What Is Binance Smart Chain? Features, Benefits, and DeFi Opportunities
A Comprehensive Guide to Binance Smart Chain: Exploring Its Functionality, Use Cases, and Advantages
By reading the article “What Is Binance Smart Chain” published in Adaas Investment Magazine, you will get acquainted with the Binance Smart Chain and the differences between BSC and Binance Chain (BC) in general. This level of familiarity can be enough when you need educational information about this topic.
Table of Contents
What is the Binance Smart Chain? (BSC)
Binance Smart Chain is a parallel blockchain with the Binance Chain developed to implement smart contract-based applications.
One of the most important features of Binance Smart Chain is the use of Ethereum EVM, which provides its users with support for applications such as Metamask wallet. The main goal of the developers is to increase the speed and reduce the cost of transactions for users and applications based on this blockchain.
What is EVM?
Simply put, EVM or Ethereum Virtual Machine is the software that runs smart contracts in the miners.
Why is Binance Smart Chain so popular?
One of the biggest problems of the most popular blockchain right now, the Ethereum blockchain with the ERC-20 programming standard, is the high cost and time delay of transactions based on this blockchain.
Binance Smart Chain was initially recognized as a much cheaper and faster alternative due to the congestion of the Ethereum blockchain and its problems for users. After the migration of a large number of users and the admirable performance of Binance Smart Chain, the popularity of this platform increased, as a result of which the price of the BNB token, which is the native token of this platform, rose above $300.
What are the applications of the Binance Smart Chain?
Binance Smart Chain is a platform for performing smart contracts. High speed and low transaction costs are a great opportunity for developers to customize their decentralized applications (DApps) under the blockchain programming standard in a variety of industries such as decentralized finance (DeFi) or non-fungible tokens (NFT).
For example, one of the most successful projects, first developed under Binance China and then supported by Binance smart chain tokens, is the PancakeSwap decentralized exchange, which has become increasingly popular with support tokens such as SAFEMOON or SHIBA INU.
Many platforms such as ZeroSwap, C.R.E.A.M. Finance, ForTube, and Spartan operate in the Binance Smart Chain ecosystem.
The blockchain is also integrated with LINK, BAND, SXP, and ANKR projects, which shows the strength and popularity of this blockchain among other projects which are active in the cryptocurrency industry.
The differences between BSC and BC
To understand the difference between these two blockchains, it is better to have enough information about each blockchain first.
| Binance Chain | Binance Smart Chain | |
|---|---|---|
| Consensus | DPoS | PoSA |
| No. of Validators | 11 | up to 21 |
| Mean Block Time | <1s | ~5s |
| Programmability | BEPs | Support EVM-compatible smart contracts |
Binance Chain (BC)
In April 2019, the Binance platform for entering the decentralized finance industry, to introduce the Binance DEX, developed a fast and inexpensive blockchain called Binance Chain (BC) with the BEP2 programming standard.
Being a fork of the Cosmos SDK, this blockchain uses the Business Tendermint (BFT) mechanism as well as the Proof of Stock (PoS) Consensus mechanism.
Binance Smart Chain
Binance Smart Chain (BSC) was developed in 2020 to support smart contracts. This smart chain is very similar to the Ethereum blockchain and uses the Ethereum Virtual Machine (EVM).
The biggest difference between Binance Smart Chain (BSC) and Ethereum Blockchain is the use of the Proof of Staked Authority (PoSA) consensus mechanism, which provides faster and cheaper transaction approval and processing mechanisms for this blockchain.
What are BEP2 and BEP20 standards?
Many users of the cryptocurrency market have repeatedly encountered the term token based on BEP2 or BEP20. These two terms refer to the standards of smart contract programming in the two blockchains BC and BSC.
There is a similar situation in the Ethereum blockchain where the ERC-20 programming standard is used for normal tokens such as SHIBA INU and the ERC-721 standard is used for NFT tokens.
In the Binance platform, tokens are developed on the Binance Chain (BC) platform under the BEP2 standard, and tokens on the Binance Smart Chain (BSC) platform are developed under the BEP20 standard.
BNB token and Binance Smart Chain
The BNB token was introduced to the cryptocurrency market in 2017. BNB is known as the native token of the Binance platform, which is used to pay for transaction fees under Binance blockchains and to provide network security. Other uses for this token include its use in decentralized finance platforms is Binance platform governance operations.
The Binance platform did not introduce a new token for Binance Smart Chain, and the BNB token can also be transferred under this network and used to pay commissions. It has increased the demand for BNB tokens and has been a successful strategic decision for the Binance platform.
The BNB token can be easily transferred from the Binance Chain blockchain to the Binance Smart Chain blockchain at a very low cost. This feature allows users to take advantage of both blockchain features.
BNB Token Staking
Staking BNB tokens is an important issue for long-term investors who can now stake BNB tokens in pools and select and change their validators.
To make Binance Smart Chain more compatible with Ethereum Blockchain, the logic of the staking process has been performed in Binance Chain (BC).
Binance Smart Chain and Ethereum
Due to the delay in the release of Ethereum 2 and major problems such as high transaction costs and the long time to process and confirm the transaction in the Ethereum blockchain, many users are looking for a faster and cheaper alternative to use decentralized applications and decentralized finance operations.
There are already big competitors for Ethereum like Solana and even Cardano. But Binance Smart Chain is one of Ethereum’s biggest competitors, and as this blockchain progresses, many users will want to use it.
The end words
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FAQ
What Is Binance Smart Chain?
Binance Smart Chain is a parallel blockchain with the Binance Chain developed to implement smart contract-based applications.
What Are BEP2 And BEP20 Standards?
In the Binance platform, tokens are developed on the Binance Chain (BC) platform under the BEP2 standard, and tokens on the Binance Smart Chain (BSC) platform are developed under the BEP20 standard.
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