Binance Smart Chain (BSC), launched by crypto exchange Binance, is an Ethereum Virtual Machine (EVM)‐compatible blockchain built to support smart contracts and staking in parallel to the previously launched main chain, Binance Chain.
Binance Smart Chain is focused on making DeFi affordable by offering a higher gas block limit and faster block times than Ethereum. Its design is based on the Ethereum Geth client and a copy of the EVM, allowing projects from the Ethereum ecosystem to function natively within BSC.
BSC allows users to build dapps and stake on Binance Smart Chain while still making fast asset trades on Binance Chain; Binance Chain remains fast because it does not need its own smart contract functionality. Binance Chain is a Tendermint‐based protocol built using portions of the Cosmos SDK.
Binance Smart Chain is connected to Binance Chain by two relayers. The BSC Relayer passes communications from Binance Chain to Binance Smart Chain (such as token transfers, refunds, or staking transactions). The Oracle Relayer monitors events on Binance Smart Chain and broadcasts the transactions to Binance Chain. This two‐way connection enables cross‐chain transfers and connects the two networks’ ledgers into one interoperable system.
Binance Coin (BNB) originally launched with a Ethereum‐based ERC‐20 token which was replaced with the native, Binance Chain‐based coin BNB in 2019. It has a broad range of uses including transaction fee payments, payments processing, token launches on the Binance Launchpad, and paying a portion of the salaries for 90% of Binance employees.
The Binance Smart Chain mainnet launched in September of 2020. As of July 2021, Binance Smart Chain processes as many as 9 million transactions daily, with a current all-time daily high of 11.83M transactions in May 2021. The developer community on Binance Smart Chain is growing, in part backed by BSC’s $100M Accelerator Fund launched with the goal of accelerating the development of blockchain technology and DeFi within the BSC ecosystem.
As a neutral platform, Bison Trails now offers secure read/write and participation infrastructure for Binance Smart Chain, empowering those looking to build on the chain or help secure the network. According to Binance, the BSC ecosystem has a large and growing community of DeFi and NFT builders due in part to its low transaction fees and high transaction speeds, along with developer activity surrounding infrastructure, tooling, cross‐chain bridges, API development, security projects, and a range of builder funding initiatives related to the Accelerator Fund.
"Binance Smart Chain is becoming an important hub for developers looking to build applications, as demonstrated by the number of DeFi and NFT projects launched on the platform," said Aaron Henshaw, who leads engineering at Coinbase Cloud. "We’re proud to offer secure read/write infrastructure to support this flourishing developer community, and help drive innovation in the broader crypto ecosystem."
“Binance Smart Chain is becoming an important hub for developers looking to build applications, as demonstrated by the number of DeFi and NFT projects launched on the platform. We’re proud to offer secure read/write infrastructure to support this flourishing developer community, and help drive innovation in the broader crypto ecosystem."–Aaron Henshaw, Coinbase Cloud
Binance Smart Chain uses a novel consensus engine, Parlia (based on the Clique proof of authority consensus protocol, in combination with other proof of stake consensus methods), which is implemented as proof of staked authority (PoSA).
Binance Smart Chain comes to consensus on the state of the chain internally using proof of authority (PoA). That authority is granted by the PoS consensus activity that takes place on Binance Chain using Binance Chain’s Tendermint‐based PoS module. These activities include staking transactions, delegation, validator elections, and reward distribution. Binance Chain’s staking module calculates the active set of Binance Smart Chain validators, and updates the active set on Binance Smart Chain at midnight UTC each day. The active set of Binance Smart Chain validators then performs consensus via PoA, and also sends reward payout information to Binance Chain where reward distribution takes place.
Binance Smart Chain’s active set includes the top 21 validators by total value staked (self‐bonded and delegated). Blocks are produced in a round‐robin format and validators take turns attesting each other’s blocks, referred to as ‘sealing’ blocks, as well.
Anyone can become a validator on Binance Smart Chain by submitting a 10 BNB transaction to create a validator and self‐bonding 10,000 BNB to their validator node. However, as of August 2021, the minimum stake to be in the active set is approximately 519,000 BNB.
Delegation is enabled on Binance Smart Chain. Any BNB holder may delegate a minimum of 1 BNB to the validator of their choice. Delegators may redelegate at any time with no penalty, or undelegate, after paying a transaction fee. Rewards from delegation automatically compound to a delegator’s stake and must be unbonded to be withdrawn.
Including validators, users can operate four node types on Binance Smart Chain:
Binance Smart Chain’s EVM compatibility, along with being built as a fork of the Geth client, makes it easy for developers familiar with the EVM to easily deploy dapps on BSC in order to access the network’s scalability, low transaction fees, and DeFi community. However, transactions are also recorded faster in BSC, which has a block time of three seconds (as compared to 13 seconds for Ethereum). Though this speed and the higher block gas limit make BSC attractive for its growing developer community, these factors also require node operators to use powerful infrastructure.
|Initial token supply||200M BNB|
|Total planned inflation (pa)||None|
|Current token supply||~170M BNB|
|Active set of validators||21|
|Target staking rate||None|
|Current reward rate||~13% per annum|
|Minimum validator stake||10,000 BNB self‐bonded, active set minimum variable|
|Minimum delegation||1 BNB|
|Unbonding period||7 days, no rewards earned during this time|
|Warm‐up period||7 days, no rewards earned during this time|
|Reward payout frequency||Daily, at midnight UTC|
|Reward distribution||Rewards must be unbonded to be withdrawn|
BNB, the native token of the Binance ecosystem, is used for three purposes on Binance Smart Chain:
The current/maximum supply of BNB is lower than the initial supply due to regularly conducted "burns" of BNB by Binance, the latest of which took place in July 2021, permanently destroying over 1.29M BNB. Binance has committed to burning BNB equivalent to approximately one‐fifth of its profits each quarter, though the burn schedule has not been programmatically defined on‐chain.
There is no inflation on Binace Smart Chain; validators are rewarded via transaction fees, shared pro‐rata with delegators. The validator that generates a block receives 15/16 of the block’s gas fee, with the remaining 1/16 of gas going to the system reward contract (to fund cross‐chain functions).
At the time of creation, a validator must define its:
For example, a validator launched with a commission rate of 10%, a maximum commission rate of 20%, and a maximum daily rate increase of 1% could never raise its commission rate above 20%, and changing the commission rate from 10% to 20% could only take place over a minimum of 10 days (1% per day). Within these self‐defined parameters, the commission rate may be changed by the validator operator at any time.
Reward amounts are calculated daily on Binance Smart Chain and then distributed two days later on Binance Chain to the validator and its delegators. The validator retains its commission rate, then pays a pro‐rata share of the remaining rewards directly to delegators, after which the validator’s share of rewards are transferred directly to the validator’s identified reward address.
Slashing is enabled on Binance Smart Chain, along with jailing, a set period of time that a validator cannot participate in consensus and earn rewards. An unjail transaction must be submitted in order to return to the active set.
Three types of poor behavior on the network incur penalties:
Only self‐bonded BNB on a validator can be slashed; delegators are never at risk of losing their delegated BNB.
BSC has system parameters to dictate network behavior, including slashing amounts, cross‐chain transfer fees, uptime, and more. These parameters are defined by the BSC validator set using a proposal‐vote process on Binance Chain. Voting power is defined by overall BSC stake—because of this, running a validator is the only way to have a vote in BSC governance.
Anyone can submit a proposal on Binance Chain to update Binance Smart Chain parameters. The proposal must be submitted with a 1,000 BNB deposit and may specify a voting period during which time BSC validators can vote on the proposals (the voting period defaults to one week if not specified).
If the proposal’s quorum is met (at least 50% voting participation), there are sufficient yes votes (at least 50% of possible votes are in favor), and no more than on‐third of votes are cast ‘No With Veto,’ the proposal will pass and the proposer will receive their deposit back. In some cases, if the proposal fails the deposit may be distributed to the validator set.
Bison Trails is a blockchain infrastructure platform-as-a-service (PaaS) company based in New York City. We built a platform for anyone who wants to participate in 23 new chains effortlessly.
We also make it easy for anyone building Web 3.0 applications to connect to blockchain data from 33 protocols with Query & Transact (QT). Our goal is for the entire blockchain ecosystem to flourish by providing robust infrastructure for the pioneers of tomorrow.
In January, 2021, we announced Bison Trails joined Coinbase to accelerate our mission to provide easy-to-use blockchain infrastructure, now as a standalone product line. The Bison Trails platform will continue to support our customers. With Coinbase’s backing, we will enhance our infrastructure platform and make it even easier to participate in decentralized networks and build applications that connect to blockchain data.
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