Binance's PancakeSwap surpasses Ethereum's Uniswap in locked value
The PancakeSwap platform, developed on the Binance blockchain (BSC), is now listed as the largest for blocked assets in the decentralized exchange (DEX) sector. With its prominence, it is driving a change in this market, until recently, led by Uniswap, which is based on Ethereum.
The value locked in PancakeSwap currently exceeds USD 9,000 million and is 1,630% higher than at the beginning of the year, when the protocol barely registered USD 176 million, according to data from the DeBank website.
As for to daily commercial traffic, PancakeSwap ranks second in the ranking of the DEX market with an average of USD 2.6 billion traded in a period of 24 hours. The first place was reserved for the MDEX exchange , based on a mixed chain model with Huobi Ecological Chain and Ethereum, which handles a purchase volume of about USD 2,800 million, while Uniswap has been relegated to third place with USD 1,600 million, according to Coingecko.
Between MDEX and PancakeSwap they currently account for 53.1% of the total operations carried out in the market, while that Uniswap barely handles 15.4. The numbers show that Ethereum-based protocols are giving in a field in which they had complete dominance, until recently.
What is happening in the decentralized exchange market?
What is happening in the DEX market has a high relationship with the prominence that is charging PancakeSwap, and with Ethereum gas prices, as pointed out by the firm Deribit Insights in a recent publication.
Based on its research, the firm highlights that, although the total value blocked has Increased across the ecosystem as DeFi attracts more users, participants who are leaving their deposits in BSC are characterized by leaning toward retail.
Most of the transactions carried out on the exchange are below USD 10,000. The researchers even observed more transactions below USD 1 than above USD 50,000
This retail segment of the market that had been excluded by the high consumption of gas required by transactions based on contracts Ethereum’s smart phones, is the one that is driving PancakeSwap’s trading volume.
The platform is playing a determining role in the momentum that the Binance blockchain is experiencing. Not only by absorbing marginalized users from its peer network, but also because is accommodating native DeFi participants who want to trade, invest or arbitrage. with lower rates, as the research adds.
With PancakeSwap and BSC experiencing exponential growth, it is also time to ask how long can they keep up without presenting scalability problems? With data storage demanding, more and more space , problems may soon appear , as has happened to Ethereum in the past.
On the other hand, Ethereum continues to seek to reduce its commissions. The Ethereum Enhancement Proposal (EIP) 1559, which is expected to help solve the problems caused by high transaction fees on the network, will be activated in July of this year with the hard fork London, as reported by CriptoNoticias.
The new improvement proposal will introduce basic fees for transactions with the idea that commission prices are more predictable and stable. Subsequently, these base costs will be burned to allow users to have lower prices for the recording of transactions.
If the EIP 1559 succeeds, then everything that runs on the Ethereum blockchain may take a new momentum, with the DEX reclaiming the ground they have given up lately.
Beyond that it is also necessary to bear in mind that Ethereum’s layer 2 scaling solutions can drastically reduce the transaction fees without sacrificing the properties of decentralization like BSC does.
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