Comparing MBDX Performance to Ethereum

Ethereum is widely known for its open source decentralized framework that allows the development of dApps and smart contracts. The DeFi sector has been a major beneficiary of its use cases as it facilitates the transfer of digital assets from one user to another. However, the recent growth in the DeFi sector has made even more obvious the major problems with Ethereum, the most popular platform for DeFi.

To escape the rising gas prices and slower transaction speeds, other public chains like Binance Smart Chain have grown to be a strong alternative.

Challenges with Ethereum

Slow Transactions

Ethereum’s consensus mechanism is currently based on a PoW (Proof of Work) system, although there are plans of shifting to a Proof of Stake (PoS) consensus mechanism. However, its current mechanism only allows it to process a limited number of transactions per second. On average, DeFi apps that run on the Ethereum blockchain process about 15 transactions per second (TPS). But with the current astronomical growth in DeFi, transactions certainly need to be processed faster than that.

The implication of this slow transaction bottleneck is thus, users who need faster transactional capability would have to pay higher gas fees to make their transaction a priority. The reality is, most users want their transactions to be priority, hence they have little to no choice but to pay gas prices. This is a major dissuading factor for potential users and investors who cannot afford such fees.

High Fees and Cost

Transactions in popular DEXs that run on Ethereum cost up to US$75 while complex transactions cost users thousands of dollars. On average, transaction fees on Ethereum topped more than US$23. What this implies is, users who cannot afford such costs per transaction are left with no choice than to find alternatives or be left out. It also negatively affects decentralized derivatives trading especially for exchanges that use on-chain trading.

Cost and fees are important factors to consider for the growth of the DeFi ecosystem and decentralized derivatives trading. While Ethereum plans to shift to PoS, this will take quite some time as system change is complicated.

User Unfriendly

If we seek massive adoption of professional derivatives or spot trading, a full-fledged user interface is very crucial. A look at current centralized exchanges, it is quite apparent that they have robust trading UI, advanced order types and API integrations that make the overall trading experience much more cohesive.

DeFi trading platforms on the other hand, including derivatives platforms running on Ethereum are far from having a solid user interface that is easy to use while being very robust.

How CDzExchange is leveraging Binance Smart Chain

Binance Smart Chain (BSC) is a public blockchain that’s EVM-compatible, meaning that it supports Ethereum’s existing dapps and tools from the get-go. BSC’s Proof of Stake Authority (PoSA) consensus model provides very fast transactional capabilities with much lower fees compared to Ethereum. The average transaction fees on BSC cost just fractions of a dollar — for example you can send $300 worth of assets for roughly $0.01 which is magnitudes cheaper than Ethereum gas fees.

Due to its popularity, DeFi apps building on BSC has boomed, with billions of dollars in total value locked across BSC’s DeFi apps. Thus, CDzExchange builds on BSC to leverage the practical balance between security, cost and performance for the growing DeFi needs.

The daily active number of BSC addresses surged 21.8x from January 1st to the all time high on April 21st of 2021 (source: bscscan.com).

The DeFi sector is experiencing unprecedented growth, and the earlier the solutions are provided to ensure this growth is sustained, the better for all participants in the ecosystem.

Image credit: Pixabay

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Cross-chain Crypto Derivatives Exchange