSC facilitates smart contract functionality and boasts compatibility with the Ethereum Virtual Machine (EVM). Overall, the BSC network empowered the creation of smart contracts along with ensuring high throughput and greater scalability.
The BSC network facilitates a reliable infrastructure for creating smart contracts and the development of decentralized applications. Although the basic opportunities of the BSC network resemble that of the Ethereum blockchain, there are several key differentiators to their infrastructure that makes Binance Smart Chain better suited to what Octopus Protocol is building. Moreover, the additional functionalities of BSC facilitate strategic advantages to the Octopus Protocol and its useability.
Binance Smart Chain, built with a dual chain architecture, allows a seamless transfer of assets from one network to another. It is also compatible with the Ethereum Virtual Machine (EVM) and hence also makes it easier for developers to shift their projects from Ethereum to BSC. Furthermore, the factor of interoperability is a necessary factor for DeFi projects allowing users to access a myriad of use-cases.
One of the key issues faced by DeFi applications built on the Ethereum blockchain is the massive rise of transfer fees while conducting transactions on its network. The latest report highlights the differences between the Ethereum and BSC network transaction fees. For instance, it would cost $57 to swap 1 ETH to 2,040 DAI while it would take less than $10 for the same transaction on the BSC network. This makes BSC 6X cheaper for processing transactions than the Ethereum blockchain. Octopus Protocol provides a convenient and affordable solution for the transfer of synthetic assets by leveraging the feature of the BSC network.
Transaction Speed and Scalability
One of the aspects of rising transaction fees on the Ethereum blockchain is network congestion and lack of scalability. This has caused users to wait much longer for transaction confirmations.
The Binance Smart Chain has been inherently designed with high throughput to enhance the scalability in blockchain. This makes it an ideal design choice capable of achieving shorter confirmation times and higher transaction processing speed while being programmable to create smart contracts.
Increase in Users
The benefits of BSC have led to a surge in the number of users accessing the blockchain network. The total Value Locked (TVL) on Binance Smart Chain rose from 3% to 27% in Q1 2021. Additionally, the number of daily active unique wallers on the BSC increased to 105,000, while Ethereum recorded 75,000 in Q1 2021. The lower transaction fees and faster transaction processing has led to a shift in the dynamics of BSC for DeFi protocols.
Binance Smart Chain provides us with the tools and infrastructure required for the successful development and deployment of the Octopus Protocol without having to compromise on any essential factors. Moreover, it facilitates us to provide users a seamless platform for enabling the creation and management of synthetic assets. It allows us to focus on product quality and gain a strategic competitive advantage in the market.
About Octopus Protocol
Octopus is an open-source protocol to create, exchange, settle, and manage synthetic assets. Leveraging the technological innovation of blockchain, Octopus Protocol facilitates a platform that offers unparalleled access and exposure to real-world assets, thereby enabling a fair way to engage with synthetic assets and giving equal opportunities to access derivatives.
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