Making Index Coop more accessible by unlocking Binance Smart Chain (BSC)

[Louisaraj]

Authors : @Louisaraj @sriram @pujimak_in
Co-Authors & Reviewers: @tudou @vanita @mringz

Background :

Since the launch of Index Coop over a year ago - our mission remains the same; to make crypto simple, easy & accessible to all. This sense of direction has shaped how we approach every aspect of the DAO, from growth via engaging in strategic partnership, to finding external methodologies where we deploy products that have excellent product-market fit. We’ve also ventured into creating solutions that make crypto investing simple, by having our products in Layer 2 solution with Polygon, which is a huge win in 2021. Furthermore, creating opportunities for global expansion has resulted in us having the first regional working group, APWG.

Where our principles have been our foundation - our mission has been the compass for growth. As Index Coop moves towards a DAO that is chain agnostic, this post aims to showcase to the community where our next 100x expansion potentially might be. I.e. expanding to the BSC ecosystem.

1. BSC Ecosystem

Binance Smart Chain (BSC) is a hard fork of the Go Ethereum (Geth) protocol, and as such, shares many similarities with the Ethereum blockchain. However, BSC developers have made significant changes in some key areas. The largest change is BSC’s consensus mechanism, which allows for cheaper and faster transactions. Hence, BSC is popular amongst price sensitive users especially in APAC.

2. Blockchain Traffic

A. Avg. daily transactions

There is a major difference between the average daily transactions on BSC and Ethereum. On BSC, it is quicker and more efficient for users to move their funds and interact with smart contracts. BSC’s average daily transaction peaked at 13 mil and the current status at over 6M. On the other hand, Ethereum’s daily transactions have never exceeded 1.7M.

Source: bscscan.com

Source: etherscan.com

B. Active Daily Address

Despite being a newer blockchain, BSC recorded a high of 1.5 mil addresses on Oct 14, 2021 – more than double Ethereum’s all-time high of 799,580 addresses on May 9, 2021.

Source: bscscan.com

Source: etherscan.com

C. Unique Wallet Addresses

The number of unique wallet addresses on BSC has hit 116m since its inception.

Source: bscscan.com

D. Total Value Locked

Among the top L1 chains, BSC occupies the second position with TVL of $19.47B and has witnessed tremendous growth since its launch in September ‘20

Source: Defillama

3. Defi Dapp Comparison

A. Trading volume

PancakeSwap, the largest DEX for the BSC ecosystem, at time of writing has recorded USD 1.3B in 24hr trading volume and is ranked number one in overall performance of DEX trading volume for all blockchain among all DEXs.

DEX Trading Volume Ranking

Source: Debank.com

It is interesting to note the average size of trade for users from PancakeSwap (24H VOL/ 24H USERS) averages to approx. USD 2400. This could be an indication that most users on BSC are new to crypto trading and investing. Listing Index Coop’s products on BSC would further align with the mission to be the landing spot for millions of crypto investors all around the world as they start investing in this space.

B. DEXes TVL Comparison

PancakeSwap is ranked third in overall DEXes TVL with USD 6B deposited in the protocol. A point to note is Pancakeswap has only presence on BSC.

Source: Defillama

C. Pancakeswap demographics

Pancakeswap has a strong presence and caters widely to Asian countries and has Japan & India as its top users. Also note that among the top 10 list below, 3 of them are in Americas region, with the US actually taking the top spot, and the 2 countries in the LATAM region accounted for almost 12.2%, shy of 3% from the US . This is only one of the indicators that despite strong presence in Asia + Pacific, it also adds a lot of value to both developing and developed countries.

Source: Webrate.org

4. Stablecoin holders comparison

Stablecoin is one key factor in driving mass adoption of crypto as it serves as the bridge between fiat and crypto. BUSD is a 1:1 US dollar-backed stablecoin issued by Paxos and approved by the New York State Department of Financial Services, and is the major stablecoin for the BSC ecosystem. At time of writing, there are currently 1.97 mil wallet addresses that are holding BUSD. This is also the second most held stablecoin in terms of token holders. This means that a significant number of crypto users trust BUSD as the stable coin of choice for Defi solutions.

5. Competitors to Index Coop in BSC Ecosystem

In summary, there are no strong competitors in the field of crypto index products in BSC ecosystem.

6. Potential of BSC for IC

• Since BSC is strongly backed by Binance, there is a constant influx of new users of Binance Centralized Exchange onto BSC as it is their primary DeFi chain.
• Binance is further strengthening BSC with a new 1B [growth fund ](https://www.binance.org/en/blog/binance-launches-one-billion-binance-smart-chain-fund-to-reach-one-billion-crypto-users/)across the ecosystem
• BSC is dominated by Asian markets which could be a potential target of IC’s next billion users, so having a brand presence on BSC could aid in the same
• While BSC is dominant in emerging markets, one cannot deny that even in developed nations, especially the United States; they are also one of the key stakeholders that use this chain in the DeFI space

Conclusion:

Index Coop is only as strong as its overall presence in the whole DeFI space. Having our products across multiple chains while maintaining its strong commitment to product growth, protocol sustainability and community autonomy will enable us to move one step closer to our mission of making crypto investing easy, simple & accessible. As we experiment on having our products across multiple chains, it is important to prioritise our efforts on one that will return the greatest impact to our core KPIs. Given the metrics above which highlights the performance of BSC, we believe that expanding our products to BSC is an experiment worth having. We value community feedback on the 2nd largest ecosystem (after ETH) research and we look forward to your inputs & suggestion.

Please share any comments/questions/objections/concerns you have below!

Temperature check;

• FOR - having our products on BSC can add FURTHER value to Index Coop; more R&D required to address benefits & challenges moving forward.
• AGAINST - having our products on BSC will NOT add value to Index Coop; cease R&D and proceed in other endeavours.

[pujimak_in]

Good job on the research for this. @Louisaraj and @sriram.

Cc @Mringz @BigSky7

Of course… this forum post is open for discussion. Looking forward to everyone thoughts on this.

[Tudou]

You can’t imagine how much effort Louisa, Irsyad and the rest have put into drafting this post. Regardless of the outcome, I am grateful for those involved in this. I am personally in favour of making a presence on BSC, although humbled to learn from the community their worries and suggestions.

[pujimak_in]

Also… if you guys voted AGAINST the Temp Check, would love on thoughts and world view as why you think so.

Cheers~

[Vanita]

Request the community to share their thoughts on the reason behind the temp check. This will allow us to reflect on the thoughts and better align the requirements

[MrMadila]

Hi guys, thanks for putting together such a well detailed, laid out post. I hope the other members who voted against can find time to provide some constructive feedback.

I voted against on the basis that BSC in not decentralised and based off of anecdotal consensus that the chain lacks security. We already have a strategy in place to get our products over onto L2’s in order to make them more available and economical to buy and sell. At the moment this is concentrated on polygon and soon I expect Arbitrum and other scaling solutions.

As our brand is very much focused on being the premium on chain index provider I would argue that it is not a good match to be on BSC due to it’s perception mentioned above. (I appreciate that, that perception also varies greatly throughout regions and crypto social circles)

My question to you is: do you need permission to bridge the DPI or MVI tokens etc over onto BSC? If not then there is nothing stopping anyone who is passionate about seeing the products there from porting them over. If they get organic traction there great. But I would not vote to allocate resources or be seen to be promoting any relationship with Binance.

[0xModene]

Going to hard no on this. BSC isn’t decentralized at all, the chain has a tough time keeping consensus, and the developers are very reckless with updates.

I’d rather spend engineering time encouraging our customers to put their crypto into other, more responsible chains

edit: I’d suggest taking a look here for some insight into my thoughts here

[LemonadeAlpha]

Appreciate the thoughtfulness and thoroughness behind this post

I voted against for a few main reasons:

• I would be curious to understand the demand for DPI or our other porducts on BSC given the underlying projects are typically not on the BSC platform

• I want us to be a bit more deliberate with what chains we target, BSC not necessarily being the right fit in my personal opinion (the counter to that is a BSC-focused product built on a BSC-native asset manager platform would be fine imo)

• It doesn’t appreciably improve UX relative to the existing Polygon deployments (afaict, there is no mobile app to interact with BSC & from bank account)

With all of that said, if some DEX were willing to sponsor the rewards, its hard for me to object.

[catjam]

Echoing concerns from @MrMadila and @0xModene on BSC. I personally believe that the future is multi-chain and we should be looking at opportunities to expand outside of the Ethereum L1/L2 ecosystem. I also appreciate the regional lens that the APACWG has brought to this post. However, I think the risks outweigh the benefits for BSC specifically.

If the group is looking for other L1s with an APAC presence, Terra might be worth a look – it’s got robust bridge support, a booming APAC community, and lots of cool projects! (That said it’s not EVM compatible so there may be technical limitations.)

[TheYoungCrews]

Thanks to all who worked to put this detailed post together. I love to see data-driven arguments for potential growth opportunities – keep them coming!

I voted against for reasons unrelated to BSC’s decentralization/security (valid points raised by other objectors). Index Coop products are available as ERC-20 tokens via TokenSets, and they can be bridged anywhere that ERC-20 tokens can go. I’m not sure what the call to action on this post is asking for.

Are we asking Set Protocol to consider deploying their contracts on BSC & create BEP-20 versions?
Are we asking our limited Index Coop engineering resources to build BEP-20 versions of our existing products?
If it were as simple as bridging our existing products over to BSC & running some awareness campaigns, I would be interested, but I don’t think it is.

@Louisaraj

5. Competitors to Index Coop in BSC Ecosystem

Less than $1m AUM for any crypto index product on BSC shows that we’re not clearly leaving a big opportunity on the table here. No question that APAC growth should be a strategic priority, as should making our products accessible in lower fee environments that new folks can participate in without paying an arm & a leg on gas fees, but I think we are better off focusing our efforts on Polygon at this time.

[0xModene]

@catjam

I also appreciate the regional lens that the APACWG has brought to this post.

Following up with a personal affirmation to this, as I didn’t include that originally. The whole Binance ecosystem as I understand it is much larger in APAC areas, and I understand why BSC is a consideration because of that.

Perhaps we could see BSC fade a bit now that Binance (CEX) is allowing direct-to-Arbitrum payouts (and other options as well), but not being in APAC I have zero idea as to what the meta game is there, socially

[TheYoungCrews]

definitely appreciate the regional lens & appreciate the scale of BSC as well. Perhaps we could pursue growth by pulling folks out of the BSC ecosystem & into indexcoop products on Polygon, Ethereum & any other L2 or L1 chain that our products are available on, as they are all inherently global.

[Thomas_Hepner]

@TheYoungCrews

I voted against for reasons unrelated to BSC’s decentralization/security (valid points raised by other objectors). Index Coop products are available as ERC-20 tokens via TokenSets, and they can be bridged anywhere that ERC-20 tokens can go. I’m not sure what the call to action on this post is asking for.

Agreed. Could the original posters provide an explanation? I don’t understand what the suggested action is here.

@MrMadila

I voted against on the basis that BSC in not decentralised and based off of anecdotal consensus that the chain lacks security. We already have a strategy in place to get our products over onto L2’s in order to make them more available and economical to buy and sell. At the moment this is concentrated on polygon and soon I expect Arbitrum and other scaling solutions.

@MrMadila @0xModene Could the Ethereum decentralization maxis in the thread please justify their support for going after exchange listings (including Binance) and Polygon support, but not supporting BSC? I honestly don’t understand the inconsistency. Why aren’t we seeking to meet users where they are? I’d be happy if users purchased DATA on Polygon (is Polygon really more “decentralized” than BSC? I don’t think so.), Solana, Terra, BSC, KuCoin, Coinbase, or anywhere else they would like.

[Thomas_Hepner]

edited my post. Not sure why I thought you did!

[mel.eth]

@Thomas_Hepner

Could the Ethereum decentralization maxis in the thread please justify their support for going after exchange listings (including Binance) and Polygon support, but not supporting BSC? I honestly don’t understand the inconsistency. Why aren’t we seeking to meet users where they are? I’d be happy if users purchased DATA on Polygon (is Polygon really more “decentralized” than BSC? I don’t think so.), Solana, Terra, BSC, KuCoin, Coinbase, or anywhere else they would like.

I voted FOR on this. I have no issue with bridging anywhere there is demand. That said:

I mentioned it on the Weekly call and and I’ll echo it here: I’m agnostic regarding integrations until we stand up a review board to either thumbs-up or -down potential integrations. Given that this stuff is generally permissionless, it’s not a matter of approving integrations, it’s a matter of dedicating resources to those integrations, and by-way-of, tacitly approving them.

I think a failure to bridge to BSC and support that integration is a mistake. BSC is not ideal, but it’s very real and there is a lot of demand there. DeFi is risky at every entry point and chain-specific safety concerns are best left to the users of that chain. If we don’t bridge DPI, a janky version will be spun up on BSC that will be worse for users. I say if there’s demand and a way, give the users what they want.

If BSC fails that’s a BSC failure not an IC failure. CREAM failed and that was not in any way seen as a Coop failure because we pursued an integration; I see this the same exact way - the products are ethereum-native and solid, and that’s the way they’re meant to be held; everything else is at the holder’s discretion - we’re just providing options.

[0xModene]

Comparing side chains to CEXs I would say is unfair, where a CEX is generally a KYC’d, custodial option and they don’t tend to advertise any decentralization theater. Custody (another important tent pole for me personally) is something I don’t love, but some people are not ready for full custody because it’s never something they’ve had to do with their finances.

If we’re on a scale of SQL database to full on Ethereum, is Polygon comparatively much further up the scale than BSC? Maybe a little? This is something I personally don’t like about the Polygon’s POS chain.
As for BSC specifically, there’s quite the plague of inability to maintain consensus and keep a node synced. That’s a problem for a lot of reasons, and I’d rather not be associated with BSC for that reason

[lee0007]

@Thomas_Hepner @TheYoungCrews
My understanding for the reason of this post is transparency - to provide community visibility into projects that APWG community members have been working on and sincerely believe could add value given we live in the APAC market.

If there’s a call to action it is simply for community feedback and input and to this purpose, I see the post has succeeded. Thanks everyone for sharing your feedback and concerns. This forum is a key communication mechanism for ensuring transparency, visibility and community oversight. I know I personally have gained significant insight around BSC thanks to this post and the authors efforts here @Louisaraj @sriram @pujimak_in

[Louisaraj]

@lee0007

If there’s a call to action it is simply for community feedback and input and to this purpose,

Yes 100% to that. We wanted to get a sense of our community sentiments towards having Index products on BSC.

@TheYoungCrews

Are we asking Set Protocol to consider deploying their contracts on BSC & create BEP-20 versions?
Are we asking our limited Index Coop engineering resources to build BEP-20 versions of our existing products?
If it were as simple as bridging our existing products over to BSC & running some awareness campaigns, I would be interested, but I don’t think it is.

The low hanging fruits would be to bridge our existing products to BSC and get BSC DEXes to sponsor the rewards, there are existing bridges that we can leverage. There could be a few possibilities to explore regarding index products on BSC.

@TheYoungCrews

Less than $1m AUM for any crypto index product on BSC shows that we’re not clearly leaving a big opportunity on the table here.

The competitor stats reflects the potential opportunities we have in BSC, as we currently do not have any strong competitors in the playing field. It is not meant to reflect that BSC users don’t demand for Index products, IMO demand for index products (in general) is not chain specific.

Thank you all for your feedback and perspective; agree that security risk should be considered seriously! Will definitely be discussing this in the APWG bi-weekly sync call happening in an hour. If you are interested to join in the discussion, feel free to pop by!

[MrMadila]

@Thomas_Hepner

@MrMadila @0xModene Could the Ethereum decentralization maxis

Bit strong! I try my best not to be an anything Maxi!

Unfortunately, as I am not an engineer/dev I cannot verify for myself the quality of chain Y vs chain X so I can only go on anecdotal sentiment (as flawed as that is) and as is evident in other people comments here there seem to be valid concerns with BSC. I do get the slight “dissonance” being against BSC but pro-Binance CEX etc but I agree with @0xModene 's comments.

I was a soft no btw! I fully agree (and alluded to in my response as have others) that people should be free to trade where they wish. If they want to work on bridging stuff over to BSC there is nothing stopping them and I agree with LA. If a BSC DEX wanted to incentivise it etc great.

I was coming from a branding and reputation perspective. Whilst there is no shortage of never-ending chain war drama and controversy, BSC has an above-average negative reputation so it is my personal opinion we should not be seen to be actively pushing our products there.

I am more than happy to listen to others perspectives here though as I acknowledge my potential biases and wide knowledge gaps.

[Thomas_Hepner]

@MrMadila

Bit strong!

Haha sorry, I must have been grumpy yesterday! My wording could have been less strong.

@MrMadila

If a BSC DEX wanted to incentivise it etc great.

I was coming from a branding and reputation perspective. Whilst there is no shortage of never-ending chain war drama and controversy, BSC has an above-average negative reputation so it is my personal opinion we should not be seen to be actively pushing our products there.

I think I understand your point. Just to clarify - you’re saying you don’t think IC should have a partnership with BSC, or be affiliated with them in any way, but we’re okay with them incentivizing our products on their chain??