Binance Smart Chain (BSC) and its validator structure makes it way more centralized than its rivals
Faced with the price growth of Binance Coin (BNB) and the vast Binance ecosystem, Messari researcher Wilson Withiam decided to dive into Binance Smart Chain (BSC) research. And his findings actually proved skepticism among people: Based on the Binance Smart Chain (BSC) validator architecture, it seems much more centralized than its competitors.
BSC’s active validator set resets daily based on each validator’s voting power (staked BNB + any delegations).
All BNB staking and delegation takes place on Binance Chain through a staking module.
Binance Chain validators manage this module, thus all BSC validator accounts.
— Wilson Withiam (@WilsonWithiam) April 12, 2021
Binance Smart Chain validator structure makes it way more centralized than its rivals
Withiam states that Binance Smart Chain is more centralized than most platforms:
“Some might overlook the influence Binance Chain has over Binance Smart Chain’s validator set. BSC has 21 active validators, making it more centralized than most platforms.”
He added that the set of validators is defined daily by Binance Chain, a network managed by just 11 validators, and has posted an infographic showing the relationships.
The researcher went on to explain:
“BSC’s active validator set resets daily based on each validator’s voting power, consisting of staked BNB and delegations. All BNB staking and delegation takes place on Binance Chain through a staking module managed by Binance Chain validators. These in turn control all BSC validator accounts.”
BSC currently supports several third-party validators, and some of them have close ties to Binance.
Withiam concludes that users should know that the network is much less decentralized than its creator claims:
“For those using BSC, take the time to understand the topology of the network. Sure, the fees and speed (both UX factors) are undoubtedly preferable. But strong censorship resistance and fault tolerance are not part of the package.”
Another blockchain network with node centralization and validator problems is EOS. The EOS blockchain has previously encountered similar problems with its block producers and an element of excessive control over the network.
With the Ethereum price gas surging again, those new to the DeFi scene seem unconcerned about centralization – as long as they can profit from it. The average gas price fluctuates around $ 15. However, the highest cost to do a token swap or smart contract operation is rising above $ 60.
Binance has seen strong growth and usage figures in recent months. According to the B scan block explorer, the number of daily transactions has increased by more than 1,300% since the beginning of the year to hit a peak of nearly five million on April 8.
The strong BSC dynamics and newly launched liquidity farms have also propelled Binance’s native token, BNB, to an all-time high. On April 12, BNB hit a peak price of $ 597 – up more than 1,400% since the start of 2021.
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