Binance Chain & Binance Smart Chain

Written by Ayomide Abimbola

July 1, 2021

INTRODUCTION

BINANCE CHAIN

The Binance Chain can be said to be an earlier version of the Binance Smart Chain.The Binance Chain was launched on 1st September 2019 while the Binance Smart Chain was launched in April 2019.

Binance Chain is a blockchain platform developed by the popular centralized cryptocurrency exchange to support their version of a Decentralized Exchange(DEX). Binance DEX, a DEX which allows users to directly trade with each other without having anything to do with a third party. It also powers Binance Coin (BNB), which started on Ethereum but was converted via token swap.Binance Chain was launched by Binance in April 2019. Its primary focus is to facilitate fast, decentralized (or non-custodial) trading.it can be said to be the biggest decentralized application on  Binance exchange and this is one of the friendliest decentralized exchanges existing. It can be used via a web interface at binance.org or through its native integration with Trust Wallet.

One major limitation of the Binance Chain is that it does not have much flexibility in the sense that it cannot support a wider array of Decentralized Apps(dapps) which may lead to congestion of the network.

Highlights of Binance Chain

BEP-2 Token-This is a technical standard for the issuance and implementation of tokens on the Binance Chain.

Governance- Binance Chain has its own built-in governance module that allows BNB holders to submit proposals for the addition of trading pairs.

Peggy Coins- Several crypto-pegged tokens have been issued on Binance Chain (BEP2 token format), namely: 

  • BTC
  • ETH
  • LTC
  • BCH
  • XRP
  • TRX

Orderbook or Match Engine-Binance Dex uses periodic auction to match all available orders.Maker/Taker concepts are introduced to enhance the current periodic auction match algorithm and the match is executed only once in each block while the execution prices may differ from maker to taker orders.

Cross-Chain Transfer-A cross chain communication exist between Binance Chain and Binance Smart Chain and it has the following features;

  • Build-in System Contract
  • Oracle on Binance Chain
  • BSC Relayer
  • BSC Relayer Incentive Mechanism
  • Oracle Relayer

Proof of Stake and BFT- A process whereby participants stake BNB to become Validator and then receive transaction fees when they validate approved blocks on the network.

n Proof of Stake, there are validators who win the right to validate a block based on the number of network coins they stake

BINANCE SMART CHAIN

Binance Smart Chain is a blockchain service that allows developers to build their own decentralized apps using smart contracts and it was launched in September 2020.It can be said to run parallel to the Binance chain.

One of the main aims of the Binance Smart Chain is to provide speedy transactions and at the same time making more features and capabilities available.BSC boasts smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM) which makes it possible of running dapps ported over from Ethereum. This makes it easier for developers to port their project to Ethereum. 

Applications like MetaMask can be easily configured to work for users which requires just tweaking a couple of settings.

The design goal was to leave the high throughput of Binance Chain intact while introducing smart contracts into its ecosystem.

                                Highlights of Binance Smart Chain

Cheap Transaction Fee– The transaction fee on BSC is as low as 1 cent this is very low compared to other Dapps.

Block Time – Block refers to records which together form a blockchain.The time taken to mine a block on BSC is 5 seconds.Blocks hold all the records of valid cryptocurrency transactions.

EVM CompatibleThis a blockchain-based software platform that allows developers to create decentralized applications (Dapps) and this works with BSC.

Cross Chain Transfer-It provides seamless transfer of assets from one blockchain network to another

Cross Chain Contract Events

Proof of Staked Authority

HOW DOES BINANCE SMART CHAIN WORK?

Consensus

Proof of Authority (PoA) is a reputation-based consensus algorithm that introduces a practical and efficient solution for blockchain networks (especially the private ones).

It is important to know that BSC uses the PoA or PoSA which is called the Proof of Stake Authority.The term was proposed by Dr Gavin Wood (Ethereum co-founder and former CTO )in 2017. Here instead of offering up a resource like financial stake or computing power,Proof of Authority (PoA) relies on validators staking their reputation.PoA validators need to make themselves known and are selected based on their trustworthiness.

The Proof of Stake Authority is a hybrid of Proof of Stake and Proof of Authority models and this achieves 3 second block time.Here, participants stake BNB to become Validator and then receive transaction fees when they validate approved blocks on the network.

Cross-Chain Compatibility

As started earlier, the Binance Smart Chain is a harmonising system to the already existing Binance Chain and it is designed to work in unison.

The dual chain architecture is being used for providing seamless transfer of assets from one blockchain network to another.Through this, rapid trading can be enjoyed on Binance Chain, while powerful decentralized apps can be built on BSC in this way.

Binance Chain’s BEP-2 and BEP-8 tokens can be swapped for the Smart Chain’s BEP-20 tokens which is a new token standard introduced for Binance Smart Chain.The easiest way to move tokens from one chain to another is the use of Binance Chain Wallet, which is available on Chrome and Firefox.Check out Use Binance Chain Extension Wallet for a guide to this.

DeFi with Binance Smart Chain

Various digital assets such as BTC, ETH, EOS, LTC and XRP which are already existing on the Binance chain as Peggy Coins.These are tokens that are pegged to assets on their native chains.For instance, you might decide to lock up 5 BTC in order to receive 5 BTCB on Binance Chain. At any time, you can trade your 5 BTCB for 5 BTC, meaning that the price of BTCB should closely track that of native BTC. By doing this, we can effectively port those assets on the Binance Chain.

Due to the flexibility offered by Binance Smart Chain, assets from a number of different chains can be used in the growing DeFi world.

 For instance, applications like PancakeSwap allow users to trustless exchange assets (much like Uniswap), engage in yield farming, and vote on proposals. Similar projects include BurgerSwap and BakerySwap .

Thus, this Binance Smart Chain has wide opportunities for Decentralized Finance and Dapps as whole.

Number of Dapps on BSC

Binance Smart Chain Mainnet was launched on September 1st, 2020 to provide smart contract enabled chains into Ethereum for the DeFi market.

Binance CEO Changpeng, announced the launch of a $100 M developers seed fund to support the development of decentralized applications on BSC.

The first DApps to be built on the Binance Smart Chain were DeFi applications such as PancakeSwap, BakerySwap and Beefy.

In total there are about 47 Dapps currently running on Binance Smart Chain in which 38 are Decentralized Finance Dapps.

There are about 7,900 active dapps users with $41,588,673.40 in BSC-powered protocols on Binance Smart Chain.

Trust Wallet & Binance Smart Chain

The support for Binance Smart Chain from Trust Wallet is being provided through the secure storage solutions of BSC powered digital assets and mobile friendly ways to interact with Web 3.0

With the use of Trust Wallet’s DApp Browser, anyone who uses a smartphone can experience the world of Binance Smart Chain Dapps and be a part of the Booming DeFi market.

FUTURE WITH BINANCE SMART CHAIN.

Binance Smart Chain is launched as a user-friendly alternative to Ethereum-based decentralized finance DeFi market. As there are more developers building DeFi Dapps on the BSC and users continue to follow, this ecosystem is expected to grow vertically with the addition of decentralized finance based dapps on the BSC network.

With the $100M seed fund by developers building dapps on Binance Smart Chain and this chain’s high adoption rate for the first three months boosts the network usage.Its interoperability with the pioneering smart contract platform which is combined with fast transaction settlement times and low transaction fees might be the right ingredients for the Binance Smart Chain to become the market leading dapp development.

HOW TO GET STARTED WITH BINANCE SMART CHAIN(BSC)

INTRODUCTION

One of the reasons why Binance smart Chain was introduced is because of the high gas fee on other DeFi protocols like Uniswap.

Binance Smart Chain (BSC) wallets

A wallet is needed to interact with the applications on BSC and there are varieties of options to choose from. Aside from those that will be mentioned below,others include:Maths Wallet, Ledger, Bitkeep, TokenPocket, Arkane and Safepal. 

MetaMask

A guide to use and configure metamask How to Use MetaMask

Metamask is an Ethereum wallet but it is quite easy to connect it to BSC

This way, you can use a familiar UI when interacting with BSC. 

As to how to connect your MetaMask to BSC? We’ve got a detailed guide about it, so check out Connecting MetaMask to Binance Smart Chain if you’re interested.

Trust Wallet

If you’d like to use BSC from your pocket,Trust Wallet is one easiest mobile wallet to use .

Some dApps, such as PancakeSwap, allow you to connect using Trust Wallet.

Binance Chain Wallet

Binance Chain Wallet is another option that you have for certain apps on BSC. You can get it as a browser extension for Firefox,Chrome, and Brave.It has a wonderful UI and this makes it easy to use.

How to get crypto to Binance Smart Chain (BSC)

Now,we have a variety of wallets to choose from and the next thing is to move funds to the Binance Smart Chain.We can do this by withdrawing from our Binance account or by using the Binance bridge.

Withdrawing from Binance

First thing to do is to have a Binance account,then the easiest option may be to simply withdraw from your Binance account to a BSC wallet.

When doing this,make sure to select Binance Smart Chain  (BEP-20) when withdrawing funds to your external wallet.

Binance Bridge

Another great way to transfer assets to BSC is using the Binance Bridge.

Many of the biggest blockchain such as Ethereum or TRON can be selected and convert their native tokens to wrapped tokens on BSC.

You can select many of the biggest blockchains, such as Ethereum or TRON, and convert their native tokens to wrapped tokens on BSC.

The bridge works in both ways or directions. You can monitor the on-chain reserve that ensures that the wrapped tokens on BSC are sufficiently collateralized by the native tokens here: Proof of Assets.

Binance Smart Chain (BSC) dApps

After getting a wallet, and transferring some funds to it,the next step is to know what we can do with our magic internet money.We will take a look at some of the most popular decentralized applications on BSC.

Let’s not forget that these are just a few of the biggest ones. New and exciting dApps are getting launched all the time. They can be  tracked on DefiStation, DappRadar, or the Math dApp Store.

PancakeSwap

PancakeSwap is the number one automated market maker (AMM) on Binance Smart Chain.

Similar to Uniswap or SushiSwap, you can do token swaps for BEP-20 tokens on PancakeSwap.

Passive income can also be earned by the provision of liquidity to one (or more) of the liquidity pools. Just be aware of impermanent loss before depositing.

To learn more about Pancake swap  check out the detailed guide about PancakeSwap.

Venus

Venus is a borrow-lending protocol similar to Aave or Compound or on Ethereum. It is a decentralized money market where you can borrow and lend BEP-20 tokens with algorithmically set interest rates. 

Venus also enables a decentralized stablecoin called VAI, which is backed by a basket of crypto assets. Perhaps, you could think of Venus as a hybrid of Compound and MakerDAO on BSC.

Autofarm

Autofarm is a yield aggregator on BSC. You can think of it as similar to yearn on Ethereum. It automatically tries to find the most optimal way for you to earn a yield on your deposits.

BurgerSwap

BurgerSwap is also a popular AMM on BSC. You can do BEP-20 token swaps and provide liquidity.

Cream

Cream is a popular lending protocol on Ethereum that is also deployed on BSC. You can borrow and lend BEP-20 tokens.

How to track Binance Smart Chain (BSC) metrics

In order to track our activities on BSC, BscScan is the best place.

This site is similar to that of etherscan and this is because it was made by the same team that made EtherScan.

After finding your addresses on BSC,several handy metrics that track the ongoing activity on BSC have been collected  in this article: 6 Binance Smart Chain (BSC) Metrics You Should Know.

Binance Coin (BNB)

GENERAL OVERVIEW 

BNB (Binance coin) is the native token on the Binance Ecosystem which can be used both for BSC and BC.It was first launched through an ICO in 2017.

BNB is mainly used to pay for transaction fees on the BC and Binance DEX platform, staking and asset transfers. It can also be used to run smart contracts on BSC.

Staking involves BNB holders placing their “bonded” tokens in a staking pool. Then, they can delegate their tokens to a chosen validator or candidate. They can re-delegate their tokens to another validator as soon as the election for the next validator set begins. 

BNB COIN BURN

Coin Burn is an event that some blockchain platforms perform to reduce the number of the supply of the tokens in circulation.This is intended to stabilize and in some cases increase the value of the token over time.

The Burn function is called in the token smart contract when BNB tokens are burnt.The coins are irrevocably lost once this function is called.

In no doubt,the deflationary design of the token would have a lingering positive effect on its price.

About  20% of Binance`s profits are used to buy back BNB and these tokens that are bought are subsequently destroyed every three months. Ten rounds of BNB token burns have already taken place, with about 16.7 million BNB burned up till June 2021 at the time of writing this article.

The price of BNB from November 2017 to June 2021 is seen in the Chart above.

BNB TOKENOMICS

BNB is currently valued above $356 on major exchanges worldwide at the time of writing this article. 

  • Circulating supply of BNB is at 154,532,785 BNB
  • Total supply of 169,432,897 BNB
  • Max supply of 170,532,785 BNB
  • Token set to be burnt in coming years is 54,532,785 BNB

 We can also use the Binance explorer: https://explorer.binance.org/asset/BNB.

                                            BNB Token Overview

CONCLUSION

Binance Smart Chain (BSC) greatly extends the functionality of the original Binance Chain and joins a range of cutting-edge protocols designed to bridge the gap between various blockchains. Though still in its infancy, the promise of BNB staking alongside EVM compatibility makes the platform an ideal engine for developers building powerful decentralized applications.

This Binance Smart Chain is adopted for smart contract development, decentralized application development and defi protocols and more

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