What is Binance Smart Chain?
In the latest whitepaper, Binance announced the development of Binance Smart Chain, a blockchain that supports smart contract functions.
This network is described as an innovative solution, bringing both the interoperability and programming capabilities of the Ethereum Virtual Machine (EVM) into Binance Chain. It will run on the Proof-of-Stake consensus algorithm to increase decentralization and community participation.
Moreover, the blockchain will be EVM compatible. This means it will support all of Ethereum’s existing tools but is expected to be faster and cheaper to charge transactions.
Binance Smart Chain will be a parallel blockchain in addition to the current Binance Chain. This is to maintain the high performance of DEX and, at the same time, support the smart contract function.
What makes Smart Chain stand out?
According to the proposal, Smart Chain has fast block processing time, low transaction fee. At the same time, EVM compatibility programming and native cross-chain communication will enhance the functionality for developers.
Binance’s Smart Chain has a dual chain architecture that would be ideal for users to take advantage of fast transactions on one side (Binance Chain) and build decentralized applications (dApps) with smart contracts on the other side ( Binance Smart Chain).
BNB holders, who are interested in staking BNB can also support Binance Smart Chain development and earn bonuses.
BSC’s design principles:
Technically, BSC is a standalone blockchain, instead of a layer 2 solution. Most BSC fundamental technical and business functions should be self-contained so it can run well even if the BC stopped for a short period.
The first practical and widely used Smart Contract Platform is Ethereum. To take advantage of the relatively mature applications and community, BSC chooses to be compatible with the existing Ethereum main network. This means that most dApps, ecosystem components, and tools will work with BSC and require a change of zero or minimum. The BSC node will require similar (or slightly higher) specifications and hardware skills to run and operate. The implementation should leave room for BSC to catch up.
Staking involved consensus and governance
The staking-based consensus is more environmentally friendly and leaves more flexible options to the community governance. This consensus should enable better network performance over full proof-of-work, i.e., faster blocking time and higher transaction capacity.
Native cross-chain communication
Both BC and BSC will be written with native support for cross-chain communication among the two blockchains. Communication protocols must be bidirectional, decentralized and unreliable. It will focus on moving digital assets between BC and BSC, i.e., BEP2 tokens, and finally, other BEP tokens introduced later. The protocol should take care of the minimum of other items stored in the state of the block chain, with only a few exceptions.
Benefits of Binance Smart Chain
Being a blockchain will provide security and safety for all users and developers.
Compatible with EVM and will support all existing Ethereum tools along with faster and cheaper transactions.
Its native dual-chain interoperability will enable cross-chain communication and scaling of high-performance applications that require fast and smooth user experience.
Online administration along with the Proof of Staked Authority consensus algorithm, built on 21 transaction validators, will provide decentralization and allow significant community participation.
BC and BSC share the same token universe for BNB and BEP2 tokens. This definition:
The same token can circulate on both networks and flow between them in two directions through a chain of communication mechanism.
The total flow of the same token must be managed on both networks, i.e. the token’s effective supply must be the sum of the total effective tokens provided on both BSC and BC.
The initial tokens can be created on BSC in the same format as ERC20 or on BC as BEP2, then created on the other side. There are separate ways on both networks to link the two networks and ensure total token supply.
BNB will run on BSC in the same way as ETH runs on Ethereum so that it remains its own native token for both BSC and BC. This means that, in addition to the BNB used to pay most of the fees on Binance Chain and Binance DEX, BNB will also be used to:
- pay by gas to deploy Smart Contract on BSC
- stake on the selected BSC validators and receive the corresponding reward
- perform cross-chain operations, such as token asset transfers via BC and BSC
BC supports the BEP2 token and the upcoming BEP8 token, which is a transferable and tradable original asset (if listed) through fast and second financial transactions. Meanwhile, because BSC is compatible with Ethereum, supporting the ERC20 token on BSC is natural, called BEP2E.
Binance Smart Chain is said to be an optimal solution. Firstly, the compatibility with EVM makes it possible to support Ethereum’s tools with faster speeds and cheaper transaction fees. Second, thanks to EVM’s interoperability and programming, the smart chain Binance can run on Proof of Stake, thereby increasing the community’s decentralization and participation. Moreover, Binance Smart Chains are expected to combine the features of both the DEX blockchain with smart contracts’ functionality. From there, it helps developers to be able to program and interact additionally on the blockchain.