Introduction to BNB Smart Chain (BSC)

Key Takeaways

• BNB Smart Chain (BSC) launched in 2020 as a parallel network to the BNB Beacon Chain, each serving different purposes within the larger BNB Chain ecosystem.

  
  

• BSC introduced smart contracts, enabling advanced customization and powering the rapid expansion of decentralized applications (DApps) and Web3 services.

  
  

• In 2024, the BNB Beacon Chain will be merged with BSC, creating a unified blockchain known as BNB Smart Chain.

Introduction

BNB Smart Chain (BSC) is a blockchain network that provides a diverse range of Web3 tools and decentralized applications (DApps). Known for its high performance, BSC supports smart contracts that enable developers to build various services, including blockchain games, governance and voting systems, and decentralized finance (DeFi) applications.

What Is BNB Smart Chain (BSC)?

BNB Smart Chain was launched in 2020 to expand the functionalities of the original BNB Beacon Chain. Understanding BNB Smart Chain’s role in the ecosystem requires a look at its relationship with BNB Beacon Chain.

In 2019, Binance launched BNB Chain, migrating the BNB utility token from the Ethereum network to become the native token of BNB Chain, now referred to as BNB Beacon Chain. In 2022, the ecosystem unified under the BNB Chain brand, comprising both BNB Beacon Chain and BSC, each fulfilling different roles and use cases.

BNB Beacon Chain vs. BNB Smart Chain (BSC)

Unlike the BNB Beacon Chain, BSC supports smart contract functionality and is compatible with the Ethereum Virtual Machine (EVM). The goal was to introduce smart contracts to the BNB ecosystem without impacting BNB Beacon Chain operations.

• BNB Beacon Chain: Uses the BEP-2 token standard and functions as a governance layer, handling staking and voting.

  
  

• BNB Smart Chain (BSC): Created to support smart contracts, BSC uses the BEP-20 token standard and serves as an EVM-compatible environment for DApps, DeFi services, multi-chain compatibility, and other Web3 applications.

These blockchains work side by side; however, BSC is not a layer 2 or off-chain scalability solution. It is an independent blockchain that can operate independently, even if BNB Beacon Chain goes offline. Due to its EVM compatibility, BSC launched with immediate support for Ethereum tools and DApps, allowing developers to port their Ethereum projects to BSC with ease. For users, tools like MetaMask can be configured to work seamlessly with BSC.

The BNB Chain Fusion

In late 2023, the BNB Chain team announced plans to phase out BNB Beacon Chain, transferring its core functions to BSC. This fusion, known as the BNB Chain Fusion, will occur gradually, with full integration expected by June 2024. For detailed information on this transition, consult the BNB Chain Fusion roadmap.

How Does BNB Smart Chain Work?

Consensus Mechanism

BNB Smart Chain achieves fast, ~3-second block times with a Proof of Staked Authority (PoSA) consensus mechanism. Validators are chosen from participants who stake BNB, and they earn transaction fees as rewards for validating blocks. Unlike many blockchains, BNB is non-inflationary and does not reward validators with newly minted BNB, as the token supply decreases over time through regular coin burns.

BEP-20 Token Standard

BSC’s BEP-20 token standard is similar to Ethereum’s ERC-20, specifying functions and rules for token issuance. BEP-20 allows for the creation of various digital assets on BSC, including NFTs, stablecoins, and utility tokens. As with Ethereum, each transaction on BSC requires a small amount of BNB for gas fees, incentivizing validators to secure the network.

Decentralized Finance on BNB Smart Chain

In BSC’s DeFi ecosystem, assets from other blockchains, like BTC, ETH, and USDT, can be represented as “peggy coins” or wrapped tokens. For instance, BTCB on BSC is pegged to BTC on the Bitcoin blockchain. Each BTCB token corresponds to one BTC locked on the original chain, making cross-chain assets available on BSC. This compatibility allows users to engage in DeFi activities like swapping assets, yield farming, and governance within the BSC ecosystem.

Closing Thoughts

BNB Smart Chain (BSC) is a high-performance blockchain with a wide range of Web3 tools and decentralized applications. Launched in 2020, it has become instrumental in expanding the BNB ecosystem and supporting the rapid growth of decentralized applications through smart contracts. With the upcoming BNB Chain Fusion, BSC will continue to advance as the unified BNB blockchain, offering robust infrastructure for Web3 innovation.