How Will the Transition of Projects from Erc-20 to Binance Chain Affect the Cost of Ethereum?


On April 18, the Binance cryptocurrency exchange launched the main Binance Chain network and immediately began to entice Ethereum projects to its blockchain. Will this cost fraught with the mass departure of the startup from Vitalik Buterin?

Since the beginning of 2019, the BNB token has been growing exponentially, while updating its historical highs, both paired with Bitcoin and with the US dollar.

What is the reason for so confident growth of the coin? A number of reasons affect this: launching a Binance Launchpad, running IEO, switching to own blockchain, launching Binance DEX, rapidly growing Binance audience, updating the rules for taking part in IEO, planned burning of coins, updating white paper of the project, and finally the quarterly Binance report.

These aspects are the main driver of almost fivefold asset growth from the local minimum value. The community even compares it with the Ethereum of the period 2016 – 2017, only now the focus of attention is not ICO, but IEO.

As we know, Ethereum coped well with the task of crowdfunding and acted as a platform to raise funds. However, the benefits of Ethereum are over. Yes, the community was waiting for a revolution from this project, the application of smart contracts in everyday life, the introduction of utility-tokens into the global economy, and so on. But, as we see, this did not happen, and if it does, it is not as fast as the followers of Ethereum would like. The confirmation of these words is the nominal value of this asset, which has collapsed more than 10 times from its historical maximum.

HYIP ICO in 2017, allowed projects to collect funds in ETH using the entire infrastructure of the virtual machine, which initially contributed to the growth of the price of this asset. But when the projects had to get rid of it, namely to sell ETH, it played a cruel joke with it. The result of this we see on the chart.

How does the “revolutionary model” of Binance Coin affect the future value of Ethereum?

New cryptocurrency projects have not received any preferences when choosing the blockchain Ethereum. Analysts pointed out that the new Binance network could successfully replace Ethereum when it comes to listing and releasing tokens.

“BNB will have a detrimental effect on ETH and drop it to two-digit numbers. The choice of ETH compared with Binance Chain has almost no advantages other than decentralization. Projects moving to Binance Chain will receive a lot of attention, listing and much more, ”writes Gem Club.

And many analysts are right. BNB, unlike ETH, has a deflationary model, which to some extent contributes to active investment in this asset. Binance Coin is a development team of the exchange, which confidently occupies a leading position in the framework of trading volumes of cryptocurrencies. BNB is the only asset that has updated its historical maximum during the bear market cycle, which contributes to the influx of new investors. Binance has a good infrastructure, which allows projects to gain recognition and conduct good marketing campaigns, using the audience of the exchange.

The first project that migrated to Binance Chain was Mithril. The startup previously released its MITH tokens on the Ethereum blockchain but considered Binance Chain a more promising project, which, moreover, is complemented by a full-fledged decentralized exchange. As a result, Binance added MITH/BNB and MITH/USDT pairs to its trading platform. Adding MITH to the crypto exchange helped the token to rise by 85%.

Should we expect to migrate other projects? Yes, definitely worth it. But, there is one serious “but.” It is important to understand that Binance Chain does not have the function of smart contracts, which means that projects looking for decentralized technology will, in any case, prefer Ethereum.

It can be assumed that in the first wave migration will be undertaken by projects that do not require smart contracts, oracles, etc. These can be payment services, which can be a good investment offer in a short period of time, for traders who work with Binance.