Anyone familiar with the DeFi universe may have heard of the Binance Smart Chain (BSC) in the cryptocurrency market. An ecosystem created by Binance that uses blockchain technology to support DApps Decentralized Finance tokens and applications.
This network is responsible for bringing tokens such as Light DeFi (LIGHT) and platforms that move billions of dollars daily, such as PancakeSwap, to life.
But, after all, what is Binance Smart Chain?
Binance Smart Chain is a decentralized blockchain network where there is no third-party control, not even Binance. Powered by the exchange, this blockchain ecosystem was created to support the development of DeFi projects.
Binance Smart Chain works as a dual network (dual chain) and directly relates to the Binance exchange blockchain, where the Binance Coin (BNB) token is registered.
Like other DeFi projects, Binance Smart Chain has a Binance Coin staking program, which guarantees the execution of smart transactions and contracts through the BSC network.
While most projects use the Proof-of-Stake (PoS) mechanism, Binance Smart Chain has improved this protocol and uses a staking mechanism called Proof-of-Staked-Authority (PSA).
Through this network, tokens are created and classified as BEP-20, as with Light DeFi. From decentralized exchanges (DEX) to issue new tokens, Binance Smart Chain enables the construction of tools and projects that require a secure, decentralized, and transparent blockchain network.
Decentralized Finance (DeFi)
Decentralized Finance (DeFi) applications are known for presenting financial products and services that have not previously existed in the cryptocurrency market.
With the rise of these projects on the market, Binance decided in 2019 to create a fully decentralized blockchain network. Until then, the Ethereum network was the leading platform for developing DeFi applications in the market.
However, with the conquest of numerous DeFi markets by Binance Smart Chain, even Ethereum network projects were integrated by BSC, compatible with the Ethereum Virtual Machine (EVM).
In addition to presenting a connection with the Ethereum network and with the DeFi projects that are part of this ecosystem, Binance Smart Chain allows interoperability with cryptocurrencies that are not parts of the DeFi universe, such as Bitcoin (BTC), Litecoin (LTC), and Ripple ( XRP), for example.
Difference between Binance Smart Chain, Binance exchange and Binance Wallet
With so many names involving the Binance platform, anyone can confuse the terms of the exchange, considered one of the largest in the world. Binance is regarded as a centralized exchange that trades hundreds of cryptocurrencies.
In addition, there is Binance (DEX), a decentralized exchange for trading tokens on the DeFi market, which works like PancakeSwap and UniSwap. Binance exchange and Binance DEX are two different platforms.
Binance exchange was built on Binance’s blockchain network, while Binance DEX was built on Binance Smart Chain and Light DeFi.
In addition to two exchanges, Binance has a second blockchain network known as Binance Smart Chain. This network is entirely decentralized and houses important DeFi projects.
Finally, in addition to two networks and two exchanges, Binance also has a cryptocurrency portfolio called Binance Wallet. This device works independently from other Binance platforms and stores cryptocurrencies and tokens such as Light DeFi, which is classified as BEP-20.