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Binance launches "Binance Smart Chain" testnet, supporting smart contracts and Ethereum compatibility

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Binance launches "Binance Smart Chain" testnet, supporting smart contracts and Ethereum compatibility

According to the official announcement from the cryptocurrency exchange Binance, Binance is set to launch a blockchain system based on Ethereum compatibility, with its platform token Binance (BNB) as the native token.

  • Based on Delegated Proof of Stake, Ethereum compatible
  • Binance DEX will be built on a dual-chain architecture

Binance Smart Chain

Unlike the original "Binance Chain," the system named "Binance Smart Chain" as per its latest whitepaper features the smart contract functionality known from Ethereum. Its key features include:

  • Compatible with the Ethereum Virtual Machine (EVM), supporting all existing Ethereum tools with lower transaction fees.
  • Native dual-chain interoperability allowing cross-chain communication for high-performance dApps.
  • Based on a DPoS (Delegated Proof of Stake) consensus mechanism with 21 validating nodes to provide power decentralization and encourage extensive community participation.

Binance claims this idea originated from the Binance developer community proposing a blockchain parallel to the current Binance Chain, named Binance Smart Chain, which retains the high performance of Binance Chain while supporting smart contract functionality. The innovative solution seamlessly integrates the interoperability and programmability of the Ethereum Virtual Machine (EVM) with Binance Chain.

Binance's decentralized exchange (Binance DEX) will be built on this dual-chain architecture. Binance stated:

The first practical and widely-used smart contract platform is Ethereum. However, for the relative maturity of applications and the Ethereum community, Binance Smart Chain chooses to be compatible with the existing Ethereum mainnet. This dual-chain architecture allows users to build decentralized applications and digital assets on one blockchain while trading on another.

The Block's research director Larry believes this is essentially a direct challenge to Ethereum.

BNB Staking Mechanism

As Binance Smart Chain operates on a Delegated Proof of Stake (DPoS) mechanism, its native token is BNB, allowing token holders to participate in staking and receive rewards. Binance's statement carries weight:

For all interested in investing in BNB and current holders, this presents an appealing opportunity to support the development of Binance Smart Chain while earning rewards.

It was reported last year that Binance's decentralized exchange seemed to be "squeezing out Ethereum." Binance CEO CZ vehemently denied this and mentioned multiple times that Binance Chain lacked smart contract functionality. He explained on Twitter last year:

Binance's decentralized exchange is not meant to challenge Ethereum. We don't even have smart contracts. Launching DEX is just a challenge for us as an exchange.

https://twitter.com/cz_binance/status/1118868110977581056

And now, while Binance Chain still lacks smart contracts, Binance Smart Chain has them!

Currently, the Binance CEO has not responded to this, only expressing on Twitter the hope to soon release version 2.0 of Binance Smart Chain.