BNB Chain
BNB Chain is a blockchain created by Binance which is made up of BNB Smart Chain, which is designed for developers looking to build decentralized applications (apps), and BNB Chain Governance a blockchain that is designed for BNB governance and voting. It also introduces an all-new staking mechanism for BNB, one of the world’s top cryptocurrencies by market capitalization. [1][2][3]
History
The history of BNB Chain started back in April 2019 when Binance launched what was then known as Binance Chain. At that point, the BNB utility token, which was originally designed to lower the trading fees users pay on Binance, switched over from the Ethereum network, where it was launched in 2017, and became the token of Binance Chain.[39] Binance Chain used a delegated proof-of-stake consensus.[40]
In September 2020, Binance launched the mainnet of its Smart Chain, a smart contract-enabled blockchain running in parallel to Binance Chain. Unlike Binance Chain, BSC boasted smart contract functionality and compatibility with the Ethereum Virtual Machine (EVM). The design goal was to leave the high throughput of the Binance Chain intact while introducing smart contracts into its ecosystem. This also allowed Ethereum dapps to easily move on to the Binance Smart Chain.[4][5] Binance Smart Chain has low transaction fees “as low as 1 cent” and a 3-second block time. The blockchain uses a Dpos (Delegated-Proof-Of-Stake) variant named Proof-of-Staked-Authority.[6]
In October 2020, Binance's former CEO Changpeng Zhao announced that Binance Smart Chain had processed 21 percent of Ethereum's transaction volume at a much lower cost, 35 times cheaper. He wrote on Twitter:
Yesterday, #BinanceSmartChain handled roughly 21% of transactions compared #ETH, while only charging 0.6% of the fees, making #BSC about 35x cheaper. Maybe this is bad for #BNB price (and nodes, for now), lol. But it’s good for users & developers.[11]
On October 12, 2020, the former CEO of Binance reported on Twitter that the number of active addresses on BSC increased 50 times since the launch of the network:
Looks like #BSC took 3x less time to reach 120k addresses/users than @binance CEX back in the day.
On February 15, 2022, Binance Chain and Binance Smart Chain (BSC) became BNB Chain.[36]
Binance Bridge Hack
On October 6, 2022, the Binance bridge was hacked and around $500 million of funds were stolen.[37] The Binance co-founder and former CEO Changpeng Zhao announced that the hack happened on a cross-chain bridge where users transfer digital assets from one blockchain to another.[38]
In October 2022, BNB Smart Chain deployed an upgraded version of its network, resolving several cross-chain issues following the multi-million dollar bridge hack. According to Binance, the upgrade had no effect on the trade of Binance Smart Chain tokens at the exchange but required deposits and withdrawals of those tokens to be temporarily paused. The patch release, Moran hard fork, was described as a temporary for re-enabling cross-chain functionality between the BNB Beacon Chain and Binance Smart Chain. [37]
BNB Chain
On February 15, 2022, Binance Chain and Binance Smart Chain (BSC) became BNB Chain. A transition that highlights BSC’s connection with the BNB token and BNB ecosystem. BNB, which stands for “Build and Build” (formerly called Binance Coin), is the blockchain gas token that “fuels” transactions on BNB Chain.
BNB Chain is comprised of:
- BNB Beacon Chain (previously Binance Chain) - BNB Chain Governance (staking, voting)
- BNB Smart Chain (BSC) (previously Binance Smart Chain) - EVM compatible, consensus layers, and with hubs to multi-chains.[35]
According to Binance, the name change also comes with more advancements to benefit users, projects, and developers connected to the BNB Chain community. The BNB Chain will embrace large-scale applications, including GameFi, SocialFi, and the Metaverse. In particular:
- Scaling from one chain to multi-chain
- Boosting the throughput of BSC
- Introducing on-chain governance mechanisms
- Improving scaling solutions and an expansion of the validator set of BSC from 21 to 41 (with 20 validators functioning as candidate block producers)[36]
Features
Proof of Staked Authority
The Proof-of-Authority protocol is most criticized for not being fully decentralized, as the validators, i.e. the nodes that take turns to produce blocks, have all the authority and risk corruption and security attacks. Other blockchains, such as EOS and Cosmos, introduce different types of Dpos (Delegated-Proof-Of-Stake) to allow the token holders to vote and elect the validator set. This increases decentralization and favors community governance.[12]
BSC combines Dpos (Delegated-Proof-Of-Stake) and Proof-of-authority for consensus, so that:
- Blocks are produced by a limited set of validators.
- Validators take turns to produce blocks in a PoA manner, similar to Ethereum’s Clique consensus engine.
- Validator set is elected in and out based on staking-based governance.[13]
Token Economy
Binance Chain and Binance Smart Chain share the same token universe for Binance Coin (BNB) and BEP-2 tokens. This means:
- Tokens can circulate on both networks, and flow between them bi-directionally via a cross-chain communication mechanism.
- The total circulation of the same token should be managed across the two networks, i.e. the total effective supply of a token should be the sum of the token’s total effective supply on both BSC and BC.
- The tokens can be initially created on BSC in a similar format as ERC20, or on BC as a BEP2, then created on the other. There are native ways on both networks to link the two tokens and secure the total supply of the token.[14]
Native Token (BNB)
Binance Coin runs on BNB Chain in the same way as ETH runs on Ethereum so that it remains a “native token” for both BSC and BC. This means, in addition to BNB being used to pay most of the fees on Binance Chain and Binance DEX, BNB will be also used to:
- Pay “gas“ to deploy Smart Contract on BSC.
- Stake on selected BSC validators, and get corresponding rewards.
- Perform cross-chain operations, such as transfer token assets across BC and BSC.[16]
Other Supported Tokens (BEP2, BEP8, ERC-20)
BEP2 and the upcoming BEP8 standards are both BC and BSC-supported tokens. ERC-20 tokens, or BEP2E tokens, as they are called in the network, are supported on the BNB Chain. There are ways to further "enhance" ERC-20 tokens on the platform just by adding more identifiers on an asset, such as token denomination, owner address, and decimal precision definition, among others. This process is called “token binding.”[32]
Seed Fund
Certain amounts of BNB will be burnt on Binance Chain and minted on Binance Smart Chain during its genesis stage. This amount is called “Seed Fund” to circulate on BSC after the first block, which will be dispatched to the initial BC-to-BSC Relayer and initial validator set introduced at genesis. These BNBs are used to pay transaction fees in the early stage to transfer more BNB from BC onto BSC via the cross-chain mechanism.[15]
Staking and Governance
The following list is the core ideas of staking and governance while using the Proof of Staked Authority protocol:
- Token holders, including the validators, can put their tokens “bonded” into the stake. Token holders can delegate their tokens to any validator or validator candidate, to expect it can become an actual validator, and later they can choose a different validator or candidate to re-delegate their tokens.
- All validator candidates will be ranked by the number of bonded tokens on them, and the top ones will become the real validators.
- Validators can share (part of) their blocking reward with their delegators.
- Validators can suffer from “Slashing”, a punishment for their bad behaviors, such as double sign and/or instability. Such loss will be shared by their delegators as well.
- There is an “unbonding period” for validators and delegators so that the system makes sure the tokens remain bonded when bad behaviors are caught, the responsible will get slashed during this period.[17]
Cross-chain Compatibility
Binance Smart Chain was envisioned as an independent but complementary system to the existing Binance Chain. Dual-chain architecture is used, with the idea being that users can seamlessly transfer assets from one blockchain to another. BEP-2 and BEP-8 tokens from Binance Chain can be swapped for BEP-20 tokens, the new standard introduced for Binance Smart Chain. To move tokens from one chain to another (i.e., BEP-2 to BEP-20 or vice versa), the simplest method is to use the Binance Chain Wallet, available on Google Chrome and Firefox.[18]
Yield Farming Projects
Binance Smart Chain has grown steadily to become a dominant chain for yield farming. It has several advantages over Ethereum (ETH), such as lower fees and faster confirmation times.[19] Yield farms on BSC can be accessed via existing Ethereum infrastructure like MetaMask, making the user journey easier to onboard especially for crypto users. Via yield farming, BSC is establishing a strong foothold in the decentralized finance (DeFi) industry on the blockchain.
Binance Fund Grants
In October 2020, Binance announced they would fund six projects building on their Smart Chain. More than 180 projects applied for grants since its $100 million accelerator fund was announced in September 2020.[20] [22]
In an October 14 statement, Binance stated that blockchain projects Anyswap, Arkane Network, BakerySwap, Bitquery, PancakeSwap, and Proxima will receive $350,000 in grants through the firm’s $100 million fund. The firm chose the six projects by examining the teams, products, and their contribution to the blockchain ecosystem. Binance former CEO Changpeng Zhao said the Accelerator Fund was designed to support the development of high-quality DeFi (Decentralized Finance) projects that contribute to building the industry’s infrastructure.[21] [23]
On October 29, 2020, Binance announced that they would be funding 5 new blockchain projects on Binance Smart Chain with their $100 million accelerator fund. The projects include Bounce, DeFiStation, Gitcoin, JustLiquidity, and PARSIQ.[24]
Partnerships
Band Protocol x Binance Smart Chain
In August 2020, Binance Smart Chain partnered with Band Protocol. The integration enables developers to create custom decentralized oracles that aren’t limited to scalability issues, predetermined update parameters, or specific data sets. Developers have complete access to Band Protocol’s tools to reliably connect smart contracts to any external data source or API to leverage real-world data within their decentralized applications.[25]
Cartesi x Binance Smart Chain
In September 2020, BSC partnered with Cartesi (CTSI) to unlock the next generation of decentralized applications. This partnership enabled advanced smart contract capabilities and massive computation for Cartesi DApps atop Binance Smart Chain, allowing DApp developers to jumpstart the next generation of decentralized games and DeFi products. Erick de Moura, CEO of Cartesi, said:
Developers will now be able to build computationally intensive DApp logic with familiar Linux tools, while at the same time taking advantage of the low fees and high throughput capabilities that Binance Smart Chain provides."[26]
CertiK x Binance Smart Chain
In September 2020, BSC also partnered with CertiK. According to the terms of the partnership, an interoperability protocol will be created between BSC and the security-oriented CertiK Chain to grow the DeFi tools and services ecosystem and protect users against bad actors. CertiK, the leading blockchain auditing firm trusted by industry leaders including Aave, Kava, and Ampleforth, will provide BSC with best-in-class cybersecurity services such as customized security audits and penetration testing, as well as decentralized security products such as CertiK Security Oracle scores and CertiKShield reimbursement pools.[27]
Bondly x Binance Smart Chain
On December 21, 2020, Binance Smart Chain teamed up with Bondly, an industry leader in the DeFi and NFT space. Bondly has been a pioneer in the digital assets and collectibles field, with their atomic, interoperable swap architecture and their signature product, BSwap, which allows users to perform cryptographically secured transactions of crypto-assets in an over-the-counter (OTC) manner. Recently, Bondly launched the Bondly Collectible Card Game (BCCG). BCCG is a fully digital, NFT-based, collectible card game that adds immense utility, educates about the Bondly product family, and incentivizes gamers to participate in the Bondly ecosystem.[33]
Bondly will be bringing the BCCG to Binance Smart Chain, driving the adoption of the NFT world and BSC’s NFT ecosystem. This partnership will allow BSC to connect with their community deeper through the development of the BSC NFT Ecosystem. Bondly will work with BSC to launch exclusive Christmas Edition NFT cards on BSC with unique utilities.[33]
Animoca Brands x Binance Smart Chain
In December 2021, BSC partnered with Animoca Brands, operator and investor of several NFT-based games, to launch a joint $200 million gamefi (financialization of gaming) incubation program. The two institutions invested $100 million each to fund and ease the development of new gaming experiences on top of the Binance Smart Chain.[34]
Gwendolyn Regina, Investment Director at Binance Smart Chain said:
Animoca Brands’ experience in building and operating projects like The Sandbox, a metaverse-based gaming experience, could help these newcomers to establish a foothold in the now crowded blockchain gaming market,
List of Partners
Blockchain Infrastructure and Tools
- Chainlink
- Band Protocol
- Trust Wallet
- Ankr
- BSCScan
- Bitquery
- MathWallet
- MyWish
- CertiK
- Torus[31]
DeFi
- Swipe
- Aave
- 1inch.exchange
- WazirX
- DODO
- dForce
- Bounce.finance
- Spartan Protocol
- MCDEX
- Cream Finance
- ForTube
- DeBank[30]
