SO “WTF” IS GOING ON?
Ethereum’s dominance in the smart contract space is being challenged by the likes of BSC.
Binance Smart Chain (BSC) is a blockchain network built for running smart contract-based
applications. BSC runs in parallel with Binance’s native Binance Chain (BC), which allows users to get
the best of both worlds: the high transaction capacity of BC and the smart contract functionality of
Binance Smart Chain (BSC) is a blockchain optimized for decentralized finance (DeFi) applications and
activities such as yield farming. It is based on Ethereum and primarily operated by Binance, the
world’s largest cryptocurrency exchange. It is popular due to its low fees and high liquidity, making it
a great alternative to Ethereum for certain applications. Binance Smart Chain was released in 2020 to
complement Binance Chain which runs the Binance Decentralized Exchange (DEX).
It’s important to note, right out the gate, that the Binance Smart Chain is not an off-chain or layer-2
protocol running on top of the Binance Chain.
WELL THAT`S INTERESTING, CAN I LEARN MORE?
Instead, it is an entirely independent blockchain that operates side-by-side with the Binance Chain
and supports smart contract functionalities and compatibility with the Ethereum Virtual Machine
(EVM). That’s why we emphasized “DeFi” in the title– the Binance Smart Chain is centralized to Binance as a
company. Unlike Ethereum, which is still a Proof-of-Work-based protocol, BSC uses a hybrid consensus
algorithm called Proof of Staked Authority (PoSA), which allows BSC to achieve significantly higher
transaction throughput without sacrificing security.
Another critical difference between the two competing blockchains is that, unlike Ethereum, whose
native token ETH is inflationary, BSC’s native token BNB is deflationary ( burned by Binance on a
regular schedule ). This means that BSC validators aren’t rewarded with newly minted BNB for
securing the network, but rather solely by racking up transaction fees.
That being said, Binance’s flagship smart contract platform for “decentralized” applications is a bit of
an oxymoron because the blockchain itself is highly centralized. Namely, the Binance Smart Chain has
only 21 validating nodes in its PoSA network, compared to Ethereum, which has about 10,000 PoW
mining nodes. To further exacerbate things, most of these nodes on BSC are operated by Binance
Becoming a validator on BSC involves being approved by Binance and staking BNB to secure the
network, and Binance still holds a vast majority portion of the total BNB supply.
Centralization concerns, however, aren’t that bad considering that Binance is transparent about their
vision – the Binance Smart Chain optimizes for speed, scalability, cross-chain interoperability, or
more specifically, Ethereum-compatibility, and not decentralization.
The Binance Smart Chain’s primary mission is to provide a full-fledged environment for building high-
performance “decentralized” applications. For this reason, Binance designed the BSC protocol to be
compatible with Ethereum, allowing for most of Ethereum’s dApps, tools, and ecosystem
components to be ported or simply copied on BSC with zero or minimum effort.
Binance launched the Binance Smart Chain in September 2020 and the ecosystem has already seen
impressive growth. BSC currently has ~$8.8 billion in total value locked (TVL) across all its DeFi apps,
whopping ~47 million in distinct addresses interacting with the protocol, and ~2.5 million daily
blockchain transactions (though these should be taken with a grain of salt as Binance has been
accused of spoofing transactions in the past.)
The Binance Smart Chain is growing quickly due to two reasons: fees and speed.
Ethereum gas fees are off the charts; it can cost up to $150 to execute a single peer-to-contact
transaction on Ethereum-based DeFi protocols like Aave or TokenSets; it takes minutes, sometimes
even hours, for transactions to confirm. By contrast, fees for interacting with BSC’s “decentralized”
protocols range between 1-3 cents per transaction, and the transactions settle in as little as 5
WHOA, DID YOU KNOW CRYPTO IS SO COMPLEX?
The second reason behind BSC’s impressive growth is the widespread proliferation of a phenomenon
known as yield farming. For the uninitiated, yield farming is the process of lending and staking
cryptocurrencies in Automated Market Maker or AMM-based decentralized exchanges to generate
high returns in the form of fees and additional cryptocurrency tokens.
Some users have seen three or even four-figure annual percentage yields (APY) for staking on some
of the yield farming protocols built on BSC. These yields are likely unsustainable because they’re
primarily subsidized by staking rewards in the form of highly inflationary yield farming tokens, are
high-risk, and will eventually subside.
To get started on the Binance Smart Chain, you first need a wallet that supports Binance’s BEP20
tokens, which are modeled on Ethereum’s ERC20 tokens.
Here, you have two options:
You can either install the Binance Chain Wallet, which works as a simple Google Chrome
Or you can tweak your MetaMask wallet to support the BSC Mainnet.
The first two places where you should begin your exploration of the BSC ecosystem are bscscan.com
BscScan is a block explorer and analytics platform for the Binance Smart Chain, and Defistation is a
leaderboard and analytics tool for DeFi projects built on top of BSC. If these sites sound and look all
too familiar to you, that’s because they’re nearly identical copies of Etherscan and Defipulse, only
repurposed to work for the BSC.
Another great resource to explore the Binance ecosystem is the mathdapp.store, where you can see
the latest and hottest applications built on the Binance Smart Chain.
If you head over to the token section on Bscscan, you’ll quickly notice that Binance has already
pegged some of the most popular Ethereum-based tokens on the BSC, like Ethereum (ETH), Cardano
(ADA), Polkadot (DOT), Ripple (XRP), Litecoin (LTC) and many other. This means that you can own,
stake, and trade these pegged tokens on BSC-based decentralized exchanges for a fraction of the
cost you’d have to pay to do the same on Ethereum.
WHERE *TF* CAN I TRADE NOW ?
Then, in the Yield Farms section on Bscscan, you can explore some of the most popular DeFi projects
on BSC, where you can lend or stake your crypto to earn two to five-figure yields. The most popular
of these projects is the BSC alternative to Uniswap called PancakeSwap, which quickly rose through
the ranks to become one of the biggest decentralized exchanges in crypto – even bigger than SushiSwap
– with more than ~$1.6 billion in TVL and daily trade volumes exceeding $2.5 billion.
PancakeSwap does everything Uniswap does, only multiple orders of magnitude cheaper!
AutoFarm is a yield farming aggregator running on both Binance Smart Chain (BSC) and Huobi ECO
chain (HECO). Like yEarn, AutoFarm’s Vaults auto-compound yields across platforms while pooling
the gas costs to optimize yield farming strategies. If you wish to track your entire BSC portfolio from a single platform,
you can use the BSC alternative to Ethereum’s Zapper platform called YieldWatch.
As you must’ve already noticed, we’re not dealing with much innovation here. YieldWatch is
effectively a through and through fork of Zapper, only made to track yields on the BSC.
The Binance Smart Chain can arguably be considered the hottest new thing in the cryptocurrency
DeFi space at the moment.
ALWAYS be shure to have in MIND:
Whether you decide to jump on the Binance Smart Chain hype train or watch it pass you by is
entirely up to you. If you’re all too eager to join in on the action, please do so at your own risk, and
always – always – do your own research.THE AINU SPACE DEVS
After all, the Binance Smart Chain is a centralized blockchain where Binance plays a central role in
gatekeeping the traffic and validating the transactions, which isn’t the case with Bitcoin or Ethereum.
However unlikely, Binance could theoretically pull off the biggest rug-pull in the history of crypto,
and you should always keep that in the back of your mind when interacting with some of its so-called
Video Binance Smart Chain And CeDeFi Explained
Video What is Binance Smart Chain (BSC) and How to Use It | #Binance Official Guide