Binance smart chain

Binance Smart Chain: What Is In It For Users?

Binance smart chain (BSC) is a sovereign blockchain architecture that runs parallel to the Binance chain. It allows the creation of smart contracts and the staking mechanism for BNB (Binance token). It allows users to gather BNB stakes to become a validator of the new blockchain for Binance. 

The Binance smart chain (BSC) went live on September 1, 2020, five months after it was first unveiled in April 2020. It allows you to create a smart contract for tokens on the Binance blockchain. The BSC is an Ethereum Virtual Machine-compatible blockchain expected to increase the utility Binance chain and the BNB token.

BSC leverages the Proof-of-Stake Authority (PoSA) consensus mechanism to create an ecosystem where validators, token holders, developers, and users will benefit from a high performance,  rewarding blockchain. It also provides ample opportunity for further innovations. 

Binance smart chain provides an opportunity for Defi projects and the blockchain community to leverage cross-chain interoperability. 

Due to the limitations and the need to improve the existing blockchain, the Binance Chain Development community (BCDC) pushed for Binance smart chain (BSC). It will maintain all the Binance chain features while enabling a system that can support the creation of a smart contract. Such an innovative solution brings interoperability and programmability of the Ethereum Virtual Machine (EVM) to the Binance Chain. 

The Features of The Binance Smart Chain

According to the BSC whitepaper, the main features are that:

 The BSC is EVM-Compatible

The new Binance chain accesses other existing Ethereum tools.

The Chain is a Sovereign Blockchain

Any central authority or financial intermediary does not control the BSC, hence ensuring it is safe for the network users. 

BSC is Interoperable

It permits for cross-communication and the scaling of decentralized applications (dApps). 

BSC Functions On A Proof-Of-Stake (PoS) Consensus Model

The new Binance chain will have 21 validators. The validators will be in charge of all transaction confirmations. BNB serves as both the token to stake in the system, and as gas for smart contracts. 

Every developer who wants to use smart contracts to build applications can access the Binance smart chain. This will most likely create opportunities to develop more dApps for exchange services, tokenization, and trading systems. All these features are immediately certified as functional on the testnet.  

BNB will serve as the native cryptocurrency adopted by Binance smart chain (BSC). The seed fund will come from the holders/owners of BNB who will be selected and migrated to the new chain. As a result of the proof-of-stake consensus model, validators will be chosen from the top 21 highest staked candidates. 

The Design Principles Of Binance Smart Chain (BSC)

Two blockchains run side by side of the parallel blockchain created into the Binance chain system. The new parallel chain is called Binance Smart Chain, while the mainnet is called the Binance chain. Here are the design principles of BSC:

BSC Standalone Blockchain

The BSC is technically a standalone blockchain and not a layer two solution. Most of The BSC fundamental technical and business functions are self-contained. The reason is to ensure they can run smoothly even if the Binance chain stopped for a short time. 

It has Ethereum compatibility.

BCDC decided that BSC will be compatible with the existing Ethereum mainnet because the first widely used smart contract platform is Ethereum. BSC took advantage of the relatively mature applications and community. It means that most dApps, ecosystem components, and other tools will require minimal changes to work with the Binance smart chain. Meanwhile, the BSC node will require similar hardware specifications to operate. Such implementation leaves room for BSC to catch up with future Ethereum upgrades. 

Staking involves consensus and governance.

BSC operates with a more environmentally friendly staking-based consensus. Hence leaving more options for community governance of the network. The consensus enables better network performance over the proof-of-work agreement. It has a faster blocking time and higher transaction capacity.

Native cross-chain communication and transfer

The Binance Chain (BC) and BSC are written with native support for cross-chain communication. This communication protocol is bi-directional, decentralized, and trustless. The communication focuses on moving digital assets between BC and BSC. These digital assets include the BEP2 tokens and other BEP tokens that will be introduced later. The protocol caters to the minimum of other items stored in the blockchain state, although there are few exceptions. 

Cross-chain communication is vital, and it allows the community to leverage the dual chain structure for the following:

  • It allows users to create any financial product, digital asset, or token on BSC or BC. 
  • You can manually trade and circulate BSC in a stable, high throughput, and Binance Chain environment. 
  • Platform users can carry out these transactions in a single UI and tooling ecosystem. 

BSC Consensus and Validator Quorum

The consensus protocol of BSC fulfills the following goals:

  • It ensures that the block reward is collected from gas fees, and the gas is paid using BNB. 
  • The protocol enables the system to be compatible with Ethereum 
  • It allows modern staking-based network governance. 
  • The blocking time is made shorter than that of Ethereum. 

The Proof-of-Stake Authority

Although proof-of-work (PoW) is an approved and practical mechanism that you can use to implement a decentralized network, it is not environmentally friendly. It requires a large number of participants to maintain its security. Some systems like Ethereum, MATIC Bor, TOMOChain, GoChain, xDAI, etc. use Proof-of-Authority (PoA) or its variant for both testnet and mainnet. 

Proof-of-Authority (PoA) defends against the 51% attack and has an improved efficiency to certain Byzantine players. However, the PoA is mostly criticized for not being more decentralized like PoW. Meanwhile, some blockchains like EOS and Cosmos uses different types of Deputy Proof-of-Stake (DPoS). DPoS allows the token holders to vote and elect the validator set, thereby increasing the network’s decentralization. 

BSC combines DPoS and PoA for consensus, and it ensures that:

  • A limited set of validators can produce blocks
  • The validators are elected in and out depending on staking based governance. 
  • Validators will take their turn to produce blocks in a PoA manner.

Advantages of the Binance Smart Chain

The fast block times and low transaction cost means users can transfer their assets in a shorter time for cheaper transaction fees. Meanwhile, the EVM-compatible native cross-chain communication will improve the functionality for developers. The on-chain governance with the Proof-of-Staked Authority consensus built on 21 validators provides decentralization and promotes good community involvement. 

Its native dual chain interoperability allows cross-chain communication and scaling of high-performance dApps that need efficient and smooth user experience. Also, it provides security and safety to the users and developers. 

 Who Can Use The Binance Smart Chain (BSC)?

BSC serves all developers who want to build smart contract functionality applications, especially dApps, focused on exchangeable digital assets. You can also create new digital tokens and dual chain trading on BSC. Holders of BNB can stake their tokens to support the development of BSC and earn rewards in return. 

Conclusion

Binance Exchange Coingyan

The launch of the Binance smart chain offers new opportunities for application developers and BNB holders. Users can take advantage of the fast transferring and trading feature on one side, and the extendable programming on the other side. However, time shall reveal more opportunities that BSC holds for the future. 

Jatin

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