06 Sep 2022
The untold tale of brand awareness
Rollups are the trending solution for scalability on Ethereum. Average gas fees on Ethereum and BNB Chain are currently 7.7x and 3.4x more expensive than Layer 2 solution Optimism. Meanwhile, BNB has 32x more daily transactions.
Crypto is a world where financial incentives clash with ideals, so there isn't a good measure of "real" usage yet. Everything is either incentivized, gameable, or inelastic (in terms of real competition). BNB is far from an apple-to-apple comparison to Layer 2, but it illustrates the significance of marketing and network effects.BNB Chain optimizes for speed, scalability, and cross-chain interoperability, but not decentralization. This means that the protocol can achieve a much higher transaction throughput than Ethereum. As a result, the transaction fees are also much cheaper. Launched by Binance—a true behemoth in the crypto world—BNB has established clear network effects, particularly in eastern markets. Binance has realized a 30M userbase they can leverage via email marketing, and influence a broader audience via social media and education. In addition, Binance consists of a venture fund, project launchpads, an incubator lab, a charity fund, the DEX PancakeSwap, and the most dominating CEX in crypto. Owning the largest on-off ramp is by far the best way to funnel users directly onto the chain. The security and decentralization compromises are clearly acceptable to many users in the short-term, so rollup teams have to be significantly more aggressive with marketing and emphasize unbiased education of new users to outcompete BNB and centralized protocols.