Dubbed as Binance Smart Chain (BSC), it could perform better than the main rival Ethereum on some key metrics
Binance is perhaps one of the most well-known names in the blockchain/crypto space. What started off as a cryptocurrency exchange just three years ago has transformed itself into a blockchain giant offering a wide range of services. While the baseline business continues to be a dominant name in the crypto exchange globally, it has continued to broaden the scope of its ecosystem.
Apart from being a beacon of innovation in the space, Binance has been aggressively involved in mergers and acquisitions. The most notable buyout from the company in its short history is its recent acquisition of popular Coinmarketcap (CMC) — a platform with extensive data on prices, volumes and other metrics for 5,290 cryptocurrencies. Although the price tag for the buyout was not revealed, experts put it a staggering $400 million.
There was a lot of buzz last year about Binance launching an Ethereum competitor in the form of the Binance chain. It is common knowledge that Ethereum blockchain has been the premier platform that has provided the foundation for the proliferation of decentralized applications (DApps). And it continues to be the most widely used and dominant DApps platform.
Building on that initial endeavor, Binance Chain developers have now proposed a smart contract-enabled chain that will use Ethereum’s Virtual Machine and run parallel to its existing blockchain platform (pictured below). Dubbed as Binance Smart Chain (BSC), it will run on a consensus mechanism that will enable faster processing & transaction times, coupled with strong on-chain governance.
The architecture of cross-chain communication is as in the above diagram. To accommodate the 2 heteroid systems, communication handling is different in each direction — Credit: BNC White Paper
Although the premier crypto exchange platform avoids calling BSC as a competitor to Ethereum, the features described in its White paper will enable users to create complex DApps on Ethereum’s virtual machine with low latency, faster execution times, powered in turn by a more efficient Proof of Staked Authority. This itself is akin to running a more efficient Ethereuem DApps platform.
The Proof of Staked Authority consensus algorithm is basically a hybrid between EOS’ delegated proof of stake (dPoS) system and a proof of authority (PoA) system — a much more efficient and environmentally friendly mechanism when it comes to comparing with Ethereum’s Proof of Work (PoW). Keep in mind though that Ethereuem itself is in process of shifting to a more efficient Proof of Stake (PoS) via an upgrade called Ethereuem 2.0.
Like the dPoS in EOS, the novel Proof of Staked Authority mechanism would have a set of 21 active validators who would take turns in producing blocks while being voted by Binance coin (BNB) stakeholders to state their preference. The protocol would also feature a protection mechanism called Slashing, which would punish validators against malicious or negative behavior.
Rewards on the BSC will be in the form of a transaction fee only. And each validator’s share of the transaction fees would not depend on how much stake is pledged to them, therefore, discouraging users from pledging too much to popular validators. Another key feature of the novel BSC platform would be its interoperability with Ethereuem blockchain, which would contribute to the growth of the blockchain ecosystem, as proclaimed by the Binance spokesperson.
Despite some in the Cryptoverse terming BSC as a strong contender for the mantel of “Ethereum Killer,” Binance has kept low-key on the topic. Whatever the case, BSC’s innovation is certainly going to make the interoperability of DApps among different platforms a breeze.
Originally Published on Medium