State of BNB Chain Q1 2024

From messari by AJC

Key Insights

Primer on BNB Chain

BNB Chain ( BNB ) is an ecosystem of blockchains where each chain serves a particular function. The three core components of BNB Chain are as follows:

The metrics in this report will focus on BNB Smart Chain (BSC). BSC is an EVM-compatible, layer-1 blockchain secured by a form of Proof-of-Staked-Authority ( PoSA ) that combines aspects of Proof-of-Authority ( PoA ) and Delegated Proof-of-Stake ( DPoS ). In PoSA on BSC, the validator set is of fixed size and is elected by stake weight (staked plus bonded). In addition, validators must continue staking assets to secure the network, and validators chosen to produce blocks are rotated (not based on stake weight). For a full primer on the BNB Chain ecosystem, refer to our Ecosystem  report .

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Key Metrics

Financial Overview

Market Cap and Revenue

BNB built off its strong finish in Q4 2023 and strengthened its rally in Q1 2024. At the end of the quarter, BNB’s market cap was $92.5 billion, up 89% QoQ. BNB’s market cap amongst all tokens (excluding stablecoins)  remained  flat at 3, only being surpassed by ETH and BTC. Additionally, BNB outperformed BTC in Q1, as the circulating market cap of Bitcoin increased by 65%.

Revenue, which measures all fees collected by the network, posted a strong Q1. In USD terms, revenue in Q1 was $66.8 million, up 70% QoQ from Q4’s revenue of $39.2 million. More revenue in USD was generated in Q1 2024 than any other quarter in 2023. However, this revenue increase was larger due to BNB’s price appreciation. Revenue in BNB was slightly up QoQ from 162,600 to 166,500 BNB, up 2% QoQ.

Gas fees paid on DeFi-related transactions have historically been the largest contributor to revenue. Q1 was no exception to this, as DeFi contributed 76,200 BNB in gas fees, a 1.7% QoQ increase from Q4’s 74,900 BNB. In percentage terms, DeFi transactions were 46% of total revenue. The category with the highest revenue QoQ increase was Stablecoins, increasing from 19,500 to 25,100 BNB (up 29% QoQ). The categories with the biggest decreases were Gaming (down 67% QoQ from 9,700 to 3,200 BNB) and Infrastructure (down 9% QoQ from 9,900 to 9,000).

Supply Dynamics

The initial total token supply for BNB was 200 million tokens ( launched  in July 2017). BNB is deflationary through a series of burning mechanisms:

By quarter end, the  circulating supply  of BNB was 153.9 million. Therefore, the annualized inflation rate was (2.9%), up 30% QoQ. Furthermore, the annualized real rate for staking BNB was 5.9%, down 19% QoQ. BNB’s negative inflation rates made it one of the few deflationary Layer-1 networks in Q1.

Network Overview

Usage

Average daily transactions fell in Q1, down 9% QoQ from 4.6 million to 4.2 million. This decrease can be attributed to a decrease in inscription-related activity. Q4 featured huge spikes in activity  related  to inscriptions. Importantly, however, average daily transactions are higher than they were a year ago (up 27% YoY from 3.3 million). Average daily active addresses saw impressive growth in Q1, up 26% QoQ from 1.0 million to 1.3 million.

Many protocols on BNB Smart Chain saw increases in average daily transactions in Q1.  USDT  was the protocol with the most transactions. It averaged 619,300 daily transactions, up 22% QoQ from 507,700. USDT nearly doubled the second protocol with the most transactions,  PancakeSwap , which averaged 345,200 daily transactions, up 4% from 332,900. Combined, USDT and PancakeSwap combined for 74% of protocol transactions, up 10% QoQ from 67%. In total, daily average transactions involving a protocol were up 5% QoQ from 1.2 million to 1.3 million.

Daily active addresses for notable protocols experienced gains in Q1. As with daily average transactions, USDT and PancakeSwap represented the bulk of active addresses that interacted with a protocol on BNB Smart Chain. Tether ended the quarter with an average of 273,300 daily active addresses (up 17% QoQ from 233,800), and PancakeSwap had an average of 110,500 daily active addresses (up 12% QoQ from 98,800). Combined, Tether and PancakeSwap accounted for 65% of active addresses that interacted with a protocol in Q1 (up 8% QoQ from 60%). Additionally, stablecoins  BUSD  and  USDC  noticed an uptick in daily active addresses in Q1. BUSD was up 9% QoQ from 11,300 to 12,300, while USDC was up 58% QoQ from 7,300 to 11,400.

In Q4, BNB Smart Chain  transitioned  its Gas Grants program to the  DAU Incentive Program . It awards up to $200,000 monthly, and individual projects can earn up to $90,000 from the prize pool. The total prize pool varies, equaling the sum of gas fees from eligible projects up to $200,000. Eligible projects are ranked based on their average DAU during the month they participate in the program. Winners of the first phase of this program were  announced  on January 18:

Security and Decentralization

BNB Smart Chain utilizes a  Proof-of-Staked Authority  (PoSA) consensus mechanism in which 40 validator nodes are  elected  every  24 hours  to participate in consensus. Their election is based on the total number of BNB tokens staked by/to each node. Elected validator nodes then take turns producing blocks based on  Ethereum’s Clique consensus design .

The  implementation  of  BEP-131  in June 2022 introduced candidate validators. Since then, the  maximum amount  of active validators on BNB Smart Chain is 40. Active validators first reached 40 in Q4 2023 and remained flat QoQ, a healthy sign for network security and the appetite for operating validators on BNB Smart Chain.

Total BNB staked also trended higher in Q1, increasing 6% QoQ from 22.1 million to 23.4 million. The combination of BNB price appreciation and an uptick in BNB staking resulted in an 101 % QoQ increase in the total dollar amount of BNB staked, from $7 billion to $14.1 billion.  Compared  to other PoS networks, BNB Smart Chain had the third-highest dollar value of funds staked by the end of Q1. However, the gap behind the second-highest ( Solana ), was $55.9 billion.

The  Nakamoto coefficient  is the number of node operators that collectively control more than 33% of the network. The higher the coefficient, the more resilient a network is to attacks and bugs. Alongside active validators, the Nakamoto coefficient remained flat QoQ at 7.

Technical Developments

BNB Chain underwent a series of hard forks and technical upgrades in Q1:

In Q2, BNB Beacon Chain will be  sunset.  While BNB Beacon Chain was used as BNB Chain’s staking and governance layer, it introduced  complexity  and some security vulnerabilities due to the bridging between BSC and BNB Beacon Chain. For this reason, BNB Chain plans to migrate BNB Beacon Chain functionality to BNB Smart Chain.  BEP-333: Chain Fusion  will be implemented across four different upgrades.

Lastly, there is a  proposal  still in discussion for Proposer-Builder Separation (PBS) on BNB Smart Chain validators.  BEP-322  aims to address the fragmentation of MEV (maximal extractable value) solutions on BSC. Of the 40 total active validators, 23 have  adopted  MEV solutions, some with different providers. The different architectures make it difficult for validators to synchronize with different MEV providers. Additionally, without BSC client support, MEV services remain unstable. BEP-322 proposes a unifying solution to improve transparency, encourage competition through multiple MEV integrations, and stabilize the products.

2024 Roadmap

On January 31, BNB Chain released its  roadmap  for 2024. The roadmap is multifaceted, featuring robust plans for BNB Smart Chain, BNB Greenfield, opBNB, and more. The goal of future development efforts is to unify the current ecosystems and chains with the multichain paradigm, “One BNB’” within BNB Chain for a unified, seamless experience. Some key highlights include:

Ecosystem Overview

DeFi

BNB Smart Chain DeFi TVL denominated in USD increased from $4.3 billion in Q4 to $7.2 billion, a 67% QoQ increase. This  ranked  BNB Smart Chain as the third highest chain by TVL denominated in USD by the end of the quarter. However, TVL denominated in BNB slightly decreased QoQ by 12% from 13.6 million to 11.9 million BNB. This dynamic indicates that the TVL increase in USD was driven by BNB price appreciation and capital inflows. This dynamic indicates that the TVL increase in USD was driven in part by BNB price appreciation.

The top two protocols by TVL on BNB Smart Chain are  Venus Finance  and PancakeSwap. Venus Finance, the largest protocol by TVL, grew 71% QoQ from $1.7 billion to $2.8 billion ($1.1 billion increase). Notably, $255.7 million of the TVL  increase  was driven by borrowing (23% of the QoQ increase). The majority of Venus Finance’s TVL gains in Q1 were driven by the price appreciation of deposited assets and the growth of supplied assets on the protocol. By the end of Q1, Venus Finance’s TVL dominance was 39% (up 1% QoQ).

PancakeSwap also had an impressive Q1, growing its TVL from $1.6 billion to $2.3 billion, a 44% QoQ increase. PancakeSwap consists of three different AMMs ( PancakeSwap AMM ,  StableSwap , and  AMM V3 ). By the end of Q1, AMM TVL was $1.7 billion (77% of TVL), StableSwap TVL was $52 million (2% of TVL), and AMM V3 TVL was $480.3 million (21% of TVL). However, PancakeSwap’s TVL dominance decreased to 32% (down 14% QoQ). In sum, Venus Finance and PancakeSwap represented 71% of TVL on BNB Smart Chain.

Outside of the top two, there were other protocols with notable TVL gains in Q1.  Lista DAO , a CDP stablecoin lending protocol,  launched  a rewards program in Q1 to encourage protocol usage. In part to this rewards program, Lista DAO TVL grew 423% QoQ from $58.5 million to $306 million.  PinkSale , a token launchpad protocol, had a 55% QoQ increase from $179.8 million to $277.9 million.  Kinza Finance , a lending protocol, also experienced TVL growth in Q1. Its  rewards program , which launched in Q4, continued helping to grow TVL in Q1, up 216% QoQ from $64.7 million to $204.5 million. Finally, a Bitcoin Layer-2 project,  B² Network ,  launched  a farming project on multiple chains in Q1 ( B² Buzz ). At quarter end, this farm had attracted $154.6 million in BTCB deposits on BNB Smart Chain.

In Q4, BNB Smart Chain introduced the  TVL Incentive Program . The TVL Incentive Program aims to reward projects deployed within the ecosystem that attract significant amounts of TVL. The program runs in phases, and  Phase 2  ( launched  March 5) will reward $160,000 total to five projects on BNB Smart Chain. The program lasts until April 14, and at the conclusion of the program, rewards will be sent to the five projects with the most incremental TVL gains. As of writing, the five projects in line to  receive  rewards from this program are:

DEXs performed quite well in Q1, as average daily DEX volumes rose 193% QoQ from $364.1 million to $1.1 billion. Onchain activity has been elevated across most networks due to a “ Memecoin Mania ” and the resurgence of a bull market, and BNB Smart Chain was no exception. The month of March ($48.6 billion) had the highest DEX volumes on BNB Smart Chain of any month since December 2021 ($55.3 billion).

By the end of Q1, there were 64 different DEXs on  BNB Smart Chain . Despite the high level of competition, PancakeSwap has historically been the most dominant DEX on BNB Smart Chain. In Q1, PancakeSwap’s average daily DEX volume was $762.5 million, up 140% QoQ from $317.5 million.

In percentage terms,  Uniswap  was the top gainer on BNB Smart Chain for average daily DEX volumes. In Q4, Uniswap averaged $5.5 million in daily volume. That number grew 3,673% QoQ to $208.3 million in Q1. For Q1, the top five DEXs by average daily trading volume were:

Stablecoins

The stablecoin market cap on BNB Smart Chain was on a downtrend in 2023. This was primarily due to the decrease in the supply of  BUSD . In Q1’23, NYDFS  ordered  Paxos (the BUSD issuer) to cease issuance, and various centralized exchanges, such as Coinbase,  suspended  BUSD trading. As such, the stablecoin market cap on BNB Smart Chain decreased every quarter in 2023.

In Q1’24, the losses from BUSD (down 38% QoQ from $566.9 million to $354.1 million) were finally outpaced by the gains from other stablecoins on BNB Smart Chain. In total, the stablecoin market cap increased 4% QoQ from $4.6 billion to $4.7 billion.  USDT  had the biggest gains in absolute terms, gaining $200.2 million in market cap (up 6% QoQ from $3.4 billion to $3.6 billion). By the end of Q1, USDT represented 76% of the stablecoin market on BNB Smart Chain.  USDC  was the biggest gainer in percentage terms, gaining 27% QoQ (from $428.7 million to $543.2 million). By the end of Q1, USDC represented 11% of the stablecoin market on BNB Smart Chain.

opBNB

opBNB is an EVM-compatible optimistic rollup that helps scale execution throughput for BNB Smart Chain. Since  launching  in the middle of Q3, $29.2 million was bridged to opBNB from BNB Smart Chain by the end of 2024. Total value bridged (TVB) bridged in Q1 more than doubled, up 118% QoQ to $63.7 million. USDT (up 219% QoQ to $43.7 million) is by far the most popular bridged token on opBNB, representing 69% of all TVB. BNB, the gas token for opBNB, also represents a large portion of TVB (26%). BNB TVB was up 33% QoQ to $16.5 million. Combined, USDT and BNB account for 95% of opBNB’s TVB.

In Q4, BNB Smart Chain introduced the  TVL Incentive Program . The TVL Incentive Program aims to reward projects within the ecosystem that attract significant amounts of TVL. The program runs in phases, and  Phase 1  ( launched  December 6) rewarded projects specifically deployed on opBNB. This phase ended on January 14, and the following projects  won :

This program helped increase the DeFi TVL on opBNB. On December 5, 2023, TVL was $3.3 million, and by January 14, TVL had increased to $21.6 million (up 552%). In quarterly terms, DeFi TVL on opBNB ended Q1 at $18 million, up 40% QoQ.

NFTs

The NFT market on BNB Smart Chain had an impressive Q1, with the biggest increase in activity in over a year. The average daily NFT trading volume grew 249% QoQ from $223,000 to $778,700. Average daily sales also had a large increase, up 229% QoQ from 3,900 to 12,900. There was also a noticeable increase for average daily buyers, jumping 128% from 2,000 to 4,500.

Ecosystem Growth

After private crypto markets bottomed out in the latter half of 2023, BNB Smart Chain ecosystem funding picked back up in Q1. Six projects building primarily on BNB Smart Chain announced funding rounds in Q1, totaling $37.6 million raised.

BNB Smart Chain continues to support new projects within its ecosystem outside of private fundraising through its  Most Valuable Builder (MVB) Accelerator Program . Applications for the seventh season of this program, in collaboration with Binance Labs and CMC Labs,  opened  in December 2023. Teaming up with Binance Labs and  CMC Labs , this program aimed to incubate new projects and took place in Q1  2024. It  featured  a 10-week accelerator, builder grants, and operational resources for applicable teams. On March 1, BNB Smart Chain  announced  the 13 projects that were selected for the program:

Outside of the MVB Accelerator Program, BNB Smart Chain also hosted a  hackathon  in Q1. Application submissions were  open  from January 18 to March 5, and over 700 different applications were  submitted . The total prize pool consisted of over $490,000, and there were six different  tracks : (i) AI, (ii) Infrastructure, (iii) Gaming, (iv) DePIN, (v) DeSoc, and (vi) DeSci. The winners of the hackathon were announced on March 20:

A list of all other projects that qualified for prize money can be found  here .

Closing Summary

BNB Smart Chain was able to capitalize on the return of the crypto bull market in Q1. It achieved QoQ improvements across multiple metrics like market cap (up 89% QoQ), revenue in USD (up 89% QoQ), average daily active addresses (up 26% QoQ), DeFi TVL (up 67% QoQ), and average daily DEX volume (up 193% QoQ). Additionally for some metrics, such as DEX volumes, BNB Smart Chain reached highs not seen since the last bull run in 2021.

As crypto enters the next stage of the market cycle, BNB Smart Chain will be well-positioned to benefit. On the technical side, BNB Chain is progressing to one singular, unified solution encompassing BNB Smart Chain, opBNB, and BNB Greenfield with “One BNB.” As for the ecosystem, BNB Chain continues to support its developers and builders through various incentive programs, accelerators, and hackathons that will attract top talent.