Binance To Launch opBNB Layer 2 Network Later This Month
Early Users Can Claim Genesis NFT
By: Samuel Haig •DeFi News
Binance, the top centralized crypto exchange, is gearing up to launch opBNB, a Layer 2 scaling solution designed to significantly boost the throughput of its Layer 1 smart contract platform, BNB Chain.
On Aug. 10, Binance announced it will deploy opBNB on mainnet this month, meaning the deployment will take place within roughly the next two weeks. Binance first unveiled opBNB alongside launching its testnet on June 19.
Binance kicked off a promotional campaign dubbed “Odyssey” on Aug. 9, with early adopters receiving opBNB Genesis NFTs and being eligible to win a share of $50,000 in prizes. Binance said opBNB Genesis NFTs will confer “a set of benefits and utility for its holders.”
Users must complete a series of tasks to qualify for the NFT, including bridging assets between the opBNB and BNB Chain testnets and minting their own NFT using opBNBScan. opBNB is built on Optimism’s OP Stack, a tech stack for launching customized Layer 2s.
BNB Chain Looks To Reverse Decline
The launch of opBNB follows a long–term downtrend for the total value locked (TVL) and market share of BNB Chain.
Binance launched its first smart contract network, Binance Chain, in April 2019. The network suffered from poor adoption and technical shortcomings, prompting the launch of BNB Chain (then called Binance Smart Chain) in September 2020 amid DeFi Summer.
BNB Chain offered compatibility with the Ethereum Virtual Machine (EVM), meaning developers could migrate code from Ethereum to BNB Chain without making wholesale changes. With the early DeFi boom pushing up transaction fees on Ethereum, BNB Chain positioned itself as a low-cost alternative populated by forks of Ethereum’s leading protocols.
BNB Chain started 2021 with a TVL of $152M before rocketing to an all-time high of $22B in early May, and then oscillating between $9B and $16B for the rest of the year, according to DeFi Llama. BNB Chain consistently ranked as the second-largest smart contract network until getting overtaken by Terra in December 2021.
While Terra abruptly imploded in May 2022, BNB Chain also lost two-thirds of its TVL last year. The downtrend has continued into 2023, with the network getting overtaken by Tron in Q1 and falling to a $3.1B TVL.
Arbitrum, Ethereum’s largest Layer 2, also overtook BNB Chain in March after airdropping its ARB token to early adopters. According to L2beat, the airdrop pushed Arbitrum’s TVL from $3.8B to $5.8B in a single day. Arbitrum currently hosts $5.9B worth of assets, down from a record high of $7B in April.
Ethereum L2s Overshadow Alt L1s
BNB Chain and other cheap Layer 1 networks also face stiff competition in the form of Ethereum’s surging Layer 2 ecosystem.
L2s undermine the value proposition of alternative Layer 1s by offering comparable fee savings with the added benefit of inheriting security guarantees from Ethereum’s $43B Proof of Stake consensus mechanism.
However, some in the crypto community have raised concerns about the lack of working fraud proofs posing a risk to early L2 participants.
Ethereum L2s have been on a tear in 2023, gaining 156% to sit at $10.6B in TVL.