Guide to Binance Smart Chain and Its Ecosystem
Although sacrificing a bit on decentralization, the Binance Smart Chain and its ecosystem offer a fruitful environment for DeFi apps. It opens up new opportunities for up-and-coming projects, triggering a whole new wave of crypto-asset exchange, investment, and fundraising. At the same time, it inspires innovative uses of blockchain such as NFTs.
Binance has earned itself the status of a top brand in the crypto economy. It is widely known for operating the leading cryptocurrency exchange platform that offers a great experience for both beginners and seasoned traders.
The exchange platform is also very competitive in terms of rates. CoinMarketCap places Binance at the top of the list of crypto exchanges, with its competitors trailing far behind.
Binance has its own native BNB coin which is used to pay transaction fees and support the Binance ecosystem. It was first introduced through the Ethereum network, but due to congestion issues, Binance decided to introduce its own blockchain for hosting BNB and trading other currencies.
Binance Chain was introduced as a hub for creating tokens and marked the launch of Binance’s decentralized exchange (DEX) as well. It featured a performance upgrade that set it apart from the Ethereum network and inherited the speed, liquidity, and competitive rates offered by Binance’s centralized exchange.
Binance Chain’s main purpose was to support reliable and speedy transactions. It had no infrastructure to build decentralized apps. As a second project, Binance Smart Chain was launched to fill the void and featured programmable smart contracts. This created a new DeFi platform and ecosystem that is now rivaling the likes of Ethereum and other prominent dApp development frameworks.
Read on to find out more about Binance Smart Chain and its DeFi ecosystem.
Binance as the top crypto exchange platform
Before diving into Binance’s Smart Chain capabilities, let’s explore the exchange platform that brought it mainstream recognition. Binance exchange provides peer-to-peer trading services and connects buyers and sellers of cryptocurrency all over the world.
Binance supports several types of trading orders, including market, limit, and stop-limit. Market orders are carried out instantly at the best available prices. Limit orders are executed at a specific price set by the trader. Stop-limit orders let the trader execute an order only when the price reaches a certain level.
Additionally, Binance offers trading on futures and crypto derivatives with such special types of orders as one-cancels-the-other (OCO), time in force limit, and limit TP/SL (strategy order).
To make the trading process convenient, the exchange platform enables advanced charting with numerous indicator views and overlays. Providing a switch between a simple and advanced trading interface, Binance can be a good fit for beginners and experts alike.
Combined with the unmatched liquidity, the Binance exchange supports over 300 coins available for deposit and withdrawal. This number is constantly increasing, as more tokens join the platform. The top supported altcoins include Ethereum (ETH), Litecoin (LTC), Ripple (XRP), Bitcoin Cash (BCH), Chainlink (LINK), EOS (EOS), Cosmos (ATOM), Tether (USDT), Stellar, and others.
Exchange fees are very enticing on Binance, with 0.1% for regular trades and 0.02-0.04% for trading on futures. This goes in high contrast with such leading exchanges as Coinbase, Bittrex, and Bitfinex, where fees start at 0.2-0.25% — twice as high as Binance’s commission.
These attributes have made Binance very popular and attracted a large community of traders, making it a platform with the highest liquidity.
Introducing DEX through Binance Chain
Seeing Ethereum’s performance and scalability issues together with the rising fees for transactions, Binance decided to introduce their own blockchain. It was intended to become the new home for the BNB token and also move the Binance exchange into a decentralized setting. This way they created an alternative marketplace for issuing and exchanging crypto-assets within their ecosystem.
Binance DEX is a decentralized exchange platform and the most used dApp hosted on Binance Chain. It allows its users to trade between themselves without a central authority or intermediaries involved in the process. Traders have full control over their personal data, transaction privacy, and, most importantly, their private keys.
Built using the Tendermint protocol and Cosmos SDK, Binance Chain provides a formidable performance upgrade. It features a 1-second block time which puts it way ahead of both Bitcoin (10 minutes) and Ethereum (20 seconds). Inheriting the best features of Binance’s centralized exchange, Binance DEX is able to handle several thousand transactions per second.
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What can you do with Binance Chain?
Binance Chain offers a platform for issuing and showcasing coins with its own BEP-2 token standard, similar to Ethereum’s ERC-20. Coming from an exchange giant such as Binance, it obviously offers more liquidity and expansive use cases for the coins by its community.
Binance Chain hosts its native BNB token which is used to pay transaction fees as well as offer various rewards and discounts for participating in the network. Here’s everything you can do with BNB on the Binance Chain:
- Purchase, send, and receive Binance coins (BNB)
- Issue and showcase BEP-2 based tokens
- Freeze, unfreeze, burn, and mint tokens
- Participate in Binance governance
- Propose and create trading pair listings for tokens
- Receive DEX market data and create maker/taker orders
What do you use for a Binance Chain wallet?
First of all, newcomers from Ethereum shouldn’t worry at all as Binance Chain is EVM compatible. Most of the popular dApps have been ported to the platform. Metamask lovers can go on using their favorite web wallet since it has full support for BNB and BEP-2 tokens.
If you’re a die-hard Ethereum user and want to have a familiar experience with Binance, try this guide for connecting Metamask to Binance.
If you’re really up for the transition and would like the authentic experience, then you should go for Trust Wallet, as it’s the official crypto wallet for Binance Chain. Aside from Binance tokens, it also supports Bitcoin and other top cryptocurrencies. The wallet is available via a handy mobile app with the full set of features allowing you to buy, store, earn, and exchange crypto, as well as to collect NFTs and interact with dApps from both Binance and Ethereum.
Trust Wallet’s features include Binance DEX support, integrated Uniswap and PancakeSwap exchanges, ERC-20, ERC-721, ERC-1155, BEP-2, and BEP-20 support. All the top security attributes of a first-class wallet are there too, such as FaceID, TouchID, and military-grade encryption. The wallet does not force you to share any personal information and lets you store your private keys on your device.
Another alternative is the native Binance Chain Wallet which has proven to be the best onboarding tool for traders. You can use it if you’ve decided to stray away from Ethereum’s Metamask and are in need of a browser extension wallet. It supports cross-chain transfers and allows you to easily interact with Binance Chain products on the web.
Binance Smart Chain as the hub for dApps
After creating a speedy platform for transactions, Binance wanted to take the next step and introduce an environment for building decentralized applications. The team created Binance Smart Chain (BSC) as a parallel blockchain with smart contracts support. The BSC protocol is fully compatible with Ethereum which allows for accelerated dApp development and easy onboarding by the blockchain community.
Creating BSC as a separate blockchain was meant to safeguard Binance Chain’s high performance while adding the additional component of smart contract programmability and execution. The two networks provide cross-chain interoperability which means BSC digital assets can be easily transferred to and traded on the Binance Chain.
Having two parallel blockchains also means that there are different token standards: BEP-2 and BEP-20. BEP-20 is an extension of Binance Chain’s token standard which allows it to be used in decentralized applications. Both tokens were inspired by Ethereum’s ERC-20.
To optimize its performance, Binance Smart Chain uses a Proof of Authority consensus model. Its design features a limited number of validators which allows reaching transaction speeds of 3-5 seconds per transaction. BSC architecture also enables the platform to invoke lower transaction fees which are mere drops in the ocean compared to the enormous rates on Ethereum.
CeDeFi: How Binance values performance over decentralization
Many DeFi purists often argue that Binance is much less decentralized than Bitcoin and Ethereum. The reason is behind Binance’s approach to governance and how transactions are approved on the network.
The BSC blockchain relies on 21 validators to finalize transactions into blocks and decide on the platform’s future development. They are the ones who have voting privileges. Validators must stake BNB coins to participate in the consensus and are elected every 24 hours.
Network members with the highest stake are chosen for each validating round. However, it just so happens that Binance owners have the largest share of BNB and are usually the ones staking the most. Because of how often this level of centralization is being critiqued, Binance’s founder, Changpeng Zhao, refers to the platform as CeDeFi or centralized, decentralized finance.
But let’s explore if this underlying concept really is so unfavorable for a dApp platform.
Ethereum’s true decentralization rests on thousands of nodes spread around the world. This makes it capable of withstanding shutdowns of several nodes and allows it to avoid governance by a chosen few. Decentralization comes with a price, however, as Ethereum can only process 15 transactions per second.
Binance creators value performance over decentralization and that’s why the platform compensates for its downside via high speeds and reliability. These perks enable it to host demanding applications and sustain broad expansion in features and user base.
Ultimately, Binance Smart Chain is a great platform for building DeFi apps, blockchain games, NFTs, and more. Businesses, entrepreneurs, and regular users who don’t mind a lower level of decentralization can enjoy small fees on transactions and a much faster block time.
Binance’s NFT marketplace and its potential
Binance launches its new NFT marketplace in June 2021 and it is expected to feature an impressive lineup of creators, NFT collaborators, and crypto enthusiasts. The works to be presented span a variety of domains including visual arts, music, video games, and sports. Some of the artwork and collectibles will be available exclusively through Binance.
Some may think it to be a bit late for Binance to jump on the bandwagon and capitalize on the NFT craze, but the platform owners are determined. The marketplace is said to share the same account system as other services, so users will have full access to the resources of Binance’s expansive ecosystem. By providing the highest level of liquidity and the cheapest transactions, Binance’s NFT marketplace will also support niche and small-value creators.
The NFT platform will have two main venues: the “Premium Event” event category with the most sought-after collections and the “Trading Market” for creating and selling all manner of NFTs. Premium Event contributors will receive 90% of profits from primary sales of their works. Binance also charges a 1% processing fee for transactions made through the Trading Market and awards a 1% royalty payment to creators for all secondary trades.
For comparison, SuperRare marketplace likewise features a premium gallery, but takes a 15% fee from primary sales and also charges a 3% fee on purchases. OpenSea, which is one of the largest NFT marketplaces offering a variety of collectibles, has a 2.5% fee on every transaction. Another giant, Foundation, takes 15% as a commission. Nifty Gateway hauls 5% plus $0.30 from every secondary sale.
Most marketplaces use Ethereum as the platform for storing the NFTs and supervising transactions. The high scalability and low fees of Binance Smart Chain make its NFT marketplace a great alternative for creators who want to extract a greater profit from their works. It is especially attractive for smaller investors and NFT collectors.
We offer our expertise in NFT development for Binance and other blockchains
Dual-chain approach and Binance ecosystem
The design and architecture of Binance Chain and Binance Smart Chain enable them to directly communicate with each other within a dual-chain ecosystem. Users are equipped with powerful tools and given access to an extensive library of DeFi apps available in Binance Smart Chain. At the same time, they take advantage of pro trading and fast transfers through Binance Chain’s DEX.
The interoperability of the two chains also makes it easy to swap between the BEP-20 and BEP-2 based tokens. It means that both of the token holders can participate in the growing DeFi world of Binance Smart Chain. In the same way Uniswap does for Ethereum dwellers, PancakeSwap allows Binancians to exchange their assets, take part in yield farming, participate in competitions and lotteries, and earn rewards.
BakerySwap and BurgerSwap offer similar features, each with its own unique benefits. Ultimately, Binance Smart Chain’s compatibility with Ethereum makes it easier to launch the same dApps that the community came to love. By forking applications from Ethereum, creators can tweak them to provide more valuable features and enjoy a quick launch to the network.
Some of the impressive new projects recently kick-started include Venus, a money market app that brings decentralized lending and credit opportunities to BSC. Alien Worlds is another exciting dApp on Binance featuring an immersive metaverse where players can explore space to conquer new planets and build star fleet armadas. Swipe now offers cryptocurrency debit and credit cards through Binance Smart Chain.
The Binance ecosystem and its community are very supportive and it bootstraps up-and-coming projects through Binance Launchpad and Launchpool. These platforms provide guidance for setting up and launching tokens and also assist in a project’s marketing. Teams only need to focus on their project’s feature development, while Binance takes care of its exposure to a wide user base.
The Binance ecosystem is a very strong addition to the expanding universe of DeFi and Ethereum-like blockchain platforms. The BNB coin is very popular on cryptocurrency exchanges and is of great interest to yield farmers because of its liquidity. Binance Chain’s design plays right into this, allowing for rapid-speed transactions at fees lower than average on the market.
Although it does sacrifice a bit in terms of decentralization, most investors would rather favor platforms like Binance than lose a large chunk of funds to enormous fees on Ethereum. Binance Smart Chain opened up a new avenue for dApps and DeFi projects with its high performance and unrivaled scalability. Many Inspiring projects have already joined the network.
It’s a very exciting time to jump on board and influence the DeFi world with a project launch on Binance. Setting up and configuring a BEP-2 or BEP-20 token, and integrating software with the Binance Smart Chain, however, can prove to be a challenging endeavor. Having an experienced blockchain product development company as a partner will not only ease the technological aspects of delivery but also give you full support from the discovery phase to project launch.