CoinEx Smart Chain｜Exchange-based Public Chains Explained
Public chains, the underlying infrastructure of the blockchain space, have always been under the crypto spotlight. Last year, as innovative projects in categories that include DeFi, NFT, and GameFi thrived, public chains also recorded exponential growth.
As of November 25, 2022, DeFiLlama has included 155 public chains, a nearly tenfold growth compared with the figure recorded in early 2021. Last year, the public chain category was dominated by Ethereum, accounting for 96% of the combined TVL of all public chains. Today, the category has witnessed the boom of multiple chains. In particular, BNB Chain, backed by a top exchange, evolved into the second-largest chain.
What are exchange-based chains?
As their name suggests, exchange-based chains are launched by centralized exchanges (CEXs) in an attempt to build public chain ecosystems. These chains quickly rose to prominence in 2020 when the DeFi boom that year started fierce competition in the public chain category. Since then, led by top exchanges like Binance and Huobi, CEXs have started to venture into the field, which created a multiple-chain ecosystem with Ethereum at the center.
Public chains are platforms that function as the core infrastructure of the blockchain space. As they involve development in terms of technology, system, ecosystem, economic model, and product operation, developing and running a public chain is no easy task, which also means that building such a chain demands a top-notch tech team, as well as a professional operating team. Meanwhile, mainstream CEXs are often equipped with mature tech teams and operating teams, giving them an inherent advantage in building public chains.
If you’re interested, here are some exchange-based chains that you can try out:
- Binance’s BNB Chain: https://www.bnbchain.org/en/smartChain
- CoinEx’s CoinEx Smart Chain (CSC): https://www.coinex.org/
- Huobi’s Heco Chain: https://www.hecochain.com/en-us/
Advantages of exchange-based chains
A closed-loop blockchain ecosystem
When building public chains, exchanges rely on their ecosystems to bring in users and funding to foster a fully functional and closed-loop blockchain ecosystem covering tech innovation, project R&D, app implementation, and trading & circulation. As is the case between Binance and BNB Chain or CoinEx and CSC, exchanges and their chains are mutually complementary in terms of resources, user traffic, and market influence.
Asset advantages
The long-term growth of a public chain ecosystem requires a stable source of funding support. Although regular public chains could keep on running for five to eight years using the funds they raised, building an underlying system is a decade-long endeavor. In this regard, top exchanges often come with steady cash flows, which better enable the long-term growth of public chains.
Exchange-based public chains, which are fully backed by the abundant resources and strong market influence of their exchanges, are favored by many project teams. Meanwhile, such exchanges often boast sufficient funds and professional operating capacities that allow them to actively build a public chain ecosystem over the long run. For example, CoinEx’s CSC has launched two major funding programs, including the Multi-Million Dollar Supportive Plan and the Five-Million USD Special Funding Support for Metaverse Ecology, to provide incentives for CSC projects in their infancy. Meanwhile, Binance’s BNB Chain has also rolled out a developer program to help ecosystem builders launch their projects through subsidies and incentives.
The success of exchange-based chains always depends on the exchange’s brand influence, credibility, and user base. In that regard, mainstream exchanges boast massive assets and active communities, which help their chains attract and incubate more innovative projects, thereby facilitating ecosystem growth. In today’s public chain category, competition is heating up, and the market will be carved up by multiple chains. In the future, exchange-based chains are likely to become the leading players in the category, enabling industry-wide progress.
