In brief

  • Binance Smart Chain (BSC) was launched to compete with Ethereum on DeFi and other applications.
  • Several new BSC projects look extremely similar to Ethereum projects.

Amid the recent rise of Ethereum NFT project EulerBeats, an alleged copycat version, Musical Beats, launched on Monday on Binance Smart Chain (BSC). 

Just days later, Musical Beats is shutting down, the project announced on Tuesday.

Ethereum developers and community members had accused the project of ripping off EulerBeats, which takes the works of Swiss mathematician Leonhard Euler and turns them into unique visual and audio works of collectible art.

Matt Corva, General Counsel at Ethereum software company ConsenSys, which funds Euler Beats, tweeted out a side-by-side look on Monday and threatened legal action.

Corva tells Decrypt that Binance CEO Changpeng "CZ" Zhao, "is out there, effectively advertising and marketing people to move off of Ethereum and really saying some negative things about Ethereum and gas fees, meanwhile profiting off all of the Ethereum development at the infrastructure level and the application level by just copying Ethereum.” (Disclosure: ConsenSys also provides funding to an editorially independent Decrypt.)

Musical Beats is hardly the only alleged Binance copycat of an Ethereum project. 

For many popular Ethereum-based applications and projects, there’s now an eerily similar Binance Smart Chain version.

The Ethereum NFT project Hashmasks has an apparent cousin on BSC called Bashmasks. The Binance version of CryptoPunks, which sold several digital collectibles for over $1 million each last month, is called Binance Punks.

The Binance version of NFT market OpenSea is called… BopenSea. It launched on Tuesday with a tweet that declared: “Art should be for everybody, not gatekept behind $50 minting costs!”

Binance Smart Chain launched in September, firing a shot across the bow of Ethereum, which has been enjoying enormous growth thanks in large part to the range of decentralized finance (DeFi) projects built on the platform. 

Changpeng Zhao made a straightforward pitch at the time: “Binance Smart Chain makes it possible for developers around the world to build DeFi services and many more dApps within the Binance Chain ecosystem, while delivering various benefits such as an all-new method for staking BNB, high performance, lower fees, direct connection with fast DEX and more.”

In short, he suggested his platform would be Ethereum without the congestion and expensive transfers. And it turned out to be perfectly timed to take advantage of the rising popularity of NFTs, unique digital assets such as trading cards, art work, and songs, whose authenticity and ownership can be verified on the blockchain. Major rock band Kings of Leon announced just today that it would release an entire album as a non-fungible token.

Some say the reduced fees come at the cost of true decentralization. Unlike proof-of-work Ethereum, which is maintained by thousands of computers running the software, Binance Smart Chain uses proof of staked authority; just 21 nodes at a time verify transactions. This has led critics to warn that Binance could have more control over the direction of the blockchain. (Binance has not yet responded to a Decrypt request for comment.)

As Binance Smart Chain volume grew, Ethereum developers and community members began pointing out a worrying trend: Many of the projects appeared to be knock-offs of Ethereum intellectual property.

It all started, arguably, with PancakeSwap, a BSC fork of popular Ethereum-based decentralized exchange Uniswap. Less than two weeks ago, PancakeSwap briefly became the most-used decentralized exchange (DEX) in the world.

María Paula Fernández, founder of the ETHBerlin hackathon and conference, argues that PancakeSwap has evolved enough that it can be considered a “decent and old-fashioned fork,” rather than a copycat. 

But she’s less sanguine about Binance Punks. “Binance Punks are simply an attempt to deceive people into accessing punks,” she wrote in a Medium post on March 2. “A money grab, with none of the originality of the crypto punks or their incredible snowball effect into becoming one of the most sought-after digital assets.”

She had similar thoughts on BSC’s Musical Beats. EulerBeats’ web description reads, “An ultra scarce collection of 27 art + music originals generated based on Euler’s mathematical discoveries.” Musical Beats originally chose an extremely similar description: “An ultra scarce collection of 30 art + music originals generated based on mathematical [sic] Aglo.”

Corva says decentralization shouldn’t mean copycats fly free. 

“People equate decentralization with just total abdication of rules and rights,” he told Decrypt. “And that's not it. That was never the purpose of decentralization. You didn't just say decentralization means we accept a lawless society where anybody can do whatever they want at all times.”

Corva also points to a misunderstanding of “open source,” a phrase that can vary depending on the project. There’s the very permissive MIT license that allows nearly carte blanche use. The Bitcoin white paper was published under such a license. Copy-left licenses such as the GPL license, on the other hand, would allow computer code to be used for whatever as long as any product of that code was published as open source under the same license.

But even if code is open source, business is not, Corva argues. EulerBeats, created by a ConsenSys Mesh company called Treum, has legal rights, as do similar projects.

“Their website, their code, their text, their ideas, they're all protected, unless they've otherwise licensed them,” Corva said. “So the idea that somebody finds a repo for a product that has smart contracts that are open source, it's not a free license to just copy and paste their entire business and product and release it under your own brand. That is 100% copyright infringement.”

It might prove difficult to protect IP in a decentralized industry, or go after potentially illegal activity on blockchain. Corva told Decrypt, however, that there are strategies that can be used given that blockchain projects are heavily dependent on Web 2 infrastructure. For instance, an outage at the Federal Reserve’s payment system last week led to performance issues with crypto firms that were tied into those systems.

“Web 2 infrastructure is actually really well equipped to handle copyright-related claims as a result of the Napster world and how that all evolved,” he said. “So it's an enforcement problem, but it's naive to think there's no remedy as a copyright holder. There's always a remedy for you. The question is: Is it worth it?”