Binance Smart Chain Unlikely To Foster A Developer Ecosystem

Binance, the massive crypto exchange run by CZ, proposed Binance Smart Chain (BSC), an additional blockchain, separate from Binance Chain, that will enable programmability through smart contracts in hopes developers will build applications on this atop, while offloading throughput to Binance Chain.

The reasoning is clear, if Binance is able to attract developers to build viral applications, this can attract large consumer interest and bolster Binance’s ecosystem but also add another use case for BNB (native token), as it is used for staking. It would be naive to dismiss the resources Binance can put behind this initiative from a monetary perspective and a community one.

Binance Smart Chain is compatible with Ethereum, with the go-to-market being developers are able to port over their applications with ease (unlikely in practice) and benefit from lower fees (product of a more centralized chain). Binance Smart Chain is controlled by 21 nodes who stake BNB, implying it is not only more centralized versus Ethereum’s 1000’s of nodes and community led off chain governance, but CZ will likely reign control over the chain given his influence and his BNB stake. Binance Chain never decentralized, why would its new programmable sibling?

While a high profile launch, Binance Smart Chain may be in competition with Ethereum and other programmable blockchains for clicks and eyeball time, but it is certainly not a competitor for building the decentralized future.

Developers today build unimaginable applications on decentralized chains since they have a new sandbox to innovate in with new tools to play with. They are building magical applications like synthetic asset platforms and decentralized futures exchanges since they are no longer bound by the Web 2.0 mental design space of the past.

Once you bring a developer back into a centralized sandbox, the game plan is to usually bring an existing Web 2.0 app to the chain, promote it as decentralized and fade into irrelevance. Developers lose their magic paint brush, the burning ethos of creating everlasting, novel creations on a decentralized chain.

Building global applications from a laptop and an internet connection to exist forever and be iterated on by a global community loses its flare once you say its pulse is controlled by 21 nodes and the opinion of Binance management.

Centralized chains miss the point, every time. The point is not to offer cheaper transactions, anyone can do this using Amazon Web Services, but to foster a community driven ethos of builders who enjoy working together without a centrally derived mandate. Binance Smart Chain is very similar to EOS, both with a 21 node control and a warchest of capital to deploy. To date, this hasn’t work out well for EOS, granted Binance Smart Chain will likely produce better tech.

We have other concerns on why Binance Smart Chain is unlikely to decentralize, including its economics. The 21 validators only earn transaction fees (no block rewards), but if throughput is offloaded to Binance Chain, this means less, low fee transaction fees are flowing to validators which sounds directionally at odds with economically incentivizing outside actors to become a validator.

Never a dull moment in the smart contract wars, I hope it stays that way.