Competition heats up in the dapp space as developers compare Binance Smart Chain to ethereum. How do factors such as scalability and transaction costs affect your decisions?
The blockchain space is tremendously competitive, particularly when it comes to decentralized applications (dapps).
As of February 2, according to data from DappRadar, a prominent analytics platform, Binance Chain (BNB) is in the foreground with 5,215 dapps and a user base exceeding 5.3 million unique active wallets (UAW) over the last 30 days.
ethereum (eth), on the other hand, occupies the second position with 4,497 dApps, although its user base of approximately 1.36 million UAW pales in comparison to Binance Chain.
However, ethereum dapp volume amounts to an impressive $115 billion, more than six times Binance Chain's $17.5 billion, highlighting the significant commitment of ethereum developers.
Amid this, Xin Jiang, former vice president of Binance, proposed that the market may not require further infrastructure improvements as dapps could emerge as the next catalysts for the crypto space.
What's happening? Let's delve into how the dapp market is performing, which chains are leading the frontier of development, and which sectors are driving the dapp market to new heights.
The current state of the dapp market
According to a nft-web3-games” target=”_blank” rel=”noopener”>report According to DappRadar, the dapp industry witnessed an impressive 124% year-over-year increase in its UAW, culminating in a daily count of 4.2 million UAW by the end of 2023.
Fast forward to early 2024, momentum shows no signs of slowing. Starting February 1, the dapp industry jagged reached a new milestone with 5.3 million UAW daily. This represents an increase of 18% from the previous month and the highest since 2022.
Breaking down the figures by industry segments provides insight into the diversification of dapp usage.
<img decoding="async" width="1024" height="623" src="https://crypto.news/app/uploads/2024/02/dappradar-1024×623.png” alt=”BNB Chain vs. ethereum: who wins the dapp race? – 2″/>
Blockchain games continue to lead the pack with a steady 1.5 million dUAW, maintaining their dominance from the previous month. This translates to a 28% dominance over the entire dapp ecosystem,
Similarly, the decentralized finance (defi) sector remains strong, holding steady at 1 million dUAW.
However, it's not just gaming and finance that is driving growth. The non-fungible token (nft) space has seen notable expansion, rising 4% this month, reaching 697,959 dUAW.
In the midst of this, the social sector dapp has grabbed the headlines, with an impressive 868,091 dUAW. This increase, a 262% increase from the previous month, is largely attributed to platforms like CARV and Dmail Network, indicating an increase in interest in social media on decentralized platforms.
Rise of social dapps
The growing popularity of social dapps comes in response to growing concerns about data privacy violations and online scams on traditional platforms.
tech mogul Elon Musk's acquisition of Twitter in 2022 sparked a wave of discontent among its user base. Subsequent changes, such as considering a paywall, caused a drop in monthly active users, expected will continue until 2024.
Amidst this, social dapps like Friend.tech gained traction. Launched in August 2023, Friend.tech quickly became a major player in the social cryptocurrency scene, with over 100,000 users and $25 million in revenue.
But the shift toward decentralized applications is not just about dissatisfaction with centralized platforms. Analysts stand out that regulatory scrutiny and privacy concerns, particularly in the EU, are also driving this trend.
Dapps differ from traditional platforms in that they avoid centralized data collection for ads; some are nonprofit and prioritize user privacy.
However, while decentralized platforms offer more freedom and anonymity, they also attract communities with extremist views, raising concerns about the spread of extremist content.
As of February 26, based on data of DappRadar, CARV, Galxe and Dmail Network have become the top social dapps, measured by total UAW in the last 30 days.
CARV and Dmail Network have seen significant growth, with volumes increasing by 330% and 120%, respectively. However, Galxe has experienced a substantial decline, up to 100%.
Why is Binance Chain leading the dapp race?
By comparing Binance Smart Chain (BSC) and ethereum on dApps' performance, scalability, transaction fees, and consensus mechanisms, we gain insight into their strengths and weaknesses.
BSC stands out for its low transaction fees and high scalability, allowing for fast transaction processing at a fraction of the cost compared to ethereum.
Starting February 26, BSC can drive up to 45.3 transactions per second (TPS), a significant improvement over ethereum's current performance, which ethereum/charts/transactions-per-second” data-type=”link” data-id=”https://blockchair.com/ethereum/charts/transactions-per-second” target=”_blank” rel=”noopener”>remains less than 15 TPS but points to a substantial increase with ethereum 2.0.
Transaction fees on ethereum have been a persistent concern. ethereum%20Average%20Transaction%20Fee%20is,85.84%25%20from%20one%20year%20ago.” target=”_blank” rel=”noopener”>averaging at $0.89 as of February 25. During periods of network congestion, these rates can skyrocket even higher, posing challenges for users and developers.
In contrast, BSC offers noticeably lower transaction fees, averaging at $0.15 at the time of writing, presenting a compelling advantage for those looking for more profitable blockchain interactions.
The choice between BSC and ethereum depends on the specific needs and priorities of dapp developers and users. Each platform has its advantages and disadvantages in terms of decentralization, security, transaction speed and cost.
BSC excels at providing an efficient and economical solution for high-frequency applications and transactions that require fast transaction speeds and low fees.
On the other hand, ethereum's strength lies in its strong security and decentralization measures, along with a wide range of dapps and a vast ecosystem.
The road ahead
The success of decentralized applications depends on improving the user experience to make blockchain-based solutions more accessible. Simplifying interactions, refining interfaces, and incorporating familiar features are crucial to attracting a broader audience.
In today's security-conscious digital world, dapps must also prioritize strong privacy and security measures. Innovations in cryptographic techniques such as zero-knowledge proofs and secure multi-party computing will be essential to improving security.
While finance and gaming have dominated the dapp scene, there are opportunities to expand into new areas such as social media, education, and healthcare.
Ultimately, the goal of dapps is widespread adoption. Achieving this requires not only technological advancements but also educational initiatives to show the practical benefits of dapps in everyday life.
