Binance, in April 2019, launched the Binance chain. Its major goal is to enable quick, decentralised trade. Unsurprisingly, the most popular decentralised application on it is Binance DEX, one of the most user-friendly decentralised exchanges available. You can access it through a web interface at binance.org or through its native integration with Trust Wallet.
However, due to the restrictions inherent to blockchain systems, the chain lacks flexibility. The smart contracts in a system intended for quick trade might drastically congest the network. Scalability is still one of the most difficult challenges in blockchain development. And here is where the Binance Smart Chain comes into play.
What exactly is the Binance smart chain?
A Binance Smart Chain is being created as a complement to the existing Binance Chain. This is a blockchain with smart contracts. The BSC design aims to be compatible with the Ethereum Virtual Machine. It makes it easier for developers to run decentralised applications created using the Ethereum blockchain on Binance’s new blockchain.
It also enables the development of pegged currency and cross-chain transfers. BTC, TRX, ETH, and other tokens are examples of those that can be pegged. On this smart chain, these pegged currencies function similarly to the BEP-20 tokens. This is comparable to the ERC-20 token on the Ethereum smart chain.
The concepts for developing a Binance Smart Chain are as follows:
- It has a low block generation time, even shorter than in Ethereum.
- The transaction verification takes a relatively short time.
- The Gas charge is paid in BNB and is used to collect the rewards for block creation.
- BSC aims to accommodate the majority of Ethereum-based applications.
- It offers excellent facilities, such as enhanced staking and network control.
How does the Binance Smart Chain function?
Binance Smart Chain uses a Proof-of-Stake consensus technique to reach 3-second block timings. It employs a technique known as Proof of Staked Authority (or PoSA), in which participants stake BNB to become validators. They will be paid transaction fees from the transactions that are a part of a valid block if they propose it.
It is worth noting that, unlike many protocols, there is no block subsidy of newly coined BNB since BNB is not inflationary. On the contrary, as the Binance team conducts coin burns regularly, the quantity of BNB diminishes with time.
2. Compatibility across chains
Binance Smart Chain is a separate but complementary system to the existing Binance Chain. It implements Dual-chain architecture, to allow users to move assets from one blockchain to another in real-time. As a result, Binance Chain can provide fast trading while also allowing for the development of sophisticated decentralised apps. Users get exposure to a huge ecosystem that may cater to a wide range of use cases as a result of this interoperability.
You can exchange Binance Chain’s BEP-2 and BEP-8 tokens for BEP-20 tokens, the new standard announced for Binance Smart Chain. It operates in the same manner as its Ethereum cousin.
The simplest way to move tokens from one chain to another is to utilise the Binance Chain Wallet, which is accessible on Chrome and Firefox. Some examples of the Binance chain wallet are:
Binance Smart Chain design principles
Binance Smart Chain follows these design principles
This smart chain is fully compatible with Ethereum, the most efficient and popular smart contract platform. As a result, BSC design aims to be interoperable with Ethereum’s mainnet. Because the majority of the decentralised apps originate from the Ethereum platform, they will also work on the BSC platform. Not only do dApps exist, but so do ecosystem components, tools, and so on. Most of the time, dApps do not require adjustments to make them operate on BSC.
This blockchain is self-contained and does not require a layer 2 solution. As a result, the majority of the key procedures of BSC must be self-sufficient. This makes them usable even if Binance Chain is not present.
Faster and more efficient
Binance’s new smart chain includes a staking facility, which simplifies consensus and enables several alternatives for community governance. This, in turn, is likely to result in improved network performance. This can also contribute to a reduction in blocking time and an increase in the number of transactions completed in the same amount of time.
The two blockchains facilitate cross-chain communication natively. For the BSC, a bidirectional, trustless, and decentralised communication protocol has been established.
DeFi and BSC
You may be aware that some digital assets, such as BTC, LTC, ETH, EOS, or XRP, already exist as “Peggy coins” on the Binance Chain. These are tokens that are linked to assets on their respective native blockchains. For example, you may elect to lock up 10 BTC in exchange for 10 BTCB on the Binance Chain. You may exchange your 10 BTCB for 10 BTC at any moment, which means that the price of BTCB should closely match that of native BTC. By doing so, you are basically porting these assets onto the Binance Chain.
Because of the flexibility provided by Binance Smart Chain, assets from other chains can also use the expanding DeFi space. For example, programmes like PancakeSwap enable users to exchange assets, engage in yield farming, and vote on ideas. BurgerSwap and BakerySwap are two similar projects.
Binance chain and Binance Smart Chain cross-chain communication
The dual chain structure and cross-chain communication are extremely beneficial in a variety of ways —
- On this platform, users may develop financial products, virtual assets, and tokens.
- You may trade the products developed on BSC on the Binance Chain platform either manually or automatically. The latter is a platform that is extremely stable, extremely quick, and extremely user-friendly.
- Users can operate both Binance Smart Chain and Binance Chain with a single tool system and UI.
Binance Smart Chain Metrics
There are six Binance Smart Chain Metrics in total, which are as follows:
1. Average Gas Price
This indicator analyses and monitors the average gas price for transactions on the BSC platform. The BSC platform has relatively modest fees.
2. Daily Transactions
One of the most helpful metrics on BSC. This measure represents the number of transactions that occur on the Binance Smart Chain on a given day. This, in turn, assists you in comprehending the network activity range. However, the type of smart contract determines the number of transactions. There is a feature called BscScan that allows you to identify the day with the most transactions.
This is the fundamental statistic that validates the blocks offered by users to the platform. If the blocks are legitimate, the validators will get paid in transaction fees. This ensures that the platform remains operational.
4. Farms with High Yields
The most popular application of these platforms is yield farming, also known as liquidity mining. You may create yield on the Binance Smart Chain by utilising your past holdings of digital assets through the use of certain platforms.
5. Unique Address Count
This measure determines network growth. Its purpose is to determine unique people’s engagement on the platform. However, there is a disadvantage. In other words, a single user may have numerous unique addresses that he uses for mining, in which case this measure will not provide a precise count. So, while this is beneficial, there is a restriction.
6. Token Finder
This metric keeps track of the top BEP-20 tokens. This will assist you in determining which tokens are actively traded or have the biggest cumulative value on this platform.
The Binance Smart Chain considerably expands the capabilities of the original Binance Chain and joins a slew of cutting-edge protocols aimed at bridging the gap between different blockchains. Though the platform is still in its infancy, the promise of BNB staking combined with EVM compatibility makes it a perfect engine for developers creating strong decentralised apps.