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DeFi investors flee BNB Chain; What’s happening?

DeFi investors flee BNB Chain; What's happening?

Amid worldwide regulatory scrutiny against Binance and other crypto centralized finance (CeFi) service providers, the BNB Chain (formerly Binance Smart Chain) has seen close to $2 billion in outflows from its decentralized finance (DeFi) ecosystem in 2023.

Interestingly, Changpeng Zhao (CZ), Binance CEO, had predicted DeFi would outperform CeFi in the next bull run.

Binance’s CEO prediction was made live in X Space’s ‘Ask Me Anything’ (AMA) session on September 3, where CZ talked about the challenges his company was facing, but also other regulatory matters related to DeFi platforms.

However, numbers related to Zhao’s most relevant holdings on the BNB Chain (BNB) native token can pose even more challenges for the crypto-billionaire’s vision for the cryptocurrency market, and Binance’s success in a rumored new focus on the decentralized finance sector.

Data retrieved by Finbold from DefiLlama on October 7, shows a loss of $1.85 billion in the total value locked (TVL), year-to-date (YTD) for the BNB Chain. With a registered total value invested of $4.65 billion by January 1, 2023, to around $2.8 billion TVL at the time of publication.

BNB Chain (formerly BSC, or Binance Smart Chain) TVL on DeFi.
BNB Chain (formerly BSC, or Binance Smart Chain) TVL on DeFi. Source: DefiLlama

BNB Chain DeFi protocols are losing TVL

Notably, the two leading DeFi protocols on the BNB Chain — PancakeSwap (CAKE) and Venus (XVS) — dominate the majority of the total value invested, currently with $1.27 billion and $608.46 million TVL, respectively. Both are also respectively registering outflows of 1.52% and 7.18% in the last 30 days.

TVL of the top 5 DeFi protocols on BNB Chain.
TVL of the top 5 DeFi protocols on BNB Chain. Source: DefiLlama

Interestingly, the third biggest DeFi protocol by total value locked is actually accounting for ‘Binance staked ETH’, which is measured in Ethereum (ETH), rather than in BNB. Therefore, accruing value for the former chain, as investors are just using CZ’s structure while picking ether for staking to receive their passive income.

BNB price analysis

It is also important to say that the BNB tokens have lost 13.8% of their value YTD. With a starting trading price of $246.66 on January 1, to a current trading price of $212.62 by press time.

BNB year-to-date price chart.
BNB year-to-date price chart. Source: Finbold

The TVL metric was also impacted by this value loss, considering the total value is measured in USD by DefiLlama, despite being invested in BNB. Nevertheless, there are also fewer BNB tokens locked into its chains’ protocols since the start of 2023.

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