As the global regulatory gaze intensifies on Binance and other crypto centralized finance cefi service providers, the BNB Chain (previously known as Binance Smart Chain) has experienced nearly $2 billion in withdrawals from its decentralized finance (DeFi) ecosystem in 2023. This exodus is particularly interesting given that Binance CEO, Changpeng Zhao (CZ), had previously forecasted that DeFi would surpass CeFi in the upcoming bull run.
CEO’s Predictions and Reality
In an ‘Ask Me Anything’ session held by X Space on September 3, CZ had not only discussed the hurdles his firm was confronting but also touched upon regulatory issues pertaining to DeFi platforms. Yet, the real figures concerning Zhao’s most significant holdings in the BNB Chain’s native token could present additional challenges to his vision for the cryptocurrency market and Binance’s speculated new emphasis on the DeFi sector.
The Downward Trend of BNB Chain
Data acquired by Finbold from DefiLlama on October 7 reveals a $1.85 billion reduction in the total value locked (TVL) for the BNB Chain since the start of the year. From an initial investment of $4.65 billion on January 1, 2023, the TVL has dwindled to approximately $2.8 billion at the time of writing.
Worth noting, the two most prominent DeFi protocols on the BNB Chain — PancakeSwap (CAKE) and Venus (XVS) — account for the lion’s share of the total investment, currently standing at $1.27 billion and $608.46 million TVL respectively. Both protocols have seen a reduction in investment, with outflows of 1.52% and 7.18% respectively over the past month.
The Impact on Binance’s Staked ETH
Interestingly, the third-largest DeFi protocol by TVL is ‘Binance staked ETH’, which is measured in Ethereum (ETH), not in BNB. This means that investors are using CZ’s structure but choosing ether for staking to earn their passive income, thereby increasing the value of the former chain.
In addition to this, it’s crucial to note that BNB tokens have depreciated by 13.8% since the start of the year. Starting at a trading price of $246.66 on January 1, they are now trading at $212.62. This decrease in value has also impacted the TVL metric, which is calculated in USD by DefiLlama, despite being invested in BNB. Furthermore, fewer BNB tokens have been locked into the chain’s protocols since the start of 2023.
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