summary: 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 (...
content: 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. 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. Binance Chain used a delegated proof-of-stake consensus. 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. 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. In October 2020, Binance 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. On October 12, 2020, the 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. Binance Bridge Hack On October 6, 2022, the Binance bridge was hacked and around $500 million of funds were stolen. The Binance co-founder and CEO Changpeng Zhao announced that the hack happened on a cross-chain bridge where users transfer digital assets from one blockchain to another. 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. 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. 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) 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. BSC combines Dpos (Delegated-Proof-Of-Stake) and Proof-of-authority for consensus, so that: 1. Blocks are produced by a limited set of validators. 2. Validators take turns to produce blocks in a PoA manner, similar to Ethereum’s Clique consensus engine. 3. Validator set is elected in and out based on staking-based governance. Token Economy Binance Chain and Binance Smart Chain share the same token universe for Binance Coin (BNB) and BEP-2 tokens. This means: 1. Tokens can circulate on both networks, and flow between them bi-directionally via a cross-chain communication mechanism. 2. 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. 3. 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. 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: 1. Pay “gas“ to deploy Smart Contract on BSC. 2. Stake on selected BSC validators, and get corresponding rewards. 3. Perform cross-chain operations, such as transfer token assets across BC and BSC. 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.” 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. Staking and Governance The following list is the core ideas of staking and governance while using the Proof of Staked Authority protocol: 1. 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. 2. All validator candidates will be ranked by the number of bonded tokens on them, and the top ones will become the real validators. 3. Validators can share (part of) their blocking reward with their delegators. 4. 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. 5. 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. 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. 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. 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. In an October 14 statement, Binance stated that blockchain projects Anyswap, Arkane Network, BakerySwap, Bitquery, PancakeSwap, and Proxima will rec