The Web3 ecosystem has been flourishing thanks to the attention generated by such technologies as DeFi and NFTs. What’s more, blockchain platforms like the BNB Smart Chain (BSC) make this ecosystem more potent. So, what is the difference between BEP-20 and BSC?
The BNB Smart Chain is mainly a distributed blockchain network that is dedicated to operating Smart contracts. Innovators and developers may use it to build decentralised apps (DApps). This, in turn, promotes the transition to Web3.
BEP20, on the other hand, is the native token standard for the BSC Blockchain network. The first-ever attempt to create an internet computer that could run smart contracts was Ethereum—with ERC20 as its native token standard. BEP-20 is the token standard for creating tokens on the BSC platform, just as ERC20 is used to create tokens on Ethereum.
Here’s everything you need to know about these 2 terms.
The Difference Between BEP20 and BSC
BSC is a blockchain built by Binance that is dedicated to running Smart Contracts and extending the functionality of the BNB Chain. BEP-20 is essentially a token standard that is used to create tokens on the BSC Blockchain.
Simply put, BSC is the blockchain that uses BEP20 as its native token standard, just as BEP2 is the native token standard for the BNB Beacon Chain.
Binance Smart Chain Evolution Proposal (BEP)—The Basics
To help you discern how the BEP-20 token standard relates to BSC, I’ll take you back to the origin of the Binance Chain. In 2019, Binance Introduced its first Blockchain, the Binance Chain—later renamed BNB Beacon Chain. It was essentially a high-performance Blockchain that facilitated near-instantaneous trading.
For instance, supporting smart contracts on such a system—one that had been optimised for fast trading—would lead to congestion. Back in 2017, Ethereum experienced such congestion as users rushed to collect and trade CryptoKitties. To prevent this from happening, Binance Chain lacked support for smart contracts.
In September 2019, the Binance Smart Chain (BSC) was unveiled–and later rebranded to the BNB Smart Chain. As opposed to the BNB Beacon Chain, the BSC Blockchain is compatible with the Ethereum Virtual Machine (EVM) and features smart contract functionality.
What is the BNB Smart Chain (BSC)?
BSC is a second-generation Blockchain platform that was specifically designed to offer smart contract functionality and EMV compatibility. This allows users to codify pretty much anything conceivable—including conventional banking services like lending, exchange, and borrowing.
Since its introduction, the BSC has been running parallel to the BNB Beacon Chain. This way, Binance was able to retain the high throughput of the Finance Chain and add smart contracts into the ecosystem. From the design point of view, both chains are similar.
Even so, BSC is an independent blockchain and not an off-chain or a layer two chain. You’ll also be glad to learn that BSC is fully-compatible, which allows for the migration of crypto assets to and from either of the chains.
You can find out how the BNB Smart Chain differs from the BNB Beacon Chain here.
How Does BSC Work?
Being a second-generation blockchain, BSC applies the Proof-of-Staked-Authority (PoSA) model to reach a consensus. This means that the platform combines both the Proof-of-Authority (PoA) and delegatedProof-of-Stake (PoS) consensus algorithms.
In contrast, first-generation blockchains like Ethereum and Bitcoin only relied on Proof-of-Work (PoW) to reach a consensus.
What is BEP-20?
BEP20 is the native token standard for the BSC Blockchain platform. Though designed to function much like the ERC20 token standard for Ethereum, BEP20 has a lot more to offer. This token establishes the basic regulations that any other token generated on the BSC platform must comply with.
This is to say that the BEP-20 standard applies to all tokens produced or released on the BNB Smart Chain platform. Such tokens include stable coins, security tokens, and utility tokens. Binance-Peg are another form of coinage that uses the BEP20 standard.
Similar to the ERC-20 token standard for Ethereum, BEP-20 is meant to ease the deployment of tokens across DeFiprotocols.
How Do BEP-20 Tokens Work?
BEP-20 tokens are designed to be extensions to Ethereum’s ERC-20 and the BEP-2 Binance token. To allow for easy deployment, BEP20 tokens are compatible with both peg-out and peg-in conversions using either the Binance Bridge or a compatible wallet.
By so doing, BEP20 tokens facilitate the development of smart contracts on the BSC platform.
DeFi on the BNB Smart Chain
Smart contracts on the BSC platform are the foundation for the deployment of decentralised finance (DeFi). With this in mind, it is okay to think of decentralised applications (dApps) as the front web faces for accessing smart contracts on a Blockchain.
Blockchain incentive and governance structures run on the native token standard—the BEP-20 standard in the case of the BSC Blockchain. The BSC platform currently has more than 1,211,898 token contracts. The most popular of these contracts are the ones that are used to bridge BSC to other blockchains or assets, including:
- Binance-Peg BSC-USD (BSC-USD) – a token that pegs the value of the US dollar to the BSC ecosystem
- Binance-Peg Ethereum (ETH) – the token that pegs the value of Ethereum to the BSC ecosystem
- Binance-Peg BTCB (BTCB) – this BEP-20 token pegs the value of BTC to the BSC Blockchain
In addition to these Peggy coins, the BEP-20 standard also powers a myriad of Smart contract tokens. These are some of the most popular BEP-20 Smart Contracts and tokens on the BSC platform today:
- Binance USD (BUSD)
BUSD is a stablecoin that was founded by Binance alongside Paxos. This BEP-20 token is 1:1 USD-backed and is compliant with NYDFS regulatory standards. The BUSD was initially launched as an ERC20 token but also supports the BEP20 standard.
- Safemoon (SAFEMOON)
Safemoon is a BEP-20 protocol that uses SAFEMOON Token with BSC as its primary operating network. The protocol is poised to become one of the best non-fungible token (NFT) exchanges. Additionally, it allows BSC users to invest in crypto apps as well as charitable initiatives.
- BakerySwap
This is a decentralised automated market-making system (AMM). It is built on the BSC platform and uses BAKE as its token. BAKE is a native BEP-20 governance token. You can earn extra BAKE tokens by providing liquidity on the platform. You may then use the tokens for governance voting and to pay transaction fees.
- PancakeSwap
Pancake Swap is one of the leading decentralised Exchange (DEX) marketplaces on the Binance Smart Chain. PancakeSwap has already replicated the Uniswap ecosystem by Ethereum and uses CAKE as its governance token. It leverages AMM technology to allow for the swapping of tokens without centralised oversight.
Conclusion
Though often used interchangeably, BSC and BEP-20 do not mean the same thing. BSC is a blockchain platform that was developed by Binance to add smart contracts and EVM compatibility to their ecosystem.
BEP-20, on the other hand, is the native token standard for the BNB Smart Chain. BEP20 functions much like the BEP-2token on the BNB Beacon Chain or the ERC-20 token on Ethereum. However, both BSC and BEP-20 boast added functionality and compatibility as compared to Ethereum and BNB Chain.
At Krystal, we support the BNB Smart Chain as one of our numerous EVM-compatible chains.
You can view your entire portfolio (including NFTs) in one screen, and swap tokens for the best rates!
Find out more about how to make a swap on Krystal from your Metamask wallet here.
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