What is Binance Smart Chain (BSC)?
A Detailed Guide on Binance Smart Chain(BSC)
You must be aware of Binance Chain, which is the home for BNB token and it facilitates ultra-fast and decentralized trading. But, Binance Chain was not flexible in terms of programmability. So, Binance Smart Chain (BSC) was introduced for developing high-performance decentralized applications.
In this article, let’s discuss more on what is Binance Smart Chain, how it works, its features, etc.
What is Binance Smart Chain (BSC)?
Binance Smart Chain is a blockchain that functions similar to the Binance Chain. It owns smart contract functionality and compatibility along with Ethereum Virtual Machine (EVM). BSC was designed with an aim to leave the high throughput of the Binance Chain along with introducing smart contracts into the ecosystem.
Fundamentally, both Binance Chain and Binance Smart CHain work simultaneously. But, it is necessary to note that BSC is not a layer two or off-chain scalability solution. In fact, it is an independent blockchain that can run even in the absence of Binance Chain. From the design perspective of both the chains, they bear a strong resemblance.
As BSC is EVM-compatible, it supports a wide range of Ethereum tools and DApps. Additionally, developers can easily port their projects from Ethereum. Users can be rest assured about using BSC as applications like MetaMask can be easily configured for functioning with BSC. Users need to just tweak a couple of settings.
Let’s understand in detail how can users set-up MetaMask for Binance Smart Chain (BSC).
How to set-up MetaMask for BSC?
Setting up the MetaMask wallet for Binance Smart Chain is a simple 2 step process:
Step – 1: Open MetaMask Browser Extension
There is a Networks tab on the top-center corner of the wallet. You need to click on it and select Custom RPC.
Step – 2: Fill in all the information in the Networks tab
After opening the Networks Tab, you will come across filling in a few information like:
Network Name: Binance Smart Chain
New RPC URL: https://bsc-dataseed.binance.org/
ChainID: 56
Symbol: BNB
Block Explorer URL: https://bscscan.com
Once you fill in all the above information, click save. Your MetaMask wallet is set-up now to use on BSC. Further steps to start on Binance Smart Chain is to acquire some BNB tokens on the Binance exchange. Now that you have set-up the wallet for BSC, you should know how Binance Smart Chain works.
How Binance Smart Chain (BSC) works?
Consensus
BSC uses a Proof-of-Stake consensus algorithm to achieve ~3 second block times. Proof of Staked Authority (or PoSA) used by BSC allows participants to stake BNB and become validators. If the participants introduce a valid block, then they’ll receive transaction fees from the transactions added to it. As BNB is not inflationary, there is no block subsidy of freshly-minted BNB. Conversely, the BNB supply decreases over time as the BNB coins are burned regularly.
Cross-Chain Compatibility
Binance Smart Chain is built as an independent but complementary system to Binance Chain. It uses Dual-chain architecture so that users can seamlessly transfer their assets from one blockchain to another. Hence, rapid trading can be enabled on Binance Chain, and decentralized applications can be built on BSC.
BSC offers interoperability where users explore the vast ecosystem that caters to a wide range of use cases. Binance Smart Chain introduced a new standard where BEP-2 and BEP-8 tokens from Binance can be swapped with BEP-20 tokens. The process uses the same functions as the Ethereum counterpart. To swap the tokens from one chain to another, it is better to use the Binance Chain Wallet available on Chrome and Firefox.
Advantages of BSC
Binance Smart Chain (BSC) offers various advantages like:
- BSC is a growing digital asset ecosystem powered by Binance DEX.
- BSC has a cheap transaction fee that is as low as 1 cent.
- Binance Smart Chain (BSC) offers high-performance as the network is capable of producing a block every 3 seconds.
- This blockchain uses cross-chain DeFi mechanisms that enhance DeFi interoperability.
- BSC has a supportive Binance ecosystem that funds and bootstraps many DeFi projects.
- The Binance ecosystem is growing with millions of users across Binance.com and Binance DEX.
- Various crypto projects are collaborating with BSC.
Binance Metrics
- Yield farms
Yield farming allows you to generate crypto with your existing crypto holdings. Platforms like PancakeSwap help you generate yield on the Binance Smart Chain. BSC has low fees which makes it ideal for smaller players to enter yield farming and get a good share of the available crops.
You can find all the current farming opportunities on the BscScan yield farming dashboard. You can quickly access the latest farms and information about what they are and how they work on the websites. One good resource to track all the DApps in the BSC ecosystem is https://mathdapp.store/.
- Average Gas Fees
The above graph depicts the average gas price that users pay for BSC transactions. As mentioned earlier, BSC has the least gas fees where 1 gwei is 10-9 or 0.000000001 BNB.
If the average gas price is 20 gwei, then sending 10 BNB which is worth around $3000 will cost you $0.01. From the transaction history, we can see that some of the transactions paid higher fees than usual. Binance Smart Chain is far from congestion, so 20 gwei is more than enough for now.
- Unique Address Count
The unique address count metric allows you to gauge the number of users in the blockchain.
With BSC, anyone can create multiple addresses. Cryptography helps in creating a large number of addresses so that there is no shortage of unique addresses. The unique address count gives a rough estimation of how the network is growing.
- Daily Transactions
The below graph shows the total number of transactions on a particular day. The chart gives an idea of the network’s activity. BscScan can also report the day when the number of transactions was the highest so far.
- Top BEP-20 tokens
With the help of the Token Tracker page, you can track the top BEP-20 tokens by market capitalization or daily trading volume. You can also check which tokens have the highest cumulative value on BSC, and which are printing the highest trading volumes.
Token/contract owners can also update their token information on BscScan to provide more details about the token. It is a compulsion that the token should be verified by the BscScan team, else it may not be trustworthy.
- BSC Validators
BSC validators ensure that the platform keeps going. The validators can stake BNB, process transactions, and confirm new blocks. Later, they earn transaction fees for their activity. Anyone can be a BSC validator, but the requirements are high.
BSC Future
This is just the beginning for Binance Smart Chain, as it is expected to establish itself as an alternative for a decentralized financial market based on Ethereum. As many developers are increasingly building DeFi apps on Binance Smart Chain (BSC) the ecosystem is obvious to grow horizontally. Also, more and more dApps will be added to the network.
Final Word
Binance Smart Chain is one of the most trending things in the DeFi space currently. If you want to be a part of BSC, then do proper research and go for it. Binance Smart Chain is a centralized blockchain where Binance plays a prominent role in gatekeeping the traffic and validating the transactions, which is not done in Bitcoin or Ethereum.
