Binance is launching a smart contract blockchain to expand its ecosystem.
Binance Smart Chain is designed to work in parallel with the existing Binance Chain, which is already up and running, powering Binance’s decentralized exchange.
The new standalone blockchain will have self-contained technical and business functions so that it can continue to run even if the Binance Chain stops working for a short period.
According to the newly released white paper, the Binance Smart Chain blockchain is compatible with Ethereum, expanding the blockchain ecosystem and allowing it to work with most decentralized applications with zero or minimal charges.
“To take advantage of the relatively mature applications and community, BSC [Binance Smart Chain] chooses to be compatible with the existing Ethereum mainnet…
The implementation should leave room for BSC to catch up with further Ethereum upgrades.”
The smart contract layer from Binance will combine the EOS delegated proof-of-stake and proof-of-authority systems to power a faster network performance and increased scalability. According to the development team, it will offer several key features: smart contracts, Binance Coin (BNB) staking, an open source platform, Ethereum compatibility, fast block times and low transaction costs.
Messari researcher Wilson Withiam says the latest move by the crypto giant is a direct challenge to Ethereum.
“Make no mistake; BSC is a clear competitor to Ethereum and, like EOS, one with seemingly endless financial support.
But money can’t always override network effects, so in the near term, BSC is a more credible threat to other emerging ETH Killers.”
By allowing staking, the new chain is intended to boost functionality for Binance’s native token BNB, which just completed its 11th and largest coin burn on Friday, shrinking the total supply by 3,373,988 units or 1.69% valued at $52.4 million.
Binance CEO Changpeng Zhao confirms the company is on track to make over $1 billion in profit in 2020 due to record-high trading volumes across its crypto offerings.