Binance Smart Chain (BSC) is the company's most recent addition to its ecosystem. This fourth-generation network uses blockchain to add advanced functionality and DeFi capabilities. The Binance Chain (BSC) was developed as a separate blockchain from the network's initial Binance Chain project.
The decision to use a dual-chain architecture paid off for the developer. The network's utility token, BNB, now has more usability and accessibility thanks to the modern blockchain. The new network's added advantages have been converted into direct gains for BNB holders.
BSC: The Benefits
Because of the BSC's framework, consumers now have access to a number of advantages. Binance users also have direct access to DeFi features like staking and farming, for example. It created the Binance Software Center from the ground up to enable developers to build and run these applications within the Binance ecosystem.
Smart contract support
Unlike Binance Chain, BSC allows for the development and execution of smart contracts. Using the network's gui, users can easily create decentralised applications and digital properties. Furthermore, the BSC was created to work with the Ethereum Virtual Machine (EVM). This method allows developers to port Dapps created on the Ethereum blockchain to the BSC without having to change the core code.
Cheaper
The cost-effectiveness of the BSC integration is one of the key advantages. The Ethereum network is currently overburdened, with record-high GAS fees. GAS is used by Ethereum applications to finish EVM instances. For the average user, this congestion directly translates to higher prices. BSC users, on the other hand, may perform complex transactions for pennies. These cost savings also aided in increasing interest in the BSC.
Faster
The BSC was created with a high level of responsiveness in mind. The network is fast, and it can handle multiple transactions in the time it takes Ethereum users to complete one. Ethereum, for example, is set up to approve blocks every 5 minutes or so. BSC, on the other hand, can produce a block every 3-5 seconds. Faster block times imply a more responsive and scalable network.
Flexible
The Binance Chain is much less flexible than the BSC. Cross-chain transactions, such as atomic swaps, are possible on the network. This feature aids in the enhancement of the network's decentralised exchange (DEX) capabilities. These transactions also aid in the reduction of traffic congestion. The BSC was developed to give users access to all of the new DeFi features. Non-fungible tokens (NFTs), pegged coins, staking, farming, and peer-to-peer lending are all enabled by the network.
BSC: How it works
BEP-20 is a new token standard introduced by the BSC to the industry. BEP-20 enables developers to build and issue tokens that reflect a wide range of properties, from physical assets like real estate to decentralised blockchain tokens. BEP-20 is BSC's version of the common ERC-20 standard, which was first released by Ethereum in 2017.
Staking
The opportunity to stake BNB tokens was one of the first advantages realised by BNB token holders. Staking directly from the network's wallet is provided by the BSC. Staking is one of the most commonly used DeFi methods today. When users stake their BNB, they will win incentives with very little effort.
Farming
Farming is another common feature that has gained popularity in recent months. Since farming does not require a lockup period or early withdrawal penalties, it is more versatile than staking.
NFT Creation and Support
The network has also been able to reach the NFT market thanks to the BSC. NFTs are one of the most rapidly expanding areas of the blockchain industry. These tokens offer digital assets an extra layer of scarcity. Notably, NFTs are currently being sold for millions of dollars.
Pegged coins
Another pattern that has received a lot of attention this year is pegged coins. The value of pegged coins is derived from other properties. These assets can be linked to precious metals like gold, as well as fiat currencies. They can also get their value from a basket of currencies or other cryptocurrencies. The BSC has made the process of generating and issuing these tokens much simpler.
IEO
The Binance Launchpad uses the BSC features directly to provide the network with Initial Exchange Offering (IEO) capabilities. IEOs are a form of crowdfunding that aims to overcome some of the technological and financial challenges that early ICOs face. Rather than holding a crowdfunding event, an IEO directly offers tokens to users through the exchange. The advantages are that businesses gain immediate access to Binance's massive user base.
Consensus Mechanism
The BSC's speed and efficiency are largely due to its use of a Proof-of-Authority (PoA) consensus system. Unlike a Proof-of-Work network like Ethereum, a PoA network conducts transaction approvals using just a few nodes. This approach is a little more centralised than PoW networks like Bitcoin, but it has greater scalability and transaction times.
Governance
The BSC implements certain group governance systems to give users more control over how the network evolves. Holders of BNB may propose new trade pairs or other important upgrades. These plans are then put to a vote, with BNB users deciding whether or not to approve them. Group governance processes are critical for keeping a project's community engaged and united.
Conclusion
Binance's decision to launch the BSC is one of the company's most significant steps. The network is no longer dependent on Ethereum. Furthermore, the pacing was flawless. Since Ethereum's GAS prices peaked, developers have been clamouring for cheaper DeFi alternatives. As a result, the BSC is now a viable option for both users and developers. As more Dapp developers move to this more powerful alternative, you can expect to see substantial growth on this network in the coming months.