Users Choose Tron and BNB Chain Over Ethereum Despite Falling Fees

Ethereum is the only of the top-five networks by unique users to post a decline in its daily active users (DAUs) over the past year, with a 16% drop in 12 months, according to Token Terminal. Over the same period, DAUs grew 83% on Tron, 42% on Bitcoin, 22% on BNB Chain, and 21% on Polygon.

Ethereum’s comparatively higher fees remain a deal-breaker for many newer crypto users even as the average fees associated with most Ethereum transactions dropped to just a few dollars amid the downtrend.

According to data from Token Terminal, Tron is the top blockchain by unique daily active wallets with 1.5M. BNB Chain ranks second with 1.1M, followed by Bitcoin with 650,600, Polygon’s PoS Chain with 350,000, and Ethereum with 311,300.

However, both Tron and Binance have faced long-standing concerns regarding high levels of suspected bot activity on their networks.

Top blockchains by daily active unique wallets. Source: Token Terminal

Tron dApps

Justin Sun launched the Tron network in 2017, which was largely dominated by gambling dApps before riding the alternative Layer 1 bull market from early 2021. The network’s TVL oscillated between $4B and $6B since late 2021, currently ranking second among smart contract networks with $5.5B. Ethereum boasts a TVL of $30.6B.

But the network is dominated by just two protocols, with JustLend, a lending protocol, accounting for 70% of Tron’s TVL, followed by JustStables, a collateralized debt protocol, with 21%.

The supply of USDT, the leading dollar-pegged stablecoin, has ballooned on Tron in recent years. Tron now represents $42B or nearly 52% of USDT supply, up from $3.3B three years ago, according to DeFi Llama.

BNB dApps

While BNB Chain launched in 2019, the network didn’t gain significant traction until positioning itself as a low-cost rival to Ethereum in early 2021. BNB Chain’s total TVL peaked at $22B in May of that year and has since steadily pulled back to now sit at $5.1B.

PancakeSwap, a fork of Ethereum’s Uniswap decentralized exchange, is BNB Chain’s top protocol. It accounts for 46% of the network’s TVL and ranks third among DEXs for daily volume with $156M, according to CoinGecko.

Conor Grogan, a director at Coinbase, tweeted that PancakeSwap has facilitated more transactions than Ethereum, Bitcoin, Dogecoin, and Litecoin combined. While the DEX processed roughly 2M transactions daily for the past six months, the figure pushed above 10M in Q1 and Q4 of 2021.

Lending protocols Venus and Alpaca Finance round out the BNB chain’s top 3 protocols with respective TVLs of $859M and $349M.

Centralization

But decentralization advocates have decried BNB Chain for being secured by a permissioned cohort of validators, arguing that the structure allows Binance to exercise control over their respective chains. BNB Chain plans to expand its validators from 40 to 100 this year.

In October 2022, BNB Chain suspended its operations to limit the losses from an exploit. The hacker made off with $110M, but was unable to transfer a further $430M in assets before the network was halted and the remaining funds seized, according to SlowMist, a blockchain security firm.

Tron faces similar chastisement for its 27 “super representative” validators, which are voted on by TRON tokenholders. In 2019, Tron’s co-founder and former CTO, Lucien Chen, claimed the project’s team controlled the majority of the network’s validators, in addition to mobilizing most of the votes cast in super representative elections.

Ethereum’s Layer 2 Surge

Ethereum’s L2 ecosystem is also emerging as a hub for on-chain activity. Arbitrum is the sixth largest network by DAUs, with that metric surging 110% in the past month, while Optimism also ranks as the ninth largest network.

Despite the high levels of activity on L2, combining Ethereum’s DAU count with Arbitrum and Optimism only moves Ethereum up one position in the blockchain user ranking to fifth, behind Bitcoin.