In one of our previous articles, we talked about Uniswap’s decentralized exchange platform specifics and described the necessary steps for first-time users to make their first token exchange.
In today’s article, we will review the Binance Smart Chain, a new development in blockchain technology which can be used for inexpensive yet speedy ERC20 token transfers. In this article, we explain the difference between the token standards available on Binance. We also provide comprehensive guide on how to use the tools for inter-network transactions.
Binance Chain vs. Smart Chain
Binance increasingly provides innovative tools to empower their users, which can sometimes confuse new users unfamiliar with the Binance ecosystem. In this case, the emergence of new BEP2 and BEP20 standards grants access to various Binance platforms and DeFi products outside of the single ecosystem. BEP2 represents a token standard on Binance Chain, while BEP20 represents a token standard on Binance Smart Chain.
Binance Chain network
In 2018, the Binance community launched a blockchain network called Binance Chain The first project on Binance Chain was the Binance DEX exchange. This project offered intuitive functionality, fast and convenient trading capabilities, and also allowed for instant transactions with low fees. High throughput and low fees are ensured by forming blocks every second, while the blocks are formed every 20 seconds in the Ethereum network and every 10 minutes in the Bitcoin network.
Binance Chain offers BEP2 standard tokens trading, a feature specifically developed for the Binance Chain network. BNB tokens were also transferred from the Ethereum network (ERC20) to the Binance Chain (BEP2) network. BTCB was the first token to appear after the launch of the blockchain and the exchange. BTCB is a Binance Chain token pegged to BTC. Later on, projects such as Mithril (MITH), Atomic Wallet (AWC), Enjin (ENJ), Aeron (ARN) and others migrated to the Binance network, making it attractive for new developers and users alike
A blockchain explorer is also available for Binance Chain, where users can find all the necessary information on the state of the network.
Binance Smart Chain network
With the growing popularity of decentralized finance (DeFi), Binance launched the new Binance Smart Chain network, a parallel autonomous blockchain compatible with Ethereum VM, which supports previously unavailable smart contracts . Binance Smart Chain operates in parallel to the main chain and has the necessary functionality to create Apps and provide high throughput. For example, blocks in the Binance Smart Chain are formed every 5 seconds, while the network itself is supported through the use of the Proof of Stake Authority (PoSA) consensus algorithm consisting of 21 validators.
Binance Chain and Binance Smart Chain networks interact with each other by means of cross-chain technology, which we have described in detail in one of our previous articles. Such an approach will enable mutual transfer of tokens between the networks, making the process of transactions faster and with lower fees
The internal BNB token functions across all networks and is used to pay commissions, pay for gas, make cross-chain transactions and for betting. The Binance Smart Chain, just like Binance Chain, has its own explorer.
Binance ecosystem access
Binance Smart Chain allows the creation of pegged tokens. They function the same way as BEP20 tokens on Binance Smart Chain and ERC20 tokens on the Ethereum network do. They are secured at a 1:1 ratio and are used for trading on Binance DEX or for transfers with lower transaction fees at higher speeds.
On the Binance exchange, one needs to select the token standard before making a transaction when depositing or withdrawing funds. It is worth noting that addresses in Binance Chain start with “bnb”, while BEP20 and ERC20 standard tokens have identical “0x” addresses. For this reason, be careful with transactions when choosing a preferred network. Also, be mindful when transferring ERC20 tokens over the Binance Smart Chain. Transaction data will be available in Binance Smart Chain explorer and not on the Ethereum one.
Creating a Binance Smart Chain wallet
As we’ve mentioned before, the new Binance Smart Chain is compatible with the Ethereum ecosystem. This means that a Metamask wallet will be able to get access to faster and cheaper payments by using the Binance Smart Chain blockchain. To take advantage of these features, you need to connect a wallet to the network. You will need to take the following steps to connect a wallet:
- Download the Metamask app to your mobile device or add the browser extension on your desktop;
- Complete the wallet setup and save the backup phrases in a secured location. You will need these phrases if you should u need to restore the wallet;
- If you are using the browser extension, make sure to open the “Ethereum Core Network” tab and select “Custom RPC”. If you are using the mobile app, open your wallet settings, select “Networks,” and click “Add Network;”
4. Next, enter the data to add a new network. To connect your wallet to the Binance Smart Chain network, enter the parameters shown in the image below;
5. Click “Save”; this will make Binance Smart Chain available for connection to your wallet.
In addition to its connectivity with Metamask and Trust Wallet, the Smart Chain network can be used with the Binance Chain wallet also available as a browser extension.
All the tools for using the benefits of the new blockchain can be found on the Binance Smart Chain page.
To connect a wallet:
- Click “Connect wallet” and select the wallet you want to connect. Depending on the chosen network, you will see a “Connected” icon indicating which network you are currently active on.
- Once you access the wallet, select the asset you want to transfer and then the network you want to transfer the asset to.Then, specify the amount of funds and a compatible wallet address, and click “Next’’.
3. Verify the validity of the information and click “Confirm a notification will pop in your Metamask Wallet browser which needs to be approved for the transaction to go through. You can always check the transaction details and their status in the “History” tab of the wallet.
Binance Smart Chain provides the opportunity to perform inexpensive transactions at rapid speeds. For this reason the network has gained high popularity among users, especially againsthe backdrop of rising Ethereum network fees. Creating solutions that provide interconnectivity is one of the major tasks faced by blockchain developers today. Binance Smart Chain aims to simplify user interaction within the Web 3.0 space and drive innovation and development within the blockchain technology.
Disclaimer: The contents of this article are not intended to be financial advice and should not be treated as such. 3commas and its authors do not take any responsibility for your profits or losses after you read this article. The article has been presented to provide readers with general information. There is only personal experience described herein. The user must do their own independent research to make informed decisions regarding their crypto investments.