Crypto trader and analyst Nicholas Merten is giving Binance Coin (BNB) a close look after its meteoric ascent to an all-time high of $342.

In a new DataDash video, Merten tells his 391,000 YouTube subscribers that BNB’s furious rally from $38 at the start of 2021 is sparking a narrative that the coin and the protocol it fuels, Binance Smart Chain, could take over the decentralized finance (DeFi) space.

To explore the possibility of BNB flipping Ethereum (ETH), the crypto analyst takes a deep dive into the differences between the two leading smart contract protocols.

“The ironic thing overall is that the Binance Smart Chain is actually extremely similar to Ethereum. They share the similarity in the sense that Binance Smart Chain is basically a direct fork off of the Ethereum blockchain, in the sense of how it functions, how solidity and code can be brought over from the traditional Ethereum applications that exist into the Binance Smart Chain ecosystem. So all that functionality is seamless… 

The big difference here as well is that Binance Smart Chain in this case has a few select validators. Unlike Ethereum that goes through a mining process and has the thousands of nodes across the world in a very decentralized format, Binance is a lot more centralized. That’s not inherently a terrible thing immediately but as more assets grow on the network, just like how you have more assets on a centralized exchange, that can be a cause for concern…

The benefit of being more centralized in the interim and going towards a path of possibly more decentralization, Binance Smart Chain has been able to actually build out a system where gas fees are practically non-existent.”

Merten adds that although Binance Smart Chain has the advantages that come with its reputation, network effect, and low fees, he still believes that Ethereum is not out of the race.

“The one critical thing here that is going to determine Ethereum’s dominance on the market when it comes to DeFi or decentralized finance is an implementation of layer-two scaling. We haven’t seen this yet in the sense of some of the major protocols like Uniswap but supposedly it may be in the works as they’ve been continuing to announce that they’re working with scaling solutions like Optimism. That is going to be the game-changer.”

The crypto trader highlights that news of scaling solutions being implemented on decentralized exchanges like Uniswap v3 will likely cement Ethereum’s place as the leader in the DeFi space.

Looking at Binance Coin, Merten notes that while the crypto asset looks exhausted in the short term, he doesn’t see any problem having some exposure to BNB if a trader believes that there’s at least a 10% chance that Binance Smart Chain will eventually dominate DeFi.


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