Overview
Binance Smart Chain (BSC) is a high-performance blockchain network designed to run smart contract-based applications. Launched by Binance, one of the world’s leading cryptocurrency exchanges, BSC operates in parallel with Binance’s native Binance Chain (BC). This dual-chain architecture allows users to leverage the high transaction capacity of BC and the smart contract functionality of BSC.
BSC has gained significant traction in 2021, partly due to congestion and high gas fees on the Ethereum network. These issues have prompted developers and investors to seek alternatives, and BSC has emerged as a cost-effective and stable option.
Architecture and Functionality
BSC is an independent blockchain that runs parallel to BC. This means that even if BC stops operating, BSC will continue to run its technical and business functions. BSC supports Ethereum-compatible smart contracts, enabling developers to build or migrate decentralized applications (DApps), tools, and other ecosystem components on the BSC network with ease.
The platform operates on a proof-of-stake (PoS) consensus model, specifically, proof-of-staked-authority. BSC’s native token, Binance Coin (BNB), can be staked to contribute to network security and vote on community governance protocols. Its PoS model also enables it to process transactions faster than networks that still implement full proof-of-work (PoW) systems.
BSC combines both delegated PoS and proof-of-authority (PoA) to achieve network consensus and maintain blockchain security. In this model, elected validators take turns confirming transactions on the network and are tasked to produce the blocks in a PoA manner, which considers the amount of their stake and their reputation in the community. This consensus model allows BSC to achieve around three-second block times.
Binance Coin (BNB) and Other Supported Tokens
BNB is the native utility token of the Binance ecosystem and can be used for both BSC and BC. BNB is primarily used to pay for transaction fees on the BC and Binance DEX platform, staking, and asset transfers. BNB can also be used to run smart contracts on BSC.
BSC supports the BEP-20 token standard, which is comparable to Ethereum’s ERC20 standard. BEP2 and the upcoming BEP8 standards are both BC and BSC-supported tokens. ERC-20 tokens, or BEP2E tokens, as they are called in the network, are supported on the BSC blockchain.
Growth and Adoption
The ascent of BSC in 2021 is closely tied to the rise of PancakeSwap, a BSC-based decentralized exchange. PancakeSwap has seen remarkable growth in 2021, with total value locked on the exchange surging from $150m in January to $2.5 billion by March. PancakeSwap has become the second most popular DEX after Ethereum’s UniSwap.
