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A Look At The Binance Smart Chain

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Dalz
@dalz
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Binance is one of those platforms that we love to hate here on Hive. The main reason the interference in the governance of the community that eventually ended with the HardFork and the creation of the Hive blockchain. The other reason might be the ideological one, since Hive is for the decentralization idea, while Binance is the king of the centralized exchanges CEX.

This being said, one thing is certain and that it that Binance is not to be ignored.

In the context of the Binance interference in the Steem governance and voting for witnesses with users funds I had some personal experience with the man him self:

https://twitter.com/Dalz19631657/status/1234567443537911810

The heat of those days 😊.

Not sure is he playing dumb in this tweet or just don’t have enough info at this point, but Binance removed their witness vote and apologized publicly. Although at this point the Steemit Inc stake was already unfrozen and actively used in governance.

After this little throwback lets now see how things stands now with the Binance Smart Chain.

Binance Smart Chain [BSC]

The main Binance product is their exchange, that is probably the no.1 crypto exchange in the world. But Binance didn’t stop there. They kept building and introducing new products. And when you keep building eventually you will get some things right.

Binance as an exchange was launched in 2017. In April 2019 the Binance Chain was launched. The Binance Smart Chain was launched in September 2020. So, two chains with the Binance logo.
The Smart Chain is running independently from the Binance Chain.

At first look the Binance Smart Chain is a complete copy of the Ethereum network.

Yes, at the first look the chain looks exactly the same as Ethereum. The main blockchain explorer is also the same as the ethscan or in this case bscscan https://bscscan.com/ . Binance is not trying to hide the ETH copy or something. The oposit they are making it as similar as possible to the ETH network, so users can switch and use the Binance Smart Chain easy. You can use BSC with Metamask. Yes there are a few settings to be made, add the Binance network and you are ready to use the chain with your Metamask extension. I’m doing it and it is very helpful. You can switch between the Ethereum and Binance network with ease.

Ethereum Virtual Machine (EVM) Compatibility.

This is the key that all the tools build on the Ethereum network will be compatible on the Binance network.

Features of the Binance Smart Chain

What are the unique features of the Binance Smart Chain?

Here are few:

  • Proof of Staked Authority (PoSA)

  • Short block time of approximately 3 seconds

  • No mining

  • Small fees paid in BNB

Unlike the current version of Ethereum that is a Proof of Work chain, BSC uses a so called Proof of Staked Authority (PoSA). I haven’t looked in details what this means but as it says in the whitepaper it is a combination of Deputy Proof of Stake (DPoS) and Proof-of-Authority (PoA). Basically is a type of Proof of Stake chain.

What this means that with this consensus algorithm there is no miners in the network, but validators. To become a validator, one needs to stake BNB. A system of 21 validators is used to run the network.

With the Proof of Stake consensus in place the network can achieve fast transactions of 3 to 5 seconds.

If there is no mining what are the incentives for network validators?

The incentives for the network validators comes only from the network fees. As mentioned the network fees are paid in BNB, unlike Ethereum where they are paid in ETH. Depending on a transactions the network fees are very low. Usually in a range of a few cents. From my personal they have been around 0.02$. When compared to ETH where you would be happy to have fees under a dollar, this is a huge advantage.

There is the Binance Bridge projects that allows you to transfer tokens on the BSC and peg them. Similar to the WBTC on ETH, only in this case BTCB, USDB etc.

Does someone use this network or is it a joke?

Well for starters the Thorchain project that is a 200M makretcap at the moment and aiming to be a multibillion dollars project is running its test network on the Binance Smart Chain. They will move on their own blockchain at some point but still having them using the BSC shows the magnitude of the project.

We can find the other active projects from (Dappradar](https://dappradar.com/rankings/protocol/binance-smart-chain)

As we can see the majority of these projects are DeFi.

The top project is PancakeSwap that is a Uniswap clone on the Binance Chain. It has almost 4k acive daily wallets atm and around 18k per month. There are some few more additions to the platform then the Uniswap, but the basics are the same.

https://pancakeswap.finance/farms

Note the APYs 😊.

Apart from the above there is the Thugs.fi platform that is a type of gamified DeFi. Then there is the Venus project that is a type of DAI on the Binance chain plus some more future on top of it like staking etc.

Another interesting project is the Beefy.Finance project that is a copy of Yearn.finance for the Binance Smart Chain.

A few other gambling dapps in the top as well 😊.

A 5k active wallets per day and more than a 40k per month. Have in mind, BSC is only few months old. If we compare this to the half a million active wallets on ETH it’s obvious that it is far from even closing on ETH.

Is this decentralized?

Without some in depth research I would say no. Binance like to run things on their own and they want to move fast. This can not be done in a decentralized manner. Also, the fact that you need to stake BNB to run validators for the network is giving all the weight and control to the BNB stakeholders. And I would guess who have the control over the majority of the BNB supply.

Final note

DeFi is the main hype that is happening in 2020. The Binance Smart Chain is basically leveraging this trend. From what I can see they have probably done the best job from all the other chains that are trying to compete with ETH. No other platform like EOS or TRON has come close to ETH or even created a decent DeFi product that has gained traction. Yes, they do have some DeFi projects, but the ones working on BSC are more popular. The PancakeSwap platform is starting to get more and more tractions. The incentives for LPs are almost unbelievable. Are they going to be sustainable? Nobody can tell! Binance even have an accelerator program for developers on BSC.

The DeFi trend is far from over and probably we will see more type of products created in the future. In my view the Binance Smart Chain, even a few months old have managed to gain some small share of this hype onto their platform. The approach of totally compatible with ETH and a form of extension and not a competitor to ETH seems to be working for now.

At the end I want to add that @empoderat has a great series of posts on the top Binance Smart Chains apps, with guides how to use them and how to setup Metamask. Check his latest post! Also always be cautions when/if trying these things. Test with small amounts and then scale up.

All the best @dalz

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