Binance, a leading cryptocurrency exchange by client count and trading volumes, has integrated Binance-Pegged BUSD on the Ethereum layer-2 platform, the Optimism Network.
Binance Integrates The Optimism Network
In a press release on February 2, Binance said their users can now begin depositing and withdrawing the wrapped token via the Optimism Network.
The Optimism Network is a layer-2 protocol on Ethereum seeking to scale the smart contracting platform and drastically lower fees. Transaction fees on Optimism are several folds lower than on Ethereum, and dApps launching on it can benefit from rapid transaction processing speeds.
The Optimism Network is the second largest Ethereum layer-2 platform with a total value locked share of 32.58%. Its native token, OP, is currently trading at $2.79.
Following this integration, Binance allows users to transfer Binance-pegged BUSD, a wrapped version of BUSD, on the Optimism network. BUSD is a stablecoin that tracks the USD and is issued by Paxos under the Binance brand.
The issuer of BUSD says the stablecoin, compliant with the ERC-20 standard on Ethereum, is regulated by the New York State Department of Financial Services. The Binance-pegged BUSD is a version of BUSD that can be used to move value beyond Ethereum to Avalanche, Polygon, and Binance ecosystems, including the BNB Smart Chain (BSC).
Binance said holders can swap BUSD and Binance-pegged BUSD freely between chains. As a wrapped token of BUSD, Binance-pegged BUSD is held by a third party and is a different product from BUSD. Nonetheless, Binance has assured holders that it is safe to hold.
Over the years, the Binance ecosystem has grown. Although there are bridges with Ethereum and BNB Smart Chain (BSC) remains interoperable with other networks, association with Ethereum is critical. The decision by Binance to integrate Optimism Network could boost activity in the BSC.
Scaling Ethereum Using Layer-2 Solutions
The Optimism Network is among the many layer-2 protocols aiming to scale Ethereum. As a general-purpose platform, dApps can deploy and retain the base layer’s security.
Over the months, layer-2 platforms, dominated mainly by Arbitrum and Optimism, have been processing increasingly more transactions. Dune Analytics’ data on January 10 showed that Arbitrum and Optimism processed 1.12 million transactions versus Ethereum, at 1.06 million.
According to Vitalik Buterin, scaling Ethereum through layer-2 solutions, including Optimism, will form a base for further throughput enhancement in the future.
With the merge completed, the goal of Ethereum developers is to gradually improve on-chain scalability through Sharding. Then, Ethereum developers would process over 100,000 transactions per second, establishing themselves as a smart contracting platform leader.
Feature image from Canva, Chart from TradingView