Binance Smart Chain Goes Live Supporting Smart Contracts for DeFi

UTC by Bhushan Akolkar · 3 min read
Binance Smart Chain Goes Live Supporting Smart Contracts for DeFi
Photo: Binance Chain Blog

The Binance Smart Chain promotes interoperability and programmability with the Binance Chain while enabling smart contracts on the platform. The Binance Smart Chain is also compatible with the Ethereum Virtual Machine (EVM).

On Tuesday, September 1, crypto exchange Binance announced its new Binance Smart Chain in another push towards DeFi development. The Binance Smart Chain will run in parallel with Binance Chain enabling smart contracts and allowing users to stake the native cryptocurrency BNB.

The Binance Smart Chain is fully compatible with the Ethereum Virtual Machine (EVM). This will also help in boosting the usability of the BNB tokens and the Binance Chain. Besides, the Binance Smart Chain “features a powerhouse of blockchain collaborators” such as Swipe, Ontology, Brand Protocol, Trust Wallet, and much more.

Binance Chain is partially custodial, however, it is not completely decentralized. The Binance Smart Chain has some centralized elements that help it to run faster and with a higher capacity. The Binance Smart Chain runs using the Proof of Staked Authority (PoSA) consensus algorithm. Using the PoSA algorithm, validators can also earn BNB rewards against their contribution to network maintenance. Besides, the blockchain is also capable of producing new blocks every three seconds. The announcement reads:

“Designed to run in parallel with Binance Chain, Binance Smart Chain retains the former’s fast execution times and low transaction fees while adding Smart Contracts functionality to support compatible dApps.”

The Binance Smart Chain developers said that they would lower the transaction fees to less than 1 percent. Besides, the company has assured support for the entire digital asset ecosystem for Binance’s DEX.

Binance Push for DeFi

Binance CEO Changpeng Zhao remains bullish over the growth of DeFi sector in the long-term. However, with the recent DeFi wave, CZ also warned investors of some risky projects in the market. He added that as the sector grows further, there will be many projects that won’t last for long.

But overall, Zhao remains positive about the DeFi sector. He has also assured Binance’s commitment to take this sector further and bring new innovations. Ten days back, Binance also launched its Decentralized Finance (DeFi) staking platform supporting the DAI stablecoin. Speaking about the launch of Binance Chain, CEO Zhao said:

“Binance Smart Chain makes it possible for developers around the world to build DeFi services and many more dApps within the Binance Chain ecosystem, while delivering various benefits such as an all-new method for staking BNB, high performance, lower fees, direct connection with fast DEX and more.”

The Binance Smart Chain is the new step from Binance to bring programmability and interoperability to the Binance Chain.

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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