Leading crypto exchange Binance is launching a new Ethereum-compatible blockchain called Binance Smart Chain (BSC). The new blockchain will use BNB as its native token as a base currency.
Binance already runs its native blockchain Binance Chain (BC) that powers its exchange Binance DEX.
Binance Smart Chain Advantages
Binance explained the main advantages of Binance Smart Chain (BSC) on its blog.
- Sovereign blockchain- it’s secure and safe for all users as well as developers.
- EVM-compatible- supports existing Ethereum tooling and allows faster-cheaper transactions.
- Interoperability support – allows cross-chain communication and scaling of high-performance dApps that require a fast and smooth user experience.
- On-chain governance- Proof of Staked Authority consensus offers decentralization and community participation.
New Digital Ledger Technology network will provide Ethereum’s smart contract functionality to build decentralized apps. “Binance Chain doesn’t provide enough flexibility to application developers that led to launching another blockchain platform”, Binance said in the whitepaper released on April 17.
Binance team confirmed, “Both blockchains will run in parallel and communicate with each other because of native support of interoperability”.
Token Circulation
BC and BSC blockchains will share the same token universe for BNB and BEP2 tokens.
- The same token will move on both chains with the help of cross-chain communication.
- The total circulation of the same token will be managed across both networks.
- The tokens will be initially created on BSC in a similar format it is on BC as a BEP2.
Staking Rewards
According to Binance, BNB will allow the token investors to take part in staking to support the development and receive monetary rewards.
“Fee collected from transactions in each block is validator reward. Validators can decide how much to return to the delegators who stake them their BNB, in order to attract more staking”, whitepaper noted.
This will help in preventing the stake accumulation and “rich get richer” problem as often seen on Proof-of-Stack frameworks.
According to Coinspeaker, Ethereum is currently facing a lack of scalability and high transaction costs. Ethereum has dominance on Blockchain Smart Contract and it doesn’t give much freedom to developers. On the other hand, Binance is promising a flexible alternative that will be secure, faster and cheaper than Ethereum.
Is Binance going to compete directly with Ethereum (the second-largest public blockchain after bitcoin)!