BEP-20 tokens are the new wave in DeFi. They are especially famous because of their relation to the Binance Smart Chain – a fast-rising blockchain network. With everyone talking about BEP-20 tokens, we figured you’d want to know about them too. 😉
To help you understand what we mean, we’ve put together a simple explainer that examines BEP-20 and tokens on the Binance Smart Chain. Class is in session, people; let’s learn something! 🙇🙇♀️
What is the Binance Smart Chain?
As the name suggests, the Binance Smart Chain (BSC), is a blockchain platform that was built by Binance. It was created to solve issues that the Ethereum blockchain has.
Ethereum’s Just Too Big
Since 2020, decentralized finance (DeFi) has grown a lot. DeFi app developers are doing really cool things, but most of them use the Ethereum blockchain to work. With more apps, the Ethereum blockchain has become crowded, leading to higher transaction fees, and slower transactions.
BSC serves as an alternative. Interestingly, BSC has grown to almost twice the number of transactions on Ethereum.
Remember not to confuse the Binance Smart Chain with Binance Chain. The second mostly hosts BNB.
Now… for the Main Course: What is BEP-20?
Simply put, BEP-20 is a token standard or design for the Binance Smart Chain. It serves the same function as ERC-20 on the Ethereum blockchain.
When you want to create a token on the BSC, you will have to follow certain guidelines. BEP-20 is the collection of these guidelines. Some of the most important details you will need to provide include:
- Who can spend the tokens
- How the tokens can be spent
- The rules for how the token can be used
Transfers of BEP-20 tokens are done with BNB. On the blockchain, there are network validators (people who confirm each transaction and prevent criminal activity). For doing this work, these validators get BNB tokens. 🤑
BEP-20 vs ERC-20
As we explained, BEP-20 and ERC-20 are similar. The difference is in their structures and creators. Interestingly, BNB actually started as an ERC-20 token 😃.
The BSC already works with the Ethereum blockchain, so developers can move their Ethereum-based projects to the BSC whenever they want.