Every day, blockchain technology continues to develop and be introduced into many areas of life. Moreover, there are more and more new solutions that are aimed at solving the problem of blockchain scalability and functionality. One of the innovative solutions is BNB Chain, created by one of the most popular crypto exchanges Binance. BNB Chain is a high-performance blockchain designed to remove the limitations of its predecessors. It focuses on both efficiency and interoperability and sets a new standard for dApps, digital assets, and interoperability. In this article from Notum, we will look at the main aspects and distinctive features of the BNB chain, how to use it, and also pay attention to its advantages.
BNB Chain History
Binance cryptocurrency exchange was founded by Changpeng Zhao and launched in 2017. At the same time, BNB was issued as an ERC-20 token on the Ethereum network. Binance's first blockchain was Binance Chain, and BNB switched to it in 2019. However, Binance Chain had some programmability restrictions, which led to the development of Binance Smart Chain in 2020. BSC was created to use smart contract-based apps.
As BSC gained quite a lot of popularity in the crypto world, there was also the active growth of tokens on Binance Smart Chain. BSC worked in parallel with Binance Chain and thus offered users more opportunities for transactions. Further, BSC has implemented EVM in its work to execute Ethereum-based apps. It was at this time that Binance began to consider the BNB token as part of a larger ecosystem that would include both Binance Chain and BSC. As a result, Binance Smart Chain scaled up and became known as BNB Chain, and the Binance Chain changed its name to BNB Beacon Chain and became part of BNB Chain.
What Is the BNB Chain?
BNB Chain (stands for Build and Build) is the result of combining two Binance products (Binance Chain and Binance Smart Chain) into one network, designed to work with Binance's native cryptocurrency, Binance Coin (BNB).
- Binance Chain is a public blockchain with fast transactions but no smart contracts. After merging with Binance Smart Chain, it became known as BNB Beacon Chain.
- Binance Smart Chain (BSC) is an Ethereum-compatible blockchain famous for creating and using smart contracts. After the merger, it was renamed BNB Smart Chain, but retained its former BSC abbreviation.
So, BNB Chain has a dual-chain architecture that includes both Binance Smart Chain and Binance Chain. This provides increased interoperability with the Ethereum and also allows for a seamless transfer of assets between the BSC and the Ethereum network. In this way, BNB Chain benefits from the ecosystem of dApps, DeFi protocols, and other smart contracts hosted by Ethereum. One of the main goals of BNB Chain is to provide a high-performance blockchain environment capable of processing transactions quickly and at a lower cost compared to Ethereum. BSC achieves this by using a delegated Proof-of-Stake (DPoS) consensus mechanism that relies on a limited number of validators to confirm transactions and create new blocks. Thus, the BNB network quickly became popular due to its scalability, high transaction speed, and cost-effectiveness.
Main Features of the BNB Chain
- Smart contract support. BNB Chain allows developers to deploy and execute smart contracts similar to the Ethereum blockchain. It uses a modified version of the Ethereum Virtual Machine (EVM), allowing developers to easily port their Ethereum dApps to BSC.
- Dual-chain architecture. BNB Chain works in tandem with Binance Chain, which is mainly used for fast and low-cost transactions. This dual-chain setup allows users to transfer assets between two chains through a process called interconnection.
- Lower Transaction Fees. Compared to the Ethereum network, BNB Chain has lower transaction fees. This makes it attractive to users and developers who are looking for more cost-effective options for running dApps and interacting with smart contracts.
- High throughput. BNB Chain is designed to handle higher transaction throughput than Ethereum. This is achieved through the use of the Delegated Proof of Stake (DPoS) consensus mechanism, where validators are elected to create blocks and validate transactions.
- Binance Coin Utility. BNB Chain serves as the native blockchain for Binance Coin (BNB), which is used to pay transaction fees, participate in the token sale, and access various features within the Binance ecosystem.
- DeFi Support. The BNB network has become a popular platform for DeFi projects due to its lower fees and high throughput. Many decentralized finance applications such as decentralized exchanges (DEXs), lending protocols, and crop farming platforms are built on Binance Smart Chain.
- Cross-chain Compatibility. BNB chain provides interoperability with other blockchains, allowing assets to be transferred and used across networks. Cross-chain support allows users to access a wider range of digital assets and use them in applications based on Binance Smart Chain.
Binance Coin (BNB) is the native token of Binance, as well as the native coin of both BNB Beacon Chain and BNB Smart Chain. BNB not only fuels the whole BNB Chain ecosystem but also serves as a governance token and is thereby used to pay for BNB Chain transactions. Created by Binance in 2017, BNB first ran on Binance Chain but later switched to Binance Smart Chain (BSC), which provides smart contract functionality similar to Ethereum, but with faster and cheaper transactions. The main goal of BNB is to serve as a native utility token for the Binance ecosystem, providing its holders with various benefits and use cases.
As a utility token, BNB offers several interesting features for Binance users. For example, it allows to pay trading fees on Binance by providing a discount when used for this purpose. Also, BNB is used in various Binance Launchpad token sales, where people can participate in Initial Coin Offerings (ICOs) using BNB to buy new tokens. In addition to the exchange, BNB can be used for payments and transactions on many platforms that support Binance Smart Chain, including dApps, DeFi protocols, and even some online stores that accept crypto. As BNB Chain gains popularity, the utility and value of BNB is going to grow, making it an important part of the whole blockchain ecosystem.
Where to Use BNB?
- Trading Fee Payment. BNB can be used to pay for trading fees on the Binance exchange. By using BNB to pay for fees, traders can enjoy discounts and other benefits, making it a cost-effective option for frequent traders.
- Token Listings. Projects that want to get listed on Binance exchange can use BNB to pay for listing fees. This has contributed to BNB's popularity and use within the crypto community.
- Transaction Fees on Binance Chain. BNB is used as a means of payment for transactions conducted on the Binance Chain to facilitate the issuance and trading of digital assets.
- Cross-Chain Transfers. With the introduction of Binance Smart Chain (BSC), BNB can be used to facilitate cross-chain transfers and provide interoperability between Binance Chain and BSC.
- Participation in Token Sales. Binance Launchpad, Binance's token launch platform, often requires participants to use BNB to purchase newly launched tokens.
- DApps. As BNB Chain supports smart contracts, BNB can be used as a utility token within various dApps and DeFi projects built on the BNB Chain ecosystem.
- Yield Farming and Staking. BNB can be staked or used in liquidity pools to earn rewards and yield within BNB Chain based DeFi projects.
- Governance. BNB holders on BNB Chain can participate in governance processes, such as voting on proposals and shaping the future development of the BNB Chain ecosystem.
- Payment. Some merchants accept BNB as a form of payment, which gives users more options in terms of billing for their services. In addition, BNB is used in the entertainment industry, for example, to pay for virtual gifts.
- Others. BNB use cases also include investing. "Binance Coin may be used to invest in stocks, exchange-traded funds (ETFs), and other assets on a variety of platforms." - Coin Telegraph. Moreover, some platforms even allow you to use BNB as collateral for a loan.
Advantages of BNB Chain
BNB Chain has a huge number of advantages that attract users and developers around the world. The main ones include:
- High performance and scalability. BNB Chain provides high throughput and low transaction fees.
- Compatible with Ethereum. Since BNB Chain is compatible with a large number of existing Ethereum tools and applications, projects built for Ethereum can be easily ported to BNB Chain with minimal changes.
- Safety. BNB Chain uses the Delegated Proof-of-Stake (DPoS) system, which provides a relatively high level of decentralization and network security.
- Tools. BSC provides developers with a wide range of tools and libraries for creating dApps and smart contracts, such as Remix, Truffle, MetaMask and others.
- Low commissions. Compared to Ethereum, transaction fees on BNB Chain are usually significantly lower, making it more affordable for users.
BNB Chain continues to grow and take a stable place in the world of blockchain technologies. Since Binance is one of the leading crypto platforms that has a nice reputation and active community support, BNB Chain remains one of the most promising options for developing and running dApps, as well as providing secure and fast transactions. Its improved smart contract capabilities and wide range of unique tools continue to attract the attention of users, developers, and investors from all over the world. Rich functionality and wide adaptation allow BNB Chain to remain a key part of the blockchain world and make it stand out from the competition.
Disclaimer: Notum does not provide any investment, tax, legal, or accounting advice. This article is written for informational purposes only. Cryptocurrency is subject to market risk. Please do your own research and trade with caution.