What Is Binance Smart Chain? What You Need To Know About This Blockchain

What Is Binance Smart Chain? What You Need To Know About This Blockchain

March 27, 2021 by Leo Webb
Binance Smart Chain (BSC) appeared as a result of Binance’s innovative approach aimed to ensure interoperability and programmability of the Binance blockchain. Binance Smart Chain is based on the Proof of Staked Authority (PoSA) consensus mechanism with 21 validators. This blockchain offers low fees and a short block time. The security of the network is

Binance Smart Chain (BSC) appeared as a result of Binance’s innovative approach aimed to ensure interoperability and programmability of the Binance blockchain. Binance Smart Chain is based on the Proof of Staked Authority (PoSA) consensus mechanism with 21 validators. This blockchain offers low fees and a short block time. The security of the network is based on the double-sign detection method. This blockchain supports EVM-compatible protocols and smart contracts.

Even though Bitcoin remains the most widely used and traded crypto asset, we would never realize all the technical capabilities of the blockchain technology without Ethereum. Users have become so used to Ethereum and its smart contract programming that the words “Ethereum” and “smart contracts” are always used together. Binance was created as a centralized modified Ethereum fork so it’s compatible with Ethereum Virtual Machine (EVM). Therefore, users can work on Ethereum from the Binance Smart Chain ecosystem. This means that all coins created on Ethereum are compatible with BSC.

Given that it natively supports interoperability, Binance Smart Chain also offers cross-chain communication and transfer. Binance Chain and Binance Smart Chain are basically two parallel yet independent blockchains, and one of the purposes of BSC was to bring programmability to Binance Chain. Binance DEX enables you to exchange assets on both chains so this kind of dual architecture is a perfect solution for those who are looking for both fast trading and decentralized app development.

How To Start Working With BSC

Binance Chain Wallet

First of all, you might want to try Binance Chain Wallet. This is a browser extension that enables you to store coins on Binance Smart Chain, Binance Chain, and Ethereum, and to make transactions. To understand the advantages of Binance Chain Wallet, you should know the differences between BSC and its predecessor. Binance Chain had certain limitations in terms of efficiency and interoperability, and they were addressed in BSC. If you understand how smart contracts work on this blockchain, there will be no difference between working with this wallet and any other solutions of this kind.

When it comes to crypto wallets, one of the main concerns is security. Binance Chain Wallet integrates with the BSC infrastructure without giving access to private keys. Your private keys are securely stored by the extension and encrypted with a password. To ensure integration, this wallet adds code to communication between this extension and other web apps that you open in your browser. As a result, the extension asks for permission to access web pages.

Setting Up Metamask

You can also connect BSC to Metamask. By default, Metamask works with Ethereum wallets, which can be a big problem if you’re going to work with BSC dApps. Besides, you may lose your crypto assets if you send them to addresses that you cannot use. To connect BSC to your Metamask extension, go to the dropdown menu and select “Settings.” After this, select “Networks” and click “Add Network” to add Binance Smart Chain manually. Here you can connect to the mainnet or the testnet. The mainnet is a fully functional release, while the testnet is basically a testing sandbox. To connect to the mainnet, enter the following details:

After this, click on the Metamask logo at the top left corner, and you will see that BNB is displayed as a currency — don’t let the Ethereum logo confuse you.

Smart Chain Block Explorer

Binance Smart Chain has its explorer, BscScan. This explorer was created by the Etherscan team so if you’ve used Etherscan before, this explorer will be especially easy to use for you. This block explorer supports both the mainnet and the testnet. It enables you to view validated block details, transactions, charts, validator lists, and developer API endpoints. BscScan also features a contract verification tool.

On the BscScan homepage, you can see the BNB market cap and price, transactions, latest blocks, validators, and voting power. The price is displayed as equivalent to USD in BRB. Transactions display a ledger of unique transactions for the past 24 hours, and transaction volume history shows the volume of transactions on the BSC network for the past 14 days.

You can track transactions by using a token name, wallet address, transaction hash, or block name. For example, you can enter the necessary wallet address into a search bar, and click “Search.” You will see an overview of the balance on the wallet in BNB, along with a list of BSC tokens available in this wallet and their value. After this, you can scroll down and see all BNB transactions in the transactions menu. The charts and statistics section displays all the data on the BSC network categorized as network, blockchain, contracts, and validators data. You can also check daily transactions, unique addresses, network transaction fees, average block time, and network utilization.

Binance Bridge

Binance Bridge is a cross-chain project that was created to increase interoperability. It enables you to convert any tokens into so-called pegged, or wrapped tokens so that you can use them on both Binance blockchains. This way, you can use a whole variety of crypto assets, including ETH, BTC, LTC, USDT, XRP, ATOM, XTZ, LINK, ONT, DOT, and others, in the BSC ecosystem. On the Binance Bridge portal, you can access cross-chain liquidity on both Binance blockchains in just a few seconds.

The process of wrapping coins and tokens is pretty simple and straightforward. For example, you can transfer USDT from the Ethereum blockchain to BSC. In this case, Binance Bridge will convert ERC-20 to BEP-20 (a token standard on BSC) or BEP-2 (the standard on Binance Chain). All the wrapped coins will be backed by real tokens and coins on public addresses. Currently, Binance Bridge supports cross-chain transfers with not only ERC-20 tokens but also TRC-20 tokens, which are similar tokens from the TRON network. All cross-chain conversions take just a few minutes to execute, and Binance Bridge charges no conversion fees.

The Most Popular DeFi Projects on BSC

  • PancakeSwap
    This is a decentralized exchange created on BSC. The automated market maker (AMM) enables users to create income streams in different ways, some of which are quite innovative. This exchange relies on permissionless liquidity pools that are run by algorithms and fully automated. PancakeSwap has its CAKE token and offers lower fees and faster transactions than those on Ethereum DeFi platforms. This is the leading AMM platform on BSC, which makes it a good alternative to such Ethereum-based AMMs as Uniswap and SushiSwap. On PancakeSwap, you can trade BEP-20 tokens, provide liquidity, stake liquidity provider tokens to earn CAKE, and stake CAKE to earn other tokens or more CAKE.
  • Venus
    Venus is a decentralized lending marketplace with its own stablecoin — VAI. This marketplace offers three-second transactions and low fees, being similar to Maker and Compound, which are based on Ethereum. You can earn a market-based return by landing such assets as VAI, SXP, USDC, BUSD, BNB, and USDT. You can also borrow assets by supplying collateral, and generate VAI from your collateral. Instead of borrowing tokens from the protocol, you can mint VAI (up to 50% of the value of the remaining collateral). Besides, you can use ETH as collateral.
  • Autofarm
    This is a set of DeFi solutions that provides yield farming and DEX aggregation on different blockchains. Autofarm was created on BSC, and now it also offers cross-chain support of Huobi ECO Chain (HECO). Autofarm aims to become a leading yield and DEX aggregator on BSC, and it incorporates AMM aggregation and yield optimization in a single protocol. Autofarm Network relies on a vault system to optimize yields. Vaults are used as investment instruments, automating the best opportunities for yield farming. Vaults can provide assets as collateral, use assets as liquidity or in order to generate compound and yield profits, and manage collateral to minimize the likelihood of liquidation. By using the vaults, you can also earn AUTO, an Autofarm token, and you can withdraw from the vaults with no fees.
  • Pancake Bunny
    Pancake Bunny is a yield aggregator used for PancakeSwap. The PancakeBunny protocol enables farmers to optimize their yield compounding strategies, getting profits from various pools and automatically compounding these profits into the CAKE compounding pool. This way, the principal is protected, while users can get a better return. Currently, Pancake Bunny has pools of CAKE, BUNNY, CAKE-BNB, BUNNY-BNB, USDT-BNB, USDC-BNB, BUSD-BNB, USDT-BUSD, DAI-BNB, and VAI-BUSD.
  • Belt.fi
    Belt.fi aims to become a cross-chain DeFi ecosystem that will simplify storing and swapping of BTC-like coins and USD-based stablecoins. This is an AMM protocol that provides aggregation through vault compounding, yield, and landing optimization. It also incorporates multi-strategy yield optimization on BSC. Unlike many other exchanges, Belt.fi enables you to swap stablecoins instantly. Besides, you can get BELT tokens while using optimized strategies of yield farming. All these processes work directly from smart contracts, with no centralized processing involved. 
  • Beefy.finance
    This is a BSC-based yield farming optimizer that uses liquidity pools to automate investment strategies. Thanks to this platform, investors can take advantage of various farming opportunities with no need to manually execute their strategies or monitor them constantly. Beefy has its native BEP-20 BIFI token, which is used for governance and staking.

Wrapping Up

Binance Smart Chain is a parallel blockchain of Binance Chain that features smart contracts and EVM compatibility. Thanks to this dual-chain approach, Binance offers a high throughput of Binance Chain, while also offering interoperability and programmability of BSC. Binance Smart Chain has a whole ecosystem of dApps, and some of the BSC-based DeFi solutions can serve as a great alternative to similar Ethereum-based platforms because they offer quicker transactions and lower fees.

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