As regulatory scrutiny on Binance and other centralized finance (CeFi) platforms intensifies globally, the BNB Chain's decentralized finance (DeFi) environment (previously referred to as Binance Smart Chain) has witnessed a drop of around 2 billion dollars in its total locked value (TVL) since the start of the year. This drop has sparked a lot of inquiries.

The dip in the BNB Chain's TVL recalls the recent forecast by Binance CEO Changpeng Zhao (CZ) where he suggested that DeFi would surpass CeFi in the upcoming bullish phase. This statement was made during an "Ask Me Anything" (AMA) event on September 3rd, in which CZ discussed the obstacles confronting the firm and other regulatory challenges tied to the DeFi landscape.

Yet, notwithstanding Zhao's perspective on the crypto landscape and Binance's emphasis on decentralized finance, the present figures concerning the BNB Chain present a concerning scenario for both Zhao and Binance.

Recent figures from DeFiLlama reveal a drop of 1.85 billion dollars in BNB Chain's TVL since the year's start. On January 1, 2023, the TVL for BNB Chain stood at 4.65 billion dollars, but it has since fallen to 2.8 billion dollars. As anticipated, this downtrend in BNB Chain has had repercussions on the BNB price. Currently, BNB is hovering between 220 and 200 dollars, particularly after a substantial decline in the wake of a lawsuit by the US Securities and Exchange Commission (SEC).

The drop in BNB Chain's TVL is largely attributed to the downturn in protocols operating on its platform. Specifically, two major DeFi protocols on the BNB Chain, PancakeSwap (CAKE) and Venus (XVS), command a sizable chunk of the overall locked value, boasting TVLs of 1.27 billion dollars and 608.46 million dollars, respectively. Both have seen declines of 1.52% and 7.18% over the last month.

Notably, the third most significant DeFi protocol in terms of TVL is actually rooted in "Binance staked ETH", denominated in Ethereum (ETH) rather than BNB Chain. Thus, when investors stake ETH to gain passive returns, they are adding value to the primary chain, primarily due to utilizing CZ's framework.