BNB Price Surges 39% Despite a 28% Drop in Smart Contract Deposits

    Dropping significantly in total value locked (TVL), but BNB Chain's decentralized applications are not fading out.

    Along with the market recovery, Ether (ETH), the leading blockchain among smart contract chains, showed an increase of up to 53%. BNB Chain (BNB) has also gained 39% in 5 weeks.

    BNB (blue) vs. Ether (orange), AVAX (cyan), SOL (yellow) (Source: TradingView)

    BNB’s year-to-date performance is still down 43%, but with a market cap of $50.2 billion, the altcoin is still third in the market excluding stablecoins. The leading dApp PancakeSwap with 843,630 active addresses is also running on BNB Chain.

    To see whether the BNB increment is valid, let’s analyze network usage, including smart contract deposits, active users, and dApp usage.

    Smart contract deposits and dApp usage

    BNB Chain’s main dApp metrics showed weakness in early May when the network’s TVL fell below 24 million BNB.

    Total value locked on the BNB Chain network in BNB (Source: Defi Llama)

    The chart above indicates that BNB Chain’s dApp deposits have dropped 28% in three months and hit the lowest level since April 2021. For comparison, Ethereum’s TVL is currently at 24.4 million ETH, down 11% in the same period. Furthermore, another dApp competitor, Solana, saw TVL drop only 2% to 50.2 million SOL.

    On August 3rd, in order to certify user status, Binance announced the launch of the Binance Account Bound (BAB) token – a decentralized identifier – that can verify whether the wallet owner passed KYC on the exchange or not.

    So is this decrease in TVL cause for concern? To answer, investors should analyze dApp usage metrics. However, there are some dApps that are not financially intensive and therefore do not count their deposit value.

    As shown by DappRadar, on August 4, the number of addresses on the BNB Chain that interacted with dApps increased by 17% on average. The only negative dApp is SecondLive, a Metaverse that uses DeFi and NFT technologies.

    BNB Chain’s most used DApps over seven days (Source: DappRadar)

    Increased dApp usage not supported by additional addresses

    The growing interest in BNB Chain dApps is not reflected in active network addresses – which peaked at 2.27 million on December 1, 2021, and has recently averaged slightly over 900,000.

    Active BNB smart chain addresses (Source: BSCScan)

    Although BNB Chain’s TVL is impacted hardest than comparable smart contract platforms, there is still solid usage in DeFi apps and games. Both Era7: Game of Truth and MOBOX: NFT Farmer is in the Top 10 dApps on every blockchain.

    The above data shows that the BNB Chain’s TVL is losing ground against competing chains, but investors should not worry as dApp activity in the network remains stable. As long as Binance does not face serious obstacles in supporting BNB Chain, the possibility of the BNB native token falling in price is unlikely to happen.

    Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. 

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