WHAT IS BNB Smart Chain (Binance Smart Chain)

BNB Smart Chain (BSC) is the blockchain of the Binance exchange launched to enhance the capabilities of Binance Chain (BC). BSC and BC can work together. BNB Smart Chain is focused on smart contracts and decentralized applications at the same time. Let's talk about the Binance blockchain more.
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How does BNB Smart Chain work?

BNB Chain blockchain is launched in 2019. The purpose of the blockchain launch was to develop decentralized trading. To ensure fast trading, Binance Chain developers had to make some compromises. Blockchain is not flexible in terms of programming.
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BNB Smart Chain with Binance Chain. The functionality of BSC is focused on smart contracts and is compatible with the Ethereum virtual machine. BSC is a completely independent blockchain and can work even if Binance Chain is disabled.

BNB Smart Chain supports many Ethereum instruments and decentralized applications (DApps). Developers working on the Ethereum blockchain can port their projects to BSC.

Binance Chain and BNB Smart Chain compatibility

The BNB Smart Chain blockchain uses a dual-chain architecture. This allows users to transfer assets between BSC and Binance Chain. The blockchain bundle provides fast trading and provides a complete environment for building decentralized applications.

The dual-chain architecture of BSC allows the exchange of BEP-2 and BEP-8 Binance Chain tokens for BEP-20 tokens. BEP-20 tokens have the same functionality as ERC-20 tokens on the Ethereum blockchain. Unlike BEP-2, BEP-20 tokens are more flexible and easier to issue. This makes BNB Smart Chain attractive for creating your own coins.

BNB staking

BNB holders can lock their tokens in order to participate in the creation of new blocks. At the same time, validators do not receive interest for the contribution of tokens (lik ETH staking). Users are rewarded for locked tokens in the form of transaction processing fees. This is because the Binance team regularly buys and burns BNB tokens to prevent inflation.

BNB Smart Chain and DeFi

As mentioned earlier, BNB Smart Chain blockchain is focused on creating decentralized applications and launching a project in the decentralized finance (DeFi) sector. In particular, decentralized exchanges (DEX) are being created on the basis of BSC. For example, PancakeSwap, an exchange based on BSC blockchain, ranks third in terms of trading volume according to CoinMarketCap and CoinGecko.

BNB Smart Chain and Ethereum

BNB Smart Chain and Ethereum offer alternative approaches to the development of decentralized finance. The first way is centralized and fast. The second is decentralized, slow and expensive. So, on Uniswap exchange and on Ethereum blockchain, you need to pay about $30 fee to conduct a trade.

Ethereum leads the DeFi sector. Blockchain faced the problem of scalability, therefore, it cannot fully satisfy the hype around decentralized finance. Along with it, BNB Smart Chain offers lower fees, which attracts users to the Binance blockchain.

BSC is a centralized blockchain environment that Binance is responsible for maintaining. Other than that, BSC has only a handful of successful projects (which are copies of Ethereum projects). While Ethereum is a decentralized ecosystem with thousands of independent projects.

Conclusion

Transactions are faster on BNB Smart Chain than on Ethereum network. The transaction fee is lower. Developers can run smart contracts, create decentralized applications and DeFi projects based on BNB Smart Chain. In addition, the compatibility of BSC with Ethereum allows you to transfer DApps from Ethereum to the Binance blockchain.

At the same time, BSC is too centralized, which does not suit many users and developers (unlike Ethereum). With the launch of Ethereum 2.0, the Binance blockchain may lose ground.

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