Crypto Community Slams Binance Smart Chain Over Centralization

Many crypto analysts have criticized the whitepaper for Binance’s forthcoming ‘Smart Chain’, which was published on April 17.

Smart Chain will be Binance’s second smart contract-enabled chain after Binance Chain. It offers the additions of full compatibility with Ethereum (ETH) and a delegated proof-of-stake, or DPoS, governance system with 21 node operators elected by Binance Coin (BNB) holders.

‘Binance Smart Chain’ garners luke-warm reception

The whitepaper for Binance’s forthcoming Smart Chain received mixed reactions. Many in the crypto community posit that the chain will recycle the features of existing projects without bringing anything new to the crypto asset ecosystem.

On Twitter, crypto data aggregator Messari stated: “‘Binance Smart Chain’ looks like another ETH competitor in an already crowded field,” adding that the chain will feature an “EOS-like” DPoS system.

Reddit user ‘Always_Question’ described the whitepaper as outlining “Yet another Chinese copy-cat, this time of EOS DPOS--one of the largest $2 billion nothing burgers ever built.”

Speaking to Cointelegraph Jim Blasko of Ethereum-powered virtual world Voxels criticized the Smart Chain’s DPoS algorithm, stating, “Proof-of-stake is really just meant to eliminate traditional mining, which I still believe is crucial to a fully operational blockchain albeit public or private, decentralized or centralized, and or even permissioned.”

DPoS governance as prone to centralization

In an essay shared with Cointelegraph, the co-founder of digital asset research firm Delphi Digital, Tom Shaughnessy, argues that Smart Chain will be hampered by centralization:

“While a high profile launch, Binance Smart Chain may be in competition with Ethereum and other programmable blockchains for clicks and eyeball time, but it is certainly not a competitor for building the decentralized future.”

Shaughnessy predicts that Smart Chain’s governance allows “CZ [to] likely reign control over the chain given his influence and his BNB stake,” criticizing centralized platforms: 

“Centralized chains miss the point, every time. The point is not to offer cheaper transactions, anyone can do this using Amazon Web Services, but to foster a community-driven ethos of builders who enjoy working together without a centrally derived mandate.”

Centralization stifles creativity

Delphi’s co-founder states that decentralized chains are able to foster impressive applications because developers "have a new sandbox to innovate in with new tools to play with,” adding that “they are no longer bound by the Web 2.0 design space of the past.”

“Once you bring a developer back into a centralized sandbox, the game plan is to usually bring an existing Web 2.0 app to the chain, promote it as decentralized and fade into irrelevance."

“Building global applications from a laptop and an internet connection to exist forever and be iterated on by a global community loses its flare once you say its pulse is controlled by 21 nodes and the opinion of Binance management,” he adds.

Despite his criticism, Shaughnessy cautions: “It would be naive to dismiss the resources Binance can put behind this initiative from a monetary perspective and a community one.”