BNB Smart Chain aka BSC was established in 2020 to overcome the restrictions of the BNB Beacon Chain. Therefore, it’s important to examine its connection with the BNB Beacon Chain to comprehend the BNB Smart Chain.
BNB Chain started in 2019. The BNB utility token moved from Ethereum to become the main token of the BNB Chain. This early version is now called the BNB Beacon Chain.
The BNB Smart Chain (BSC) and BNB Beacon Chain were combined into the BNB Chain ecosystem in 2022. Despite this, the two blockchains have maintained separate operations, catering to different purposes.
How Does BSC Works?
BNB Smart Chain has approximately 3-second block times thanks to its Proof of Stake (PoS) consensus algorithm. It utilizes the Proof of Staked Authority (PoSA) mechanism, in which users stake BNB to serve as validators.
Validators receive transaction fees from the transactions they validate, instead of block rewards in freshly-minted BNB. The supply of BNB decreases over time due to regular coin burns conducted by the BNB team.
BEP-20
BNB Smart Chain uses BEP-20 as its primary token standard. If you’ve read about ERC-20 Tokens, you’ll recognize BEP-20 since it shares the same functions as Ethereum’s tokens.
BEP-20 serves as a guide for creating tokens, outlining key rules and features for how tokens are made and what they can do. It is a technical standard for BNB Smart Chain, enabling developers to build various digital assets like NFTs, stablecoins, utility tokens, and others.
BNB Smart Chain transactions need a bit of BNB as gas, just like ETH on Ethereum. Gas fees motivate validators to verify transactions and protect the network.
DeFi on BSC
If you’re using PancakeSwap or other DeFi apps on BSC, you might have seen digital assets from different blockchains like BTC, USDT, ETH, and more. These assets are known as “peggy coins” or “wrapped tokens” on the BNB Smart Chain. They’re tokens with values tied to the original assets on their native chains.
The BTCB token on BSC mirrors the value of BTC from the Bitcoin blockchain. This happens through smart contracts that create a BTCB token for each BTC locked on the original chain. This process allows us to bring outside assets into the BSC ecosystem.
In simpler terms, the BNB Smart Chain’s flexibility lets users utilize assets from various chains in the expanding DeFi area of the BNB Chain ecosystem. This enables users to trade assets, participate in yield farming, vote on proposals, and more.
Conclusion
BNB Smart Chain (BSC) is a fast and powerful blockchain in the BNB Chain ecosystem, providing various Web3 tools and decentralized applications (DApps). Launched in 2020 to overcome the constraints of the BNB Beacon Chain, BSC has been instrumental in driving the rapid expansion of DApps and Web3 services with smart contracts.