What is BSC (BNB Chain)? Explaining the features and points to note of blockchain-CRYPTO TIMES led by Binance

BSC (BNB Chain) is an L1 blockchain that supports EVM-compatible smart contracts.

In DeFiWith a TVL of around $5 billion and high affinity with the surrounding ecosystem, BNB has a market capitalization of $50 billion.has exceeded

Both indices have the second largest scale after ETH (excluding market capitalization USDT) and can be said to be representative projects.

In this article, BSC is explained from the following perspective.

Summary of this article

What is BSC? Binance-powered blockchain

BSC (BNB Chain) is an L1 blockchain that can handle smart contracts.

According to Defi Lama’s statistics, BSC has TVL (Total Value Lock) in the top three.

From now on, I will explain the outline and characteristics of BSC from the following perspective.

Let’s check the basic points of BSC.

Overview of BSC (BNB Chain)

BSC (BNB Chain) isExecuting L1 Blockchain Smart Contractsis

Initially, Binance was developing Binance Chain, which is capable of processing high-speed, high-volume transactions.

However, due to the growth of Ethereum in DeFi, etc., we will develop a blockchain that implements smart contracts that can build various projects, and BSC will emerge.

Although both Binance Chain and BSC are used for BNB to pay gas bills for BNB, there is a big difference in the functions provided by the blockchain.

Since BSC can handle smart contracts, various projects have been built similar to Ethereum, e.gIn DeFi, representative projects like Pancake Swap are operated on BSChas been

Simple features

BSC is compatible with EVM, and the basic elements are compatible with Ethereum because similar projects are built.

However, the following points show the difference between BSC and Ethereum.

• Fast finalization and high TPS
• Cheap gas
• Massive quarterly burning events
• Limited number of nodes

To summarize the above characteristics, BSC is a project with limited node and high processing capacity with few centralized parties, and regularly conducts large amount of BNB burns for a certain period of time.

In particular, high processing power and low gas prices were among the reasons why BSC attracted a large number of users when various problems appeared in Ethereum due to the popularity of DeFi.

Differences from beacons, ZKs, sidechains, etc.

There are various projects led by Binance, and some people cannot understand the difference between BSC and BSC.

So, let’s quickly examine the differences between BSC and other blockchains.

Name of the project	BNB Beacon Chain	Zk BNB	BSC	BNB Greenfield
overview	L1	Roll up	L1	Distributed storage
Convenience	Built with Tendermint and Cosmos SDK	High throughput at low cost	High versatility	Highly distributed data management
Expected usage	Stocking in BNB, Good governance etc	High frequency transactions Requested projects, etc.	Highly configurable, small projects	Decentralized storage, NFT, etc.

The above projects are collectively referred to as “BNB Chain (Build n Build Chain)”.

The Beacon Chain is responsible for governance at BNB.

Zk BNB is a BSC-based rollup (expected to reduce gas costs, etc.), and BNB GreenField is a distributed storage project.

In addition, BNB sidechains are being deployed, and it is suggested to launch projects using the OP rollup, so there are many projects that are close to BSC.

Current status of BSC

From now on, I will examine some BSC blockchain usage status and the status in the DeFi market.

As of March 2023 BSC has more than 260 million addresses.The number of unique addresses has been around 1 million every day for several months, and the number of addresses is growing at a pace of around 200,000 to 800,000 per day.(the increasing degree varies greatly over time)

(Citation source:BSC scan)

This is a large number compared to competitors such as Ethereum (total addresses: about 220 million), and considering that it is coming late, it can be seen that BSC is an actively used chain.

DeFi has a TVL of around $5 billion, second only to Ethereum, and PancakeSwap has the largest TVL among them.About half of TVL at BSC is PancakeSwaplock by

(Citation source:In Defila)

Other TVL projects include Venus (~$700 million), Alpaca Finance (~$400 million), BiSWap (~$200 million), and Coinwaid (~$170 million).

Highlights of BSC

From now on, I will explain the points of focus of BSC from the following points.

Let’s check the special points of BSC.

High throughput

BSC has EVM compatibility, can be used like Ethereum, and has high processing power.

It has the potential to achieve 2,000 TPS (it may reach 5,000 TPS in 2023),A block is generated once every 3 seconds, and it takes about 30 to 45 seconds to reach the end.is

In addition, compared to Ethereum, both processing capacity and gas costs are high, and you can touch different products on the blockchain at a low cost.

Since there is a policy to increase the processing capacity through various initiatives in the future, it seems that it can be used more easily.

Consent to adopt PoSA

BSC has adopted a protocol called “PoSA” that combines DPOS and PoA.

Basically, it is like DPoS,Entrusted entities with multiple voting power (BNB) are validatorsbecomes

[शुरुआतीहरूको लागि]What is a consensus algorithm in virtual currency (Blockchain)?

As a basis, 10,000 BNB is required to be fenced to become a validator candidate, and BNB holders will delegate to a BNB validator candidate. (BNB delegation can be easily done by general public)

In BSC, within certain timeThe validators assigned to BNB are collectively called the “validator set”, and the validator set plays a central role in the processing of transactions.I will continue.

By March 2023, 29 validators will be selected for the validator set. (Details will be described later, but among the 29 validators there are also validators with different selection methods.)

This validator set is designed to be replaced after a certain period of time, and after a certain period of time, a validator set will be selected based on the delegated BNB.

At the time of writing, 52 validators (candidates) can be confirmed in the BSC, and the validators that form the validation set will be selected from among them.

(Citation source:BNB chain)

However, as mentioned above, basically the top validators are selected, and each validator has a different position, so not all validators always participate in the network.

Also, like other PoS and DPOS blockchains, validators receive rewards subsidized by gas costs for processing transactions.

A mechanism that can expect deflation

BNB, which is the foundation not only of BSC but also of other BNB chainsAttempts to squeeze supply using burn have been implemented, and there is a mechanism by which deflation can be expected.doing

(Burn = Burn is indirectly the removal of virtual currency from the market so that it cannot be used)

There is BNBAbout 200 million coins have been released, and a mechanism has been implemented whereby BNB will gradually depreciate.supposed to be

There are two main burns applied to BNB, the first is based on gas prices, and the second is based on quarterly burns.

In the first gas price-based burn, a portion of the gas price paid by blockchain users is burned to automatically reduce the amount of BNB circulating in the market.

To date, it has burned more than 150,000 copies.

Another quarterly burn will burn a larger amount of BNB each quarter based on a formula that refers to the price and the number of blocks generated each quarter.

More than two million copies were burned in the recent fire, which is more impressive than the gas transaction fee-based burn. (Continues until 100 million pieces)

As a result of the above efforts, 40.4 million copies have been burned so far, which means that the supply has decreased by about 20 percent.

Representative projects in BSC

As mentioned above, BSC has many users and various projects are built.

Common projects include:

Although not as large as Ethereum, there are many large-scale projects deployed, and BSC’s advantages can be used at a lower cost.

To actually use it, you need to set up a wallet, so if you’re interested, please check the following.

Explain how to connect to BNB chain (BSC) on MetaMask

BSC Precautions and Risks

From now on, I will present some points that I would like to note from the point of view of caution and risk of BSC.

We have summarized the points you want to keep in mind before buying BNB or using BSC.

More centralized than Ethereum or Bitcoin

BSC has a slightly different point of view than the image that is usually directed at representative chains such as Ethereum and Bitcoin.

That is, you are sacrificing some degree of diversification.

As mentioned above, BSCValidator candidates are limited to about 50, of which validator sets that actively process transactions are limited to 29.will be

Although both have their own criticisms, they differ from the decentralization generally envisioned for Ethereum and Bitcoin, which have a reputation for high decentralization.

(There is a mechanism for supplementing other inactive validators if a problem occurs among the 29 validators.)

Although this is not a problem unique to BSC, but a similar problem for blockchains with similar structures, it is a risk that needs to be watched closely.

What is proposed in BEP131

🔸 Add 20 validator candidates (Total 41)
🔸 Select validators every 200 blocks instead of 24 hours
🔸21 elected validators – 19 randomly selected from the top 21 with the highest stakes of BNB, 2 randomly selected from the bottom 20

Details 👇https://t.co/jKNj23njy9

– BNB Chain (@BNBCHAIN) March 23, 2022

However, we can also see efforts to gradually increase diversification. Initially, the BSC had fewer verifiers than today, and was more centralized.

In addition to expanding the number of currently active validators, previously inactive validators have also been given room to join the validation set.

in particularSet the frame to randomly select from validator candidatesWe can expect incentives for BNB to delegate passive validators, and incentives for backup validators to maintain quality in an emergency.

(Currently, 8 out of 29 candidate validators are selected, but opportunities to generate blocks are limited to maintain security)

There are plans to expand the number of active validators from 29 to 100 in the future, and development is underway to make the blockchain more decentralized and stable.

The risk of Binance influence

The BSC ecosystem has been developed by the community in various ways, but Binance has a large influence on various aspects.

Even if the problem doesn’t directly affect BSC, there is potential for reputational risk if there are any issues with Binance.

For example, when FTX went bankrupt, there were instances where Solana had a more negative impact on SOL prices and the DeFi ecosystem than other cryptocurrencies.

Similar risks,It can also exist in BSC and BNB chain related protocol projects.

Potential risks of use

The various use cases of using the BSC ecosystem include DeFi and potential risks of BSC.

Apart from the various risks of using DeFi, BSC recently had issues with the block chain shutting down due to bridge issues.

Even if there is no human loss, there is a possibility that similar problems will occur in the future.

[Binance Bridge Hacked | BSC चेन इमर्जेन्सी स्टप]

1/
Binance Bridge Hacked and BSC (Binance Smart Chain) Suspended.https://t.co/ja6AWsTzk6

– CRYPTO [email protected]Crypto Assets/Blockchain Media (@CryptoTimes_mag) October 7, 2022

This is a risk that can be seen in any cryptocurrency, not just BSC, but we must always be vigilant against possible risks such as bugs and hacking.

Summary of BSC

In this article, we have discussed BSC from various perspectives.

BSC is the second largest blockchain after Ethereum.

In addition, since it is led by Binance, the biggest in the industry, it has the potential to influence the future in various ways, so we want to keep an eye on it.