Beginners Guide View Non-AMP

An In-Depth Guide To The Binance Smart Chain (BSC)

Written by: Delma Wilson

May 27, 2021

Smart Chain is the new rave in the crypto world, especially after Binance introduced their Binance Smart Chain in 2020.

These smart chains provide exceptional blockchain facilities in a constant effort to make the DeFi ecosystem thrive and become more efficient.

Read on as we discuss the different aspects of the Binance Smart Chain (BSC) and how it functions.

What is the Binance Smart chain?

The Binance Smart Chain is developed as a parallel chain to the existing Binance Chain and is a smart-contract-enabled blockchain. 

It was created to be compatible with the Ethereum Virtual Machine, to facilitate the developers to easily use the decentralized applications built with the Ethereum blockchain and use them on the new blockchain of Binance. 

It also allows pegged-coins creation and cross-chain transfers. The tokens which can be pegged include BTC, TRX, ETH, and others. These pegged coins act like the BEP-20 tokens on this smart chain, similar to the ERC-20 token on the Ethereum smart chain. 

Design principles of Binance Smart Chain

  • Compatibility with Ethereum: This smart chain is entirely compatible with Ethereum, the most efficient and popular smart contract platform. BSC is created in a way that is compatible with the mainnet of Ethereum. Since the decentralized apps are mostly built on the Ethereum platform, they will also work on the BSC platform and the other ecosystem components, tooling, etc. In most cases, there is no need for any changes to make them work on BSC.
  • Individual Blockchain: This blockchain is a stand-alone with no layer 2 solution. Thus, most of the fundamental techniques of BSC need to be self-dependent and operable even without Binance Chain.
  • Faster and more efficient: This new smart chain by Binance has a staking facility that facilitates consensus and provides multiple options to the community governance. This, in turn, leads to better performance in terms of a network and can also reduce the blocking time and increase the number of transactions within the same duration.
  • Communication protocol: The two blockchains have native support for cross-chain communications. A bi-directional, trust-less, and decentralized protocol for communication has been set up for the BSC.

Objectives of BSC

  • Reduction in the time taken for block generation
  • Transactions are confirmed within a very short time limit
  • The Gas fee is used to collect the rewards for block generation and paid in BNB
  • BSC is made to incorporate most of the things running on Ethereum
  • With an advanced staking facility and network governance, it provides exceptional facilities

How does the Binance Smart Chain work?

The Binance Smart Chain has incorporated Proof of Staked Authority (PoSA), which helps the blockchain create blocks in the blink of an eye. 

The participants can stake BNB and become validators. The block they propose needs to be valid to receive the transaction fees. These transaction fees are generated from the transactions inside the proposed blockchain. 

Since there is no inflation in BNB, there is no block subsidy as well in the form of newly minted BNB or same. However, due to the daily coin burn conducted by the Binance team, the number of BNB is decreasing over time. 

To start with the Binance Smart Chain, you must have the wallets linked to the platform. The widely-used wallet is MetaMask. You can use this Ethereum wallet without difficulties, as it is super compatible with the BSC interface. 

Other reputable, trust-worthy options are listed below: 

  • Trust wallet
  • Binance Chain Wallet
  • Math Wallet
  • TokenPocket
  • Safepal

DeFi and BSC

BSC is made to target the DeFi space, with high flexibility to incorporate the decentralized applications in the financial arena. 

DeFi applications running on other platforms, especially Ethereum, are fully compatible with BSC. This also helps the users be involved in yield farming, use proposals, votes, and exchange assets easily. 

Binance chain and Binance Smart Chain

The dual chain structure and the cross-chain communication is conducive in several ways – 

  • The users can create any financial products or virtual assets and tokens on this platform
  • You can, manually or with automation, trade the items created on BSC in the Binance Chain platform. The latter is a highly stable, fast, and user-friendly platform.
  • One can use a single tooling system and UI to operate both Binance Smart Chain and Binance Chain.

Binance Smart Chain Metrics

There are a total of six Binance Smart Chain Metrics, which are – 

  • Average Gas Price: This metric is for understanding and observing the average gas price for transactions happening on the BSC platform. The charges of the BSC platform are pretty low. For instance, 1 gwei equals only 0.000000001 BNB. The average gas price on BSC is around 20 gwei. So, if you send 10 BNB worth $300, the transaction cost would be $0.01, which is very reasonable.
  • Daily Transactions: This is one of the most valuable metrics on BSC, which shows the number of transactions that take place on the Binance Smart Chain on a particular day. This helps you understand the network activity range. There is also a feature called BscScan, which helps you find the day with the highest number of transactions.
  • Validators: This is the primary metric that validates the blocks proposed to the platform by users. The users get the transaction fees if the blocks are valid, keeping the platform operable. There is a leaderboard option where you can see the top validators with the highest numbers of valid blocks.
  • Yield Farms: Yield farming, commonly known as liquidity mining, is the most common use of these platforms. On Binance Smart Chain, you can generate yield by using certain platforms’ previous holdings of digital assets. The metric includes the BscScan yield farming dashboard, which has all the details related to the yield farming opportunities in the current market. You can get information about how yield farming is done on specific websites.
  • Unique Address Count: This metric is for finding out the network’s growth. It is to determine how many unique users are active on the platform. However, there is a drawback. A single user can have multiple unique addresses which he uses for mining, and then this metric won’t give you the exact count.
  • Token Tracker: This metric helps you monitor the top BEP-20 tokens by using the market capitalization and trading volume daily. This will help you understand which tokens are highly traded or have the highest cumulative value on this platform.

Conclusion

Binance Smart Chain is the new-age platform for all your decentralized finance applications that run on Ethereum. 

This platform is unique in itself, with multiple metrics that are highly useful and with the lowest transaction fees. Binance Smart Chain, along with Binance Chain, is a dual chain platform which is another rare thing to find in the crypto arena to date. Everything on this platform’s design protocols for communications are highly efficient and effective.

FAQ

What are the most popular Binance Smart Chain Tokens?

The top five BSC tokens by market capitalization are
Binance Coin – BNB
Binance USD – BUSD
The Graph – GRT
PancakeSwap – CAKE
Ontology – ONT

What is the transaction fee on Binance Smart Chain?

 The transaction fee on the BSC platform is very low, and starts from 1 cent.

How many blocks can be produced in a minute on Binance Smart Chain?

 With a speed of 1 block in every 3 seconds, 20 blocks can be produced on BSC in one minute.

How you can withdraw from Binance Smart Chain Wallet?

You can withdraw by using the Binance account you have. You can withdraw BEP-20 tokens from Binance Smart Chain Wallet to the Binance Account.

Delma Wilson

Delma is a B2B Content Marketer, Consultant, Blogger in the field of Blockchain, and Cryptocurrency. In her spare time, she loves to blog, play badminton and watch out ted talks. She likes pets and shares her free time with NGO.

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