Why Binance Smart Chain (BSC) is the most powerful DeFi ecosystem
Decentralized finance solutions originated on the Ethereum network, but over time the high transaction times and fees of ETH slowed down the evolution of DeFI. Nowadays, a large number of DeFi developers turn to more efficient alternatives of Ethereum, such as the Binance Smart Chain.
What is Binance Smart Chain?
Binance Smart Chain is a next-generation blockchain created by Binance, the largest cryptocurrency exchange in the world. BSC was designed specifically with DeFi in mind, and enables decentralized applications (dApps) to operate with maximum efficiency.
BSC utilizes an original token format called BEP-20. BEP-20 is very similar to the ERC-20 token standard utilized by Ethereum, which means that developers can migrate their projects from Ethereum to Binance Smart Chain extremely easy.
The Benefits of Binance Smart Chain
The greatest advantage of BSC compared to ETH is the much lower transaction cost. The popularity of DeFi caused a massive increase in volume which resulted in the Ethereum fees increasing tremendously. In contrast to Ethereum, Binance Smart Chain is much more efficient: BSC fees can be 35x or in some cases even 100x cheaper than ETH fees.
Binance Smart Chain also enables people to enjoy much faster transaction times than competing solutions. Usually, smart contracts platforms are slower than typical blockchains due to how advanced and complex smart contracts can be. BSC solves the problem with high transaction times of smart contracts platforms by featuring dual chain interoperability with Binance Chain, another blockchain provided by Binance.
During times of high network activity, volume can be spread between two network architectures: BSC and Binance Chain. This guarantees that Binance Smart Chain will never be overburdened and the transaction times and fees will remain low.
Binance Smart Chain (BSC) and Binance Chain are fully compatible with each other. The BEP-20 token standard of BSC is compatible with BEP-2 and BEP-8 standards utilized in Binance Chain, and all these token types can be stored in the same wallets and traded on the same exchanges.
Although BSC and Binance Chain are two separate blockchain designed to work in synergy with each other, it doesn’t mean that any of the chains is dependent on the other. In case some technical issue would affect either Binance Smart Chain or Binance Chain, the other network would be able to continue working without any issues.
Which DeFi Projects Use BSC?
Anything that can be done on the Ethereum network can also be done on the Binance Smart Chain, only faster and cheaper. Shortly after its launch, BSC already had 60+ decentralized applications, and the number of Binance Smart Chain dApps keeps growing rapidly.
The most popular DeFi platforms operating on the BSC blockchain are decentralized exchanges (DEXs). Alternatives to Uniswap built on Binance Smart Chain include BurgerSwap, BakerySwap and PancakeSwap.
Is BSC the Future of DeFi?
Binance Smart Chain seems to fully solve the main problem of Ethereum-based DeFi apps: high fees and transaction times. BSC is much more suited to decentralized finance than ETH. If more DeFi projects start migrating to Binance Smart Chain, perhaps in the future BSC can overtake Ethereum in its place as the second most popular blockchain after Bitcoin?