
Binance’s new Binance Smart Chain was announced in April 2020. This new blockchain will be used in parallel to the Binance Chain, the exchange’s primary cryptocurrency. This post will give you a detailed overview about how the Binance Smart Chain operates and which projects it has integrated to date. It will also explain what this all means for DeFi. Both chains are being developed at an incredible pace. Let’s take a closer look.
A Comparisson
Binance Chain (BC), Vs. Binance Smart Chains (BSC).
Binance Chain, a blockchain project, was launched in April 2019 by Binance. It allows users to issue, use, and exchange digital assets via the blockchain. Binance DEX is Binance’s decentralized exchange that runs on top of Binance Chain. It is the most widely used decentralized application (DApp), to date. The Binance Chain’s native token is BNB. Binance DEX allows users to exchange digital assets and retain full custody. This means that your coins will remain in your wallet and not with the exchange, unlike the centralized Binance.
The Binance Smart Chain on the other hand is a “parallel Blockchain” that provides programmability to Binance Chain. It basically builds a dual-chain system. Binance can now use smart contracts to adapt to the Ethereum Virtual Machine (EVM) while still maintaining its execution capabilities. The two parallel chains are identical from a user’s perspective, but they differ in their structure.
Binance Chain is a simple application. Its main purpose is to facilitate fast trading and manage large volumes of trading. Binance Smart Chain extends this functionality by allowing you to create smart contracts and more complex decentralized applications. The similar plans allow Binance Chain to interact with Binance Smart Chain.
Binance Chain
Before we get into the Binance Smart Chain, let us take a look at the Binance Chain. The Binance Chain is a software system that uses blockchain technology. Binance DEX and Binance Chain are designed to create a marketplace for exchanging and circulating digital assets in a decentralized setting. It is a fast and secure decentralized digital asset trading platform that uses a distributed consensus engine to match extreme performance. Binance DEX is a decentralized exchange built on top of Binance Chain. These are the design principles and highlights of Binance Chain.
BEP-2 / MINI-BEP2 : These are the main standards for issuing coins on the Binance Chain. Peggy Coins (BTC.ETH.XRP …): Pegged tokens such as BEP-2-BTC are 100% supported by the primary currency in reserve like Bitcoin (BTC). Governance (Voting and Listing): Binance Chain allows BNB Holders to propose trading pairs and vote on them. Byzantine Fault Tolerance consensus (BFT): A consensus can be created even if one or more nodes fail to act in a fair and honest manner. This section includes the Match Engine/Orderbook theories to improve the ongoing cyclic disposal match algorithm.
Binance Smart Chain
Binance claims that the Binance Smart Chain, a smart contract blockchain that allows programmability and is compatible with the Ethereum Virtual Machines (EVM), is an effective smart contract blockchain. It is intended to work in tandem with Binance Chain, as mentioned previously. The Binance Smart Chain will continue to maintain Binance Chain’s fast performance times and low transaction costs. Dual-chain design allows its users to create decentralized apps and digital assets on one Blockchain and benefit from the high-speed trading on the other. These are the key attributes of Binance Smartchain :
- EVM Compatible Proof Of Staked Authority consensus: A variation on Proof of Stake. This means that BNB will soon be used for staking.
- Cross-Chain transfer: Coins can easily be transferred between the two blockchains by using a bridge.
- Cross-Chain Contract Event: Trade, Transfer Block Time 5 Seconds, This block time is slower than Binance Chain’s 1 second, but faster than Ethereum’s 13 seconds.
Binance Coin (BNB)
Use cases on Smart Chain. Binance launched BNB from June 26th through July 3rd 2017. Binance launched BNB from June 26th to July 3rd 2017.
The Binance Smart Chain will use a Proof of Staked Authority algorithm (PoSA), so the BNB token can be used for future staking. This is currently being tested. Binance Smart Chain will not be able to create any additional tokens. Instead, the Binance Smart Chain’s current BNB token will be used for both chains. This will increase demand for BNB tokens.
BNB is also a deflationary currency. Binance burns a quarter of its trading volume, which is based on the amount of BNB it has traded. Binance recently completed its 12th token fire. This will continue until half of the original BNB supply (200,000,000 BNB) is consumed.