PancakeSwap, a Binance Smart Chain automated market maker, surpassed Uniswap’s total value locked for the first time yesterday hitting $7.87B, a mark $100M higher than the Ethereum AMM. That makes the BSC-based AMM the largest by assets locked.
PancakeSwap’s TVL is more than 53 times larger than it was three months ago when the AMM had only $146M locked in its protocol. PancakeSwap is now the leading AMM in terms of both TVL and daily trading volume, which has been over $1B for seven days straight now. Prior to the week-long streak, PancakeSwap had only two days with over $1B in trading volume according to DeBank.
PancakeSwap’s growth comes with caveats. Its native blockchain, BSC, uses a Proof-of-Staked-Authority (PoSA) model which limits its validator set to 21 block producers. The restriction of validators means both block time can be reduced to three seconds and gas limit increased to 30 million beyond Ethereum’s capabilities 12 seconds and 12.5 million, respectively.
Fewer nodes allow BSC to offer low gas fees, which have drawn many new users into the chain’s financial ecosystem, even though Binance sacrificed decentralization by making validator participation a permissioned process, while BSC governance depends on Binance itself.
The US is the top visiting country for both protocols, but the country represented 17% of visits for Uniswap while only 8% for PancakeSwap.
The average per capita GDP of the top five Uniswap visitors’ countries is $43,274 while PancakeSwap’s is $26,396, more evidence that Ethereum gas fees are pushing user from poorer countries towards using programmable finance on other blockchains.
From TVL to Prices
At $26, PancakeSwap’s token, CAKE, is nearly 49 times higher than it was three months ago. The pace of growth roughly matches the protocol’s TVL growth (53 times larger) over the last three months, while Uniswap’s UNI token price has grown by a magnitude of over six over the same period to $36, while its TVL has tripled.
Considering that PancakeSwap is a fork of Uniswap, investors may be hesitant to push CAKE’s market capitalization over UNI’s as the team behind the former may not be able to lead in terms of innovation.
“BSC sacrifices future innovation for today’s throughput. There’s no need to innovate on BSC because there are no constraints forcing you to,” Vas Del Por, the runnerup in the Pplpplsr Uniswap V3 auction, said on Twitter.
Uniswap’s V3 comes with a proprietary license and new capital efficiency improvements, perhaps making another fork illegal as well as the TVL metric less indicative of value.