Binance enters the smart contract wars

Binance has officially entered the smart contract war. Last week, the exchange released a whitepaper detailing a new Ethereum-compatible blockchain capable of processing smart contracts and applications. This network, dubbed Binance Smart Chain (BSC), will complement the existing Binance Chain, which launched last April to power Binance’s decentralized exchange.

The move is not entirely surprising. Binance started siphoning off token projects from Ethereum with the release of Binance Chain. Now it wants to capture some of the activity within Ethereum’s burgeoning Open Finance sector, and smart contracts are the logical next step to divert user traffic towards its “decentralized” offerings. Despite trying to downplay a potential rivalry, Binance is 100% trying to compete with Ethereum.

But doing so, the exchange is venturing into a crowded field of smart contract projects all fighting over the same pool of developers and users.

How crowded is this market?

Smart contract platforms have exploded in number over the past three years as projects strive to build a faster and cheaper version of Ethereum. Most of these launches (34 according to our screener) occurred since the start of 2018, often paid for by funds raised during the frenzied ICO bubble in 2017.

This surge in new networks has made smart contract platforms the most populated sector among base layer blockchains, surpassing currencies by the end of 2018. The trend is a clear sign the market believes smart contracts are where the money is, and that Ethereum’s perceived flaws, whether related to scalability or concerns about ETH 2.0, present an opportunity for newer, “shinier” models.