What is Binance Smart Chain ?
What is Binance Smart Chain?
What do we know about Ethereum’s strongest competitor?
Binance Smart Chain (BSC) is a new platform that aims to reduce transaction costs and create space for decentralized applications and other defy products. Due to the advantages it offers, it has been able to establish itself as one of the fiercest competitors of Ethereum Blockchain. In the following, we have introduced Binance Smart Chain and the best cryptocurrencies based on this network.
Binance Smart Chain
What is Binance Smart Chain?
Binance Smart Chain is a blockchain operated by Binance Digital Currency Exchange. This chain is based on Ethereum and has most of the features of this blockchain such as smart contracts and support for a wide range of Defi protocols. Binance Smart Chain was designed in 2020 to complete the Binance chain that manages the decentralized Exchange (DEX).
Binance has two different blockchains with somewhat confusing letters:
Binance Chain, which established in 2019 to support Binance Decentralized Exchange. This chain supports the BEP-2 token standard. The binance chain does not support smart contracts, so it is largely limited and no longer widely used.
Binance Smart Chain was created in 2020 to support smart contracts and a dedicated ecosystem in the field of defense. This chain supports the BEP-20 token standard.
The Binance Bridge can be used to transfer assets between the two chains.
Binance Smart Chain runs parallel to Binance Chain. Binance centralized exchange entered the field of decentralized finance (Defi) with the launch of Binance chain in April 2019.
Binance Chain was designed to host Binance decentralized exchange with support for high-speed transactions. Unfortunately, this chain was created without the ability to support smart contracts, so there was a sense of a new blockchain to support defy applications.
Binance Exchange launched the second blockchain in September 2020 to create a low-cost, high-speed defense ecosystem.
Binance Smart Chain essentially integrates the high throughput of the Binance chain with smart contracts, allowing users to manage their digital assets across a variety of chains, including Ethereum.
This chain provides a good environment for creating decentralized applications and other Defi products. Features of this chain include three-second block validation time, inter-chain asset transfer, Ethereum Virtual Machine (EVM) compatibility, and proof of stake consensus protocol.
By implementing the Ethereum Virtual Machine, Binance Smart Chain can run Ethereum-based applications such as the Metamask wallet. It is worth noting that Binance Smart Chain does not act as a Layer 2 protocol for Binance Chain and is an independent blockchain that can be implemented even if Binance Chain is offline. Binance Smart Chain is like a modified Ethereum fork.
Since the smart chain runs parallel to the binance chain, it uses a two-chain architecture that allows users to transfer their digital assets from one chain to another without any problems using the binance bridge.
Binance Smart Chain uses a version of the stake proof consensus algorithm called “credit proof” which uses 21 validators to secure the network; to do this; validators must stick 10,000 Binance Coin tokens.
Users can also play a “delegating” role by sticking at least one binance coin, in which case their tokens will be used by validators and they will be awarded a part of the sticking rewards.
How to use Binance Smart Chain?
For many traders, the benefits of using Binance Smart Chain are worth the hassle of setting up a Binance account and transferring a small amount of Binance Coin tokens. Here are some steps you can take to begin the process of preparation for mediation.
- Create an account in Binance
- Buy Binance Coin (BNB)
- Download Currency Password Wallet
- Connect the wallet to the Binance smart chain
What can be done at Binance Smart Chain?
Just like any other smart contract platform, Binance Smart Chain can be used for a variety of applications. However, at present the most popularity of this chain is due to the field of defense and profit cultivation or its farming.
After transferring some Binance Coin to your wallet, you can use several Defi protocols built on Binance Smart Chain or transferred to it from Ethereum Blockchain.
Users can trade by automated market making (AMM) exchanges such as pancakeswap in Binance Smart Chain, which supports BEP-20 tokens. Decentralized Binance exchanges in the Binance chain can also be used to trade BEP-2 tokens.
Fixed currency exchange
Through the “Peg-in” feature in blockchain, other blockchain tokens can be transferred to blockchains that are compatible with Binance or Binance Smart Chain networks. With the “Peg-out” feature, the opposite can be done.
In this case, the user essentially exchanges a token for a version that is compatible with the blockchain of their choice.
In a Binance exchange, the Binance bridge sends an equivalent amount of wrapped tokens to the address of the Binance or Binance Smart Chain wallet, which the user can use on the Binance platform or decentralized applications.
Platforms such as Autofarm and Pancakeswap have enabled Yield Farming in Binance Smart Chain. Users can deposit their liquidity tokens (LPs) or money to these platforms that act as pools and obtain more cash tokens or native protocol tokens. Autofarm pools use automated profit optimization strategies to get the most out of them.
Non-fungible Tokens (NFT)
After mainstream attention to the acceptance of non-repetitive tokens (NFTs), many of the decentralized applications that were transferred from Ethereum to Binance Smart Chain are NFT markets. The most popular NFT platforms are collector platforms in Pancakeswap, Bakery Swap and Battleswap.
There are hundreds of decentralized apps in Binance Smart Chain. Some examples of them are listed below.
The use of Binance Coin digital currency on Binance Smart Chain
Binance Coin is a native token to Binance Smart Chain and the Binance chain, which is used to pay gas fees and other services. Binance Coin comes in two forms:
- Binance Coin BEP-20 in Binance Smart Chain
- Binance Coin BEP-2 in Binance Chain
Binance coin quickly became one of the top 10 digital currencies in terms of market value. This coin is currently used for the following items in the Binance and Binance Smart Chains:
- Exchange it with other digital currencies in digital currency exchanges
- Transaction fee payment
- Payment of transaction fees
- Participation in token sales held at Binance Launchpad
- To earn Binance Coins in the main Binance exchange where this token can be used in services such as sticking, launch money, Binance Coin fund and liquidity exchange
- As a tool token of Binance Smart Network in games and other decentralized applications
- Use Binance Pay and Binance card to buy
- As collateral for Binance digital currency loans backed by Binance Coin
- Donate to your Binance charity
Benefits of Binance Smart Chain
Due to the increasing popularity of Binance Smart Chain in Defi markets and the migration of Defi protocols to this chain, it is better to be acquainted with the pros and cons of using this chain.
- Low gas fees
- Higher transaction speed
- Large user base
- Interactivity and compatibility
- Ease of transfer of tokens
Disadvantages of Binance Smart Chain
- Inflatable tokens
- Small governing community
- Vulnerability to attacks
- Validation of validations
- Dependency on Ethereum
How does Binance Smart Chain work?
Binance Smart Chain uses the proof of stake algorithm (PoSA) as a second-generation blockchain. In fact, this chain combines two algorithms: (PoS) and (PoA).
This makes Binance Smart Chain much more energy efficient than first-generation proof of work (PoW) blockchains such as Bitcoin and Ethereum.
Bitcoin often makes headlines because of the amount of electricity that its proof-of-work algorithm uses to secure the network. In proof of stake algorithm using economic staking, i.e. validators, instead of computing power, i.e. extractors, to verify transactions and add new blocks, this energy consumption is minimized.
Delegated Proof-of-Stake (Dpos)
Delegated Proof-of-Stake entrusted is an upgrade to proof of shares, which includes voting and delegation mechanisms. This prevents people with more power from dominating the entire network.
Almost all newer smart contract blockchains, such as Cardano, Solana, Avalanche, etc., use some form of stake proof mechanism. The reason for the popularity of stake proof projects is not only the elimination of miners but also the reliance of these platforms on an incentive structure to secure the network.
Proof of validity
Those who have the most stakes (locked tokens) receive higher rewards for maintaining the network. However, since equities of equal size may have different values, the developers used the validation model for greater security. In this model, the validity of identity has replaced the monetary value of stakes.
Binance Smart Chain currently has 21 accreditors responsible for transaction processing and network security, making the smart chain a highly centralized smart contract platform. Compared to the Binance smart chain, Ethereum has more than 200,000 credentials to upgrade to Ethereum 2.
What are the best currencies in Binance Smart Chain?
Below we have ranked the top 10 digital currencies based on Binance Smart Chain based on market value, respectively. These currencies are:
- Binance Coin
The best Binance Smart wallets
Recommended wallets for access to the rich ecosystem Decentralized applications of Smart Chain, which have become popular due to their very low fees. In the following, you will be acquainted with some examples of them.
- Metamask; A popular insecure wallet that integrates into a user’s web browser and then connects to decentralized applications. From here, you can learn more about Metamsk and how to use it. Metamsk also supports the integration of the most popular Trezor and Ledger hardware wallets with the aim of rapidly expanding the use of its wallet.
Metamask and binance coin
- Trust Wallet; this wallet, which was purchased by Binance Exchange, in addition to supporting Tezos in April 2019, provided the possibility of sticking. This wallet is available as an integrated decentralized application browser for Android and iOS operating systems. Trust Wallet currently supports more than 40 blockchains and 160,000 tokens.
- SafePal; for added security, this wallet is available not only as a mobile wallet but also as a hardware wallet called SafePal S1. At about $50, SafePal is a great wallet for cold storage and anti-hacking of digital currencies. SafePal wallet supports 20 blockchains and 10,000 tokens.
Binance Smart Chain has greatly enhanced the performance of the early Binance chain and supports a wide range of advanced protocols designed to bridge the gap between different blockchains.
Although the chain is still in its infancy, the promise of Binance Coin sticking along with compatibility with the Ethereum Virtual Machine will make the platform an ideal engine for developers building powerful decentralized applications.