A Smart Chain with UNLIMITED Resources
In this article, I will mainly look into Binance Smart Chain, the adoption-friendly platform. I will see what it currently offers, how it compares to competitors, and explain why I am personally bullish. Sources that have been used in this paper can be found at the bottom.
You’ve probably heard of Binance Chain, the home of the BNB currency. It’s optimized for ultra-fast trading. To achieve this, it had to make certain trade-offs — one being that it wasn’t as flexible from a programmability standpoint as other blockchains.
Well, Binance Smart Chain is here to change that, a new blockchain with a full-fledged environment for developing high-performance decentralized applications. It was built for cross-chain compatibility with Binance Chain to ensure that users get the best of both worlds. Combining the possibilities of CEX and DEX, utilizing both dynamically.
Introduction:
You might wonder why do we need another smart chain? Another platform for Defi and all the other stuff that Ethereum already offers. Let me show you the current main reason:
^This is why. An unsustainable, monstrous, and unacceptable gas fee system that renders DeFi on Ethereum useless for the normal user. You might think this is a good thing, as early adopters will still be able to “benefit” from Ethereum’s vast ecosystem. Well, I am here to tell you, that is simply not true. A crucial part of mass-adoption is to make the platform available for every normie and friend that you can think of. This is how Crypto will make it. Luckily, Ethereum does have some stuff on its roadmap. EIP-1559, ETH 2.0, and so on. But let’s be real here. How many weeks, months… Years?
Binance was launched in July 2017 by Chang Peng Zhao, otherwise known as CZ, who has previous experience developing the Tokyo Stock Exchange, Blockchain.info, and serving as the Chief Technology Officer of OKCoin. In April 2019, Binance decided to launch its own blockchain, the Binance Chain, with the goal of enabling fast and decentralized, or permissionless trading. The Binance DEX was also born and is the Binance Chain’s largest decentralized application or DApp to date. But, despite the Binance Chain being built for speed and instant finality, it lacks extra programmability, flexibility, and functionality, particularly smart contract functionality and compatibility with Ethereum’s universe of tools and decentralized applications. In April 2020, Binance decided to give users the best of both worlds by creating the Binance Smart Chain and setting up a powerful parallel, dual-chain structure. The Binance Chain and the Binance Smart Chain are two separate blockchains that run side by side to offer different features and functionalities. Users can take advantage of the fast transfers and trading of the Binance Chain while harnessing the extendable Smart Contract programming functionalities of the Binance Smart Chain, all within the same user interface and tooling environment.
As a parallel chain, the Binance Smart Chain not only introduces Smart Contract programming functionality, it is also an Ethereum Virtual Machine or EVM compatible chain. This means that developers can deploy DApps built for Ethereum, on the Binance Smart Chain with minimal effort. Some DeFi DApps already built on the Binance Smart Chain include PancakeSwap, BurgerSwap, and BakerySwap. With this dual parallel-chain system, users can enjoy added functionality and cross-chain interoperability without compromising speed and performance. Digital assets between both chains like BEP-2 and BEP-8 tokens from the Binance Chain are easily swapped with the Binance Smart Chain’s BEP-20 tokens. Both blockchains also run independently of each other, so if either blockchain should fail for a period of time, the other one will be still running.
BNB Token:
Now, what about the Binance coin AKA the BNB token? The Binance Coin or BNB Coin is the native token of the massive Binance ecosystem — which comprises of the Binance Centralized Exchange or CEX, a Decentralized Exchange or DEX, Binance chain, Binance Smart chain, and a host of financial services such as crypto loans, liquidity pool mining, and more.
It is essentially the native token of both blockchains and serves multiple uses. Firstly, BNB is used to pay transaction fees on Binance Chain and Binance DEX. Traders who pay with the BNB token are able to enjoy discounts off their transaction fees on the Binance exchanges. Secondly, BNB is used as “gas” with developers paying the token to deploy Smart Contracts on the Binance Smart Chain. BNB is also used to stake, help validate and maintain the Binance Smart Chain, with stakers receiving rewards. All Binance Smart Chain validators are rewarded with transaction gas fees in BNB. Finally, the BNB coin may also be used as a currency for owners to pay their bills, purchase smartphones or book flights, and accommodate a wide range of participating partners.
The BNB coin is deflationary because it is burned every quarter according to a schedule. This is done to permanently remove coins from circulation, reduce total supply and increase their value. At every quarter, Binance will use 20% of its total exchange profits to buy back and burn BNB coins until 50% of the total supply — or 100 million BNB — is depleted.
Potential Growth:
What is Ethereum’s market cap? Yeah, something around that might be reasonable. Imagine if Ethereum had Binance’s resources in terms of money and social reach when it launched, that’s basically what BSC and BNB are. Its got absolutely ridiculous potential
Ethereum’s DeFi growth rapidly happened in 2020. Currently, the Total Value Locked, or TVL is around $50 billion, while Binance Smart Chain’s TVL is around $8 billion as of now. This is a ratio of 1:5 compared to their respective market cap. Now, keep in mind, BSC’s TVL has gotten exponential growth these last few weeks. Just imagine what happens when the rest of the DeFi space realizes that they don’t have to spend $100 per smart contract interaction anymore.
Binance Smart Chain has grown at a rapid pace since its launch last year. And a total of $8 Billion is now locked on the Binance Smart Chain with approximately 22 Million Binance Coin (BNB) being locked in the various DApps. Within these; Venus, PancakeSwap, Autofarm dominate in the total value locked on the Binance Smart Chain.
“Competitors”:
Ethereum, Polkadot, Avax, Cardano, and others, can be considered BSC’s competitors. However, it does not mean that they all can’t co-exist. Just like Myspace, Facebook, and Instagram. eBay, Amazon, and Alibaba. Apple, Microsoft, and Linux. The market is big enough for all of them. The only question that remains is who will be the biggest? I am not going to downplay Ethereum or any of the other smart contract platforms, but if I had to wager a bet, I’d say either Ethereum or Binance Smart Chain will reign supreme as the #2, behind bitcoin.
Even the creator, CZ Binance argues that more than one ecosystem can co-exist. Let the users decide. Now that’s a statement I can personally get behind.
Why Binance Smart Chain?
Short and sweet: Simple transfer, very low fees, responsive network, security backed by Binance, and close to unlimited resources to make the smart chain perfect. Consider Changpeng Zhao(CZ)’s position here. He has the possibility to alleviate some pressure from Ethereum’s network, while at the same time growing his own smart chain empire. It is a win-win situation for both him and ETH, wouldn’t you say?
Potential obstacles/shortcomings:
As with any other rose-tinted investment opportunity, BSC does not come without its flaws and potential obstacles. There is plenty of stuff that can go wrong. If you are launching a blockchain platform, where the goal is for developers to build on it, you need to consider these four things:
1. Regulations, 2. adoption, 3. high competition, and 4. security.
With regards to 2. adoption and 4. security, BSC is built to handle the heavier data processing load required for “smart contracts.” It has a consensus algorithm that combines Delegated Proof-of-Stake (DPoS) and Proof-of-Authority (PoA) — Binance Coin (BNB) holders who would use staked coins to “vote” for 21 “validators” every 24 hours who would be trusted to confirm transaction blocks. According to Binance’s BSC whitepaper, this would allow block validation times of five seconds, safeguarded against attacks by potential “malicious validators.” However, one of the main FUD’s can be pointed to BSC’s “centralized” validator nodes.
Why I Am Bullish:
All of the facts I’ve presented in the article, combined with Changpeng Zhao’s leadership make me incredibly bullish on BSC and BNB’s future, this bullrun. These 6 points I am about to address, showcases that BSC has the correct infrastructure RIGHT NOW to handle adoption from retail investors.
- Binance Smart Chain yield farms
Same as with Ethereum, you have the possibility to generate crypto with your existing holdings by using platforms such as PancakeSwap. In addition, the fees are EXTREMELY low, in comparison to ETH. If you want an overview of the dApps in the BSC ecosystem, you can look here: https://mathdapp.store/
If you’re looking for something similar to Etherscan, you can browse https://bscscan.com/ — literally the same creators of etherscan made this.
- Binance Smart Chain average gas price
You can use https://bscscan.com/chart/gasprice to see the current gas price. BSC has extremely low fees. In BSC, 1 gwei is 10–9 or 0.000000001 BNB.
- Binance Smart Chain unique address count
You can use https://bscscan.com/chart/address to see how many users the blockchain has. Keep in mind though, anyone can create multiple addresses.
- Binance Smart Chain daily transactions
You can look at https://bscscan.com/chart/tx for BSC’s daily transactions amount.
- Top BEP-20 tokens
You can look at https://bscscan.com/tokens to track BEP-20 Tokens By Market-Capitalization. If you wish to learn how to wrap tokens, check out the academy.binance in “sources”.
- Binance Smart Chain validators
Binance Smart Chain relies on a consensus mechanism called Proof of Staked Authority (PoSA). This model of consensus can support a short block time and lower fees. You can look at https://bscscan.com/validators to see the top validators.
Binance Smart Chain has already provided the ecosystem with the much-needed resources. This will take time with i.e Polkadot, Cardano, and AVAX to implement. That is one of the main reasons as to why I am super bullish on BSC. It works NOW. You can literally use it without any major problems. I do recommend reading the articles that can be found here: https://academy.binance.com/
Changpeng Zhao(CZ):
The creator of Binance in 2017, and subsequently the Binance Smart Chain in 2019, Changpeng Zhao, commonly nicknamed CZ. This guy knows how to get things done. As can be seen with Binance; when he launches something, it has a certain quality.
In fact, his exchange is top tier, and arguably the best existing CEX(Centralized Exchange). Now that he’s achieved all of that, his next move is conquering the Smart Chain space with BSC and BNB as its native token. If you think about all the resources that this man and his empire have available, it would be stupid to bet against him.
If you haven’t, I recommend checking out his Twitter. He's quite active and very outspoken https://twitter.com/cz_binance?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
Twitter sentiment:
If you wish to learn more about Binance Smart Chain, check out https://academy.binance.com as they have a lot of informative guides and tutorials as to how you can use and get accustomed to the chain. Compared to Ethereum’s $50–$100 fee transactions, I’d say the hourly rate for learning to use this chain is well worth it.
Sources:
Alex. (2021, February 11). Binance smart Chain: Binance COIN BNB. Retrieved February 13, 2021, from https://techplanet.today/post/binance-smart-chain-binance-coin-bnb
Binance smart Chain: DEX trading: Decentralized exchange. (n.d.). Retrieved February 13, 2021, from https://www.binance.org/en/smartChain
Binance Academy. (2021, February 11). An introduction to BINANCE SMART Chain (BSC). Retrieved February 13, 2021, from https://academy.binance.com/en/articles/an-introduction-to-binance-smart-chain-bsc
Binance Academy. (2021, February 11). 6 Binance SMART Chain (BSC) metrics you should know. Retrieved February 13, 2021, from https://academy.binance.com/en/articles/6-binance-smart-chain-bsc-metrics-you-should-know
Binance Academy. (2021, February 11). Connecting METAMASK to BINANCE SMART Chain. Retrieved February 13, 2021, from https://academy.binance.com/en/articles/connecting-metamask-to-binance-smart-chain
