Binance Smart Chain (BSC) is a layer 1 blockchain built to support smart contracts , running alongside the Binance Chain, which was designed to support high transaction volumes.
Binance Smart Chain implements the Ethereum Virtual Machine (EVM) to enable smart contracts, allowing developers to create or migrate Ethereum-based decentralized applications (dApps) such as MetaMask.
BSC token genertor was designed based on Geth, an Ethereum execution client that manages transactions, deploys and executes smart contracts, and contains the EVM.
Evolution of BSC to BNB chain
Since its debut in 2017, the Binance blockchain — which was developed by the biggest cryptocurrency development exchange in the world — has changed. As smart contract-enabled decentralized finance (DeFi) applications took off in 2020, Binance launched a parallel Binance Smart Chain to work alongside the Binance Chain and compete with the Ethereum blockchain.
Early in 2021, as network congestion and high gas fees on the Ethereum blockchain increased transaction costs while slowing processing times, BSC quickly gained traction among developers and users.
In 2022, BSC merged with Binance Chain into a new dual-chain structure. The original Binance Chain has been renamed BNB Beacon Chain and merged with BSC, meaning that the Binance Smart Chain is now the BNB Smart Chain. Together, the two chains form the BNB chain.
The rebranding responds to Binance’s goal of developing a broader ecosystem for the Binance exchange-independent blockchain. According to Changpeng Zhao, CEO of Binance, “BNB” is short for “Build ‘N Build.”
The growing popularity of blockchain has led to an explosion of new projects being built on BSC starting in 2023, for example Bitcoin BSC.
How does the BNB Smart Chain Protocol work?
Through the use of a hybrid consensus mechanism known as Proof-of-Staked-Authority (PoSA), which combines delegated proof-of-stake (DPoS) and proof-of-authority (PoA), BNB Smart Chain adds programmability and interoperability to the BNB Beacon chain.
PoSA uses a system of validators chosen based on the number of tokens they have staked. They alternately confirm transactions and append new blocks to the chain. Backup validators, called “candidates,” provide security, as in the event of a malicious attack that takes validators offline, candidates can report back to the Beacon chain, resume processing in BSC, and propose re-election of active validators.
BSC Advantages
According to Binance, the BSC consensus protocol has been designed to meet the following objectives:
Short Block Time: BSC aims to achieve a short block time of three seconds on its live blockchain (mainnet). This means that transactions can be processed quickly, allowing for faster confirmation and reducing potential delays.
Quick confirmation of transaction purpose: BSC emphasizes quick confirmation of transaction purpose. This ensures that once a transaction is included in a block, it is considered complete and cannot be reversed or altered. This feature increases the security and reliability of transactions in the BSC.
Non-inflationary model for BNB: BSC adopts a non-inflationary model for its native currency BNB. While new coins are produced through mining in traditional inflationary models, BNB block rewards are derived from transaction fees. Over time, this mechanism aids in preserving a steady and predictable supply of BNB.
EVM Support: BSC fully supports EVM. Because of this compatibility, developers can easily migrate their current Ethereum-based smart contracts and applications to the Binance Smart Chain ecosystem. It also gives users access to a large selection of dApps in a comfortable environment.
Proof-of-stake (PoS) Governance: The PoS governance mechanism is utilized by BSC. PoS allows BNB holders to participate in the network’s consensus and decision-making process. By staking their BNB tokens, holders can contribute to block validation and participate in voting on network improvements and proposals.
What is BNB Coin?
Previously known as Binance Coin , BNB is the native utility token of the Binance ecosystem. It is utilized for asset transfers, staking, and transaction fees on the Binance exchange and BNB chain. On BSC, smart contracts are also carried out using BNB.
BNB holders who want to earn additional BNB or contribute to network security can stake BNB in a smart contract. They can also delegate their staking to a BSC validator to earn a share of the block rewards. The amount of BNB redistributed to delegators by validators from gas fees is at their discretion.
In addition to BNB, BSC supports other token standards, such as BEP-20, which developers use to create erc20 token, on the Ethereum blockchain for compatible applications. BEP-20 is equivalent to BEP-2 on the BNB Beacon chain, so holders of BEP-20 tokens can exchange them for BEP-2 tokens and vice versa on the Binance wallet.
BNB Chain Applications
BNB Chain is undergoing a series of technical upgrades to support greater decentralization and fast transaction processing as part of the dual-chain transition.
BNB Chain will focus on providing the infrastructure to support a virtual ecosystem of applications through the decentralization of gaming finance (GameFi), social media finance (SocialFi), Web3, non-fungible tokens (NFTs), and the metaverse.
It is scaling from a chain to a multi-chain structure, increasing BSC performance, introducing new governance mechanisms, increasing scaling, and expanding the number of bep20 token development on blockchain validators from 21 to 41.
The top five applications of the BNB chain based on the total value of assets in smart contracts are:
Venus Protocol — a decentralized algorithmic money market and stablecoin protocol that offers borrowers and lenders access to liquidity and profits on demand.
BinaryX — A decentralized GameFi platform that offers services to help Web2 developers transition to Web3.
PancakeSwap — The largest and first decentralized cryptocurrency exchange built on BSC.
Elephant Money — A decentralized community bank focused on generating passive income for token holders.
Cairo Finance — A deflationary system that provides a DeFi yield crop aggregator and optimizer to offer all DeFi products on a single platform for BSC users.
Cryptocurrencies are often very volatile and face regulatory uncertainties. Additionally, decentralized applications can be susceptible to fraud.
Therefore, it is important to exercise due diligence when purchasing cryptocurrencies and using blockchain applications, investing only what you can afford to lose.
