You are probably familiar with Binance Chain, which was the platform for the BNB currency. Well, it’s now optimized to overcome the limitations, such as its lack of flexibility for programming like other blockchains. The good news is that the Binance Smart Chain is here to change that; by providing a robust ecosystem for decentralized finance with super-fast trading.
This new blockchain comes with a fully integrated framework for developing high-performing decentralized applications. Another added advantage is that it was created to allow cross-link and compatibility with the Binance Chain to give users the best of both platforms.
At Applicature, we stand out as an innovative blockchain marketing company with experienced DeFi developers who will help you effortlessly migrate your projects to Binance Smart Chain to enjoy ultra-fast trading on your platforms. Also, we have all it takes to promote your DeFi Project hassle-free.
Introduction to Binance Smart Chain (BSC)
After its launch in September 2020, Binance Smart Chain (BSC) has proven to become a leading if not the best blockchain for Decentralized Finance (DeFi) and Decentralized Application (DApp) development.
Scalability, which has been one of the most challenging hurdles in blockchain development, has been made effortless with Binance Smart Chain.
What is Binance Smart Chain?
The Binance Smart Chain (BSC) is an ultra-high-speed blockchain protocol from Binance that runs similarly to the Binance Chain. However, unlike Binance Chain, BSC integrates smart contract function, and it is compatible with the Ethereum Virtual Machine (EVM). Some other unique features of this efficient algorithm include:
- Speed: One of the fastest blockchain transaction times
- Fees: lowest fee structures
- Security: It uses Proof of Staked Authority (PoSA) as a consensus algorithm
- Validators: 21 validators stake BNB the native Binance ecosystem token
- Rewards: Unlike other blockchains, validators are rewarded with transaction fees for securing the network
- Acceptability: Many developers love building DeFi apps on the protocol
Binance Smart Chain’s BEP-20 token has a format similar to the ERC-20 tokens, the Ethereum protocol tokens. The Binance Smart Chain currently has more than 60 Decentralized applications, and a vast majority of them offer DeFi Solutions.
What is a Binance coin (BNB)?
Binance Coin (BNB), created and issued by the cryptocurrency exchange Binance is an exchange-based token. This cryptocurrency is used for trading and making payments on the Binance cryptocurrency exchange.
This coin was created on the Ethereum blockchain as an ERC-20 token in July 2017 and later transferred over to Binance smart chain in February 2019, making it become the native coin of the Binance smart chain platform. It has experienced significant growth over the years, with several rounds of token burn events pushing the BNB price to one of the top-10 Crypto by market value.
The BNB can be swapped with more than 300 trading pairs across 120 exchanges.
Uses of Binance Coin
Like many other evolving cryptocurrencies, BNB offers numerous applications that go beyond the Binance exchange, such as
- Transaction fees on the Binance Exchange
- Loans and transfers
- Credit card payments
- Payment processing
- Booking travel arrangements
How does BSC work?
Binance Smart Chain brings innovation and solutions to the programmability and interoperability of the Binance Chain. It has a system that relies on 21 validators with Proof of Staked Authority (PoSA) consensus that supports short block time and charges lower fees. This makes the platform fast and relatively cheap. The system allows the most bonded validator candidates of staking to become validators and create blocks.
Other features of the design concept include:
- Double-sign detection: This and other slashing logic guarantee security, stability, and chain finality.
- Supports EMV-compatible smart contracts and protocols.
- Cross-chain transfer and other communication due to interoperability.
- Liquidity: Binance DEX allows the exchange of assets on both chains.
- Dual-chain architecture: Allows users to utilize the fast trading on one side and build their decentralized apps on the other side.
Binance Smart Chain Ecosystem
The BSC ecosystem is vibrant and thriving with support for Binance Chain and Binance Smart Chain, including:
- More than 30 wallet providers
- More than 15 million users on Binance.com, over 600,000 active users on Binance Chain, all budding potential users of Defi projects are on Binance Smart Chain.
- A vibrant and influential crypto platform on Twitter and other platforms, allowing active engagement with the Binance community.
Features of the Binance Smart Chain
A self-governing blockchain: Elected validators (21) provide security and safety.
EVM – Compatible: Compatible with every existing Ethereum tool while reducing transaction time and fees.
Interoperable: Features dual chain communication making it ideal for scaling high-performance dApps requiring a fast and stable user experience
Shared with on-chain Governance: Decentralization and community participation are provided by Proof of Stake Authority. Being a native token, BNB functions as both the fuel for executing smart contracts and tokens for staking.
Working of the design principles: consensus and validator quorum; PoS Authority; Governance
The newly created parallel blockchain Binance Smart Chain (BSC) will run side-by-side with the Binance Chain in the Binance Chain ecosystem to provide different services.
- Standalone Blockchain: The BSC is a standalone blockchain, rather than a layer 2 solution.
- Ethereum Compatibility: BSC chooses to be compatible with the existing Ethereum main net. Ethereum, being the first practical and widely-used Smart Contract platform to take advantage of the relatively mature applications and community.
- Consensus and Governance by staking: Staking-based consensus promotes a healthy community and gives more flexible choices to the community governance.
- Native Cross-Chain Communication: Both BC and BSC are written with native support for a cross-chain communication protocol that is bi-directional, decentralized, and trustless.
Consensus and Validator Quorum
Because of the above design principles, the consensus protocol on BSC is reliable. Binance Smart Chain delivers approximately 3 second block times using the Proof-of-Stake consensus algorithm. The Proof of Staked Authority (or PoSA) allows participants to stake Binance coins to become validators. Users receive transaction fees from the transactions included in every valid block they propose.
Unlike many protocols, there is no block subsidy of freshly-mined BNB, as BNB is not inflationary. However, the supply of BNB decreases over time because the Binance team usually does coin burns.
Proof of Staked Authority
Proof of Staked Authority provides more than 50 percent protection against certain types of malicious activity from hackers. It is a reliable method for keeping the BSC safe.
The governance feature of BSC has the following attributes:
- Uniform Interface: The smart contracts interested in specific parameters only need to implement algorithms using the same interface.
- Extensibility: The addition of a new system contract does not require modifying previous or existing contracts
- Failure Tolerance: The system makes it effortless for validators to vote and skip false proposals and move on without further delay.
- Multiplexing: Even though there is Governance for parameters only, there is room for more governance functions in the future.
Benefits of building projects on BSC
The dual smart chain architecture of Binance Smart Chain makes it easy to transfer assets from one blockchain to another blockchain. This flexibility makes it effortless for users to access a cast ecosystem with diverse use cases without limitations. DeFi proponents highly value interoperability, and Binance Smart Chain brings that to the forefront.
Blockchain fees known as transaction fees are paid by users when conducting transactions on a blockchain. This fee, often collected by miners or validators, is paid for their duty or ensuring that the blockchain only allows, records and processes valid transactions.
Many dApps carry out a wide range of transactions which comes with transaction fees for every exchange. This is why many people consider this an essential factor to consider when choosing a blockchain for decentralized finance protocol.
When compared to the Ethereum blockchain fees, the Binance Smart Chain is realistically more cost-effective than Ethereum. For example, Ethereum has recorded a transaction fee of more than $100 for a single transaction, while Binance Smart Chain charges between $0.01 to $0.05 for the same services.
For a transaction to be successful on the blockchain, there are many confirmations necessary to take place for complete processing. These confirmations serve as a means of preventing erroneous transactions such as double-spending. The longer the confirmation time, the more time it takes for a transaction to be processed entirely.
Avoiding unnecessary delays during transcription is a crucial factor developers consider before settling for a blockchain protocol.
Ethereum has become affected by scalability issues in recent times, leading to congestions and longer waiting times for transactions to be processed entirely.
Binance Smart Chain was uniquely designed to enhance blockchain scalability with ultra-fast processing speed for effortless implementation of smart contracts to build scalable, user-friendly, decentralized applications.
By improving the existing structure of Binance Chain, a high performance, low latency blockchain, the Binance Chain was built to enhance speed but unable to handle smart contracts.
On the other hand, BSC is compatible with Smart contracts for dApps, and it is connected with the high-speed throughput Binance Chain providing a powerful parallel chain with synergistic algorithms that are programmable, allow shorter confirmation time, and faster transaction processed speed.
What are some drawbacks of BSC?
Consensus Mechanism: The Proof of Staked Authority (PoSA) allows the blockchain to achieve its fast block times, but many critics argue that this can lead to centralization. This is because the system allows only people who can meet the financial requirement to be eligible as a validator, therefore, cutting out a large number of community members and putting the responsibility in the hands of a few privileged people.
Collusion: There is a risk of validators colluding to alter the blockchain maliciously. However, a huge penalty awaits them if they should do this, such as affecting their fees or their staked assets, so, likely, they won’t do that even though the possibility still exists in theory.
Popular projects on BSC
With dApps, we have different cryptocurrency wallets that function using the Binance Smart Chain. Now that we’ve got a wallet with crypto coins let’s examine this powerful tool’s possibilities. Here are some of the popular decentralized applications on the Binance Smart Chain platform.
It is important to state that these are just a few examples of the successful ones. There is a continuous launch of new and exciting dApps, and you can check them out on DappRaddar, DefiStation, or the Math dApp Store.
PancakeSwap ranks number one as the automated market maker (AMM) on the Binance Smart Chain platform. Like Sushi swap or Uniswap, users can do token exchanges for BEP-20 tokens on the PancakeSwap framework.
Besides, you can provide liquidity to one or more of the liquidity pools and earn passive income in the process. It’s vital to consider impermanent loss before you deposit your funds.
Even though at the core of PancakeSwap is AMM, there are also other uses of the platform. For example, you can take part in a lottery, win NFTs, sell tokens, compete for available spots on the leaderboard, and lots more.
Venus is another dApp making the news on BSC. This peer-to-peer borrowing and lending protocol is similar to compound or Aave on Ethereum. This decentralized money market allows users to borrow and lend BEP-20 tokens with an interest rate set within the algorithm.
If you have some idle funds you are not using anytime soon; Venus can be a platform where you can earn interest on them or use them as collateral to borrow against to participate in a yield farm.
It also enables a decentralized stable coin, the VAI. The coin is backed by many crypto assets making it similar to MakerDao and Compound on a BSC.
This is a yield generator on BSC. It is a hybrid of Yearn on Ethereum. The dApp automatically helps you discover an optimal way to earn on your deposited funds.
This is also another popular AMM on BSC that allows you to swap your BEP-20 token and provide liquidity.
The Spartan Protocol works as a synthetic protocol for your assets on BSC. It makes it possible for users to create liquidity pools for BEP-20 tokens, just like other available AMMs.
It can also expand its usefulness in the future to areas such as creating synthetic assets with liquidity pools as collateral and lending and on-chain derivatives.
Cream is unique because it is a popular lending protocol on Ethereum deployed in the Basic Smart Chain platform. It is used for borrowing and lending the BEP-20 tokens.
Migrating projects to Binance Smart Chain (BSC) offers a wide range of benefits to the users. Binance Smart Chain provides faster and cheaper transactions than most blockchains. Also, it allows developers to port from Ethereum to Binance Smart Chain with ease, and there are already success stories to back this claim.
Many businesses are also migrating from other platforms to BSC to leverage the powerful benefits offered by Binance. That’s where we come in at applicature; we are a solidity developer defi development company that have already implemented projects on the blockchain such as DeFi, dApps, and many more. Our developers are blockchain experts who will help you implement or migrate your projects to the BSC platform for a safer, faster, cheaper, and smooth transaction. You can contact us and let’s discuss your projects.
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