How does Binance Smart Chain Token Function? What are its benefits?

In September 2020, Binance, one of the leading crypto ecosystems launched Binance Smart Chain (BSC) – a parallel chain to Binance Chain. The aim of launching a parallel chain was to provide DeFi applications a high-throughput blockchain.

Basically, Binance Smart Chain is a smart contract-enabled blockchain and was designed in a way that it is Ethereum Virtual Machine (EVM) compatible. This set-up allows developers to deploy dApps built for Ethereum on Binance Smart Chain.

What is Binance Smart Chain token or BEP20?

BEP-20 is a token standard on Binance Smart Chain. Basically, it is an extension of Ethereum’s token standard ERC-20 and defines how a BEP-20-based token can be spent, what can be its usage, and who can spend it. It provides developers a flexible token standard to develop a wide range of tokens. For example, a BEP-20 token can represent a stablecoin, a business share, a governance token, or anything.

Additionally, the BEP20 token can be used to create a native asset or a pegged token. BEP-20 token option has become so popular that it is now available for assets like Bitcoin, Ethereum, USDT, LINK, BAND, ADA, DAI, LTC, EOS, and more.

What are pegged tokens?

A pegged token is a type of token that uses a different token standard but its value remains tied to the original asset. For example, a Cardano (ADA ERC-20) token is pegged to ADA BEP-20 at a 1:1 ratio. The advantage of a pegged token is that users are able to transfer the same ERC-20 token on Binance smart chain as a BEP-20 token at a much faster speed and surprisingly low cost.

Impressively, Binance Smart Chain has a block time of 3 seconds and it uses Proof-of-Authority (PoA) consensus mechanism to enable high-speed transactions. On top of that, the transaction costs only a few cents. The basic purpose of BEP-20 tokens is to allow fast trading of assets on decentralized exchanges.  

Why BEP20 token?

• Fast Transactions
As mentioned earlier, Binance Smart Chain uses a Proof-of-Stake consensus algorithm and is able to achieve a block time of 3 seconds. This is 4 times faster than the Ethereum blockchain which has a block time of 13 seconds.

• Low Transaction Fees
Ethereum network congestion and scalability issues have once again triggered skyrocketing gas fees. BEP-20 provides a big relief there as the transaction costs are only a few cents.

• Cross-chain compatibility
Binance Chain and Binance Smart Chain are compatible chains. As a result, BEP-20 and BEP-2 tokens can be easily moved across both networks using a simple wallet.

• Exchange listings  
BEP-20 token standard has become very popular. As a result, most of the leading exchanges easily list the BEP-20 tokens.

How does Binance Smart Chain (BEP20) token work?

Binance Smart Chain was designed to support the creation of decentralized apps (DApps) on EVM and the deployment of smart contracts. If you plan to create a DApp, you can leverage Binance Smart Chain development services to deploy native BEP-20 tokens. While these BEP-20 tokens will be cross-chain compatible, the users will have to pay very low gas fees to transact them.

How to create a BEP20 token?

To create your token on Binance Smart Chain, you can partner with a Binance Smart Chain Development company like Antier Solutions. Before we head out to develop your token, we would require the below-mentioned specifications:
1)      Token Name – For example, Bitcoin
2)      Token Symbol – For example BTC
3)      Initial supply – For example 21 Million
4)      Decimal places – 8 decimal places

Apart from these, the BEP-20 token can be created with settings like:

1)       Token Burn
If you plan to build a tokenomics that is deflationary in nature, the burn model needs to be worked upon at the time of design.

2)       Token Mint
Whether the users can mint BEP-20 tokens or not and how they can do this also needs to be designed.

3)       Token Pause
A token has many operations associated with it. However, the DApp owner might want to halt all the operations like spend, mint, and burn for a specific time. This feature can also be introduced in the design.

What are the different types of tokens that can be built using the BEP-20 token standard?

• Utility Token
BEP20 token development on Binance Smart Chain can be used to create utility tokens like Basic Attention Token (BAT).

• Governance Tokens
BEP-20 token standard can be used to create governance tokens like Maker (MKR).

• Native tokens
A token that is native to a DApp built on Binance Smart Chain uses a BEP-20 token standard.

To conclude

Given the stellar growth that Binance Smart Chain development has exhibited in the last couple of months, it seems we will witness more BEP20 tokens making their way into the crypto sphere.

At Antier Solutions, we offer Binance Smart Chain development services to enable the creation of different BEP-20 tokens extensively. Connect with our subject matter experts to share your business needs.