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Getting into Binance Smart Chain? Read this before you do so!

coinmonks profile image CoinMonks Originally published at Medium on ・6 min read

Binance Coin has been on a rampage. It has made many people rich. It has also shown that centralization with the required amount of trust might just work. The decentralization story has slowed for the time being.

Thinking about it, this step has been logical. I have been vocal about this for quite some time. Uniswap has become unusable. Let’s imagine you have earned some interest in AAVE and want to cash out, Uniswap will not let you. I mean, the high gas fees will not let you. Binance has underplayed its ecosystem, which has been building for a long. But CZ is that CEO who continues to build with his head down. The death of Centralized Exchanges was not possible, at least immediately. He knew it and hence, in quick succession he brought Bakery Swap and Pancake Swap. I was in a dilemma on which one to invest and I went for Bakeryswap. Unlucky me! But that’s another story.

Ethereum is not scaling up soon and Ethereum competitors have not launched fully. Hence the void is filled by Binance Smart Chain. Will this hype last for long. It might not. But there will still be a sustainable continued interest. Decentralization is at the core of Blockchain. So once the “Swap-feature” in other platforms launches, the crowd will shift.

However, I would still list down the below points which will keep the centralized exchanges hot.

1. New User onboarding: Any new user who gets into crypto, creates a Binance or Bitmax (or others) account. This is never going to go away. The learning on the values of blockchain comes through consistent practice. That is not from first-timers. Remember, as the population onboards, the values erode. Unfortunately yes. What can be done? Decentralized Protocols need to become cheap quickly.

Once a user onboards, he will be fed with projects in the Exchange’s own ecosystem. And people will start exploring them.

2. Crypto Cards/ Retail use of Crypto: Crypto trading and making profits from market swings have been the game of a learned few. This does not always correlate to real adoption. Most projects have been experiments. The mainstream adoption will come if users are able to pay for their daily needs with crypto. That’s where Crypto.com cards were successful and now Binance cards are slowly seeing success. This is a natural fit for centralized crypto exchanges

3. Product Aggregators: Centralized exchanges have also been playing a great role as product/ service aggregators. They at the same time play the role of distributing airdrops, acting as launchpads, providing staking services, savings plans, and also participating in crypto mining. Of course, the trade-off is that you do not hold your own keys, and also the returns are less than the actual. However, no other decentralized platform provides such collected and integrated services.

Improvement areas of Centralized Exchanges

1. Infrastructure: As the crowd started moving on Binance Smart Chain, Binance went down. The same often happens with Coinbase and other exchanges too. This is unacceptable! Traders can not lose a single minute of buying or selling opportunity. The exchanges need to upgrade their servers, fix their algorithms, and be more secure.

2. Support Staff: The quick escalation in the number of people signing up for exchanges, has hit the support functions of exchanges hard. I started a chat with Binance Support and was put in a queue line of 400+! A ticket I raised 7 days back is yet unanswered. The newcomers will not be as patient as we are. In order to retain them, the exchanges need to scale up

3. Liquidity: A huge problem is even if you use PancakeSwap and convert, let’s say, AAVE into a Binance Backed AAVE, where will you sell that? Will any Centralized exchange other than Binance accept it? Your only option will be to swap back. This also means that if Binance goes down, BSC gets crippled. Major threat. Take care of these scenarios before you get full-on with semi-decentralized chains.

Read the Previous article: How to play Dark Forest, the zkSNARK powered MMO Game — Part 1

Note: This post was first published here for Cryptowriter in association with voice.com.

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