Token standardization in crypto has helped to build a foundation for an entire blockchain ecosystem as we know it.
Smart contract platforms like Ethereum and Binance Smart Chain (BSC) allow you to build and launch your decentralized applications (DApps). Each DApp comes with a unit of value, and a tradable asset called a “token,” used to provide a utility or perform certain economic and governance-related activities.
These tokens follow a specific framework called a Token Standard, a set of rules and guidelines that must be incorporated into the smart contracts. If a token doesn’t follow and comply with the desired token standard, it won’t be compatible and interact with the rest of the ecosystem applications, such as wallets and exchanges.
Every blockchain platform has its own set of token standards that smart contracts have to follow. You might be familiar with ERC-20 tokens; these are the Ethereum-based tokens that follow the ERC-20 token standard. Similarly, Binance Smart Chain (BSC) comes with a token standard called BEP-20, which has to be followed by every BEP-20 token launched on the Binance Smart Chain platform.
This guide will discuss and demystify the BEP-20 token standard and explore some of the most promising BEP-20 tokens on the Binance Smart Chain platform.
What Is Binance Smart Chain?
Binance Smart Chain (BSC) is a blockchain platform with the ability to run smart contracts. It works in tandem with Binance Chain, a separate blockchain platform optimized for ultra-fast trading with much higher transaction throughput.
Binance, one of the largest centralized cryptocurrency exchanges, launched Binance Chain back in 2019 to support its decentralized version of the exchange, Binance Decentralise Exchange (DEX) is a crypto exchange platform that is built upon blockchain technology and negates the need .... Binance Chain was explicitly designed for fast and non-custodial (decentralized) trading. It came with a native utility token called BNB, with a fixed supply of 200 million BNB tokens.
However, Binance Chain doesn’t provide enough flexibility, due to a lack of support for smart contracts. This lack of flexibility was an intentional system design approach to prevent network congestion.
If a platform is optimized for fast, non-custodial trading, the ability to host and run smart contracts can bring a lot of congestion to the network. A famous example which validates this statement is the blockchain game CryptoKitties, which chocked the entire Ethereum network at the height of its popularity.
In September 2020, Binance Smart Chain (BSC) was launched, a programmable smart contract blockchain platform that runs parallel to the Binance Chain. BSC is fully compatible with Ethereum Virtual Machine (EVM), so the developers can migrate their existing EVM-based applications directly to the BSC platform.
Even though BSC runs parallel to the Binance Chain platform, it shouldn’t be categorized as a sidechain or a Layer-2 scalability solution. BSC is an independent and stand-alone blockchain that can keep running even if the Binance Chain goes offline.
Since BSC is EVM-compatible, developers can not only port their DApps in a frictionless way, but the users can use their favorite tools like Metamask to interact with BSC. This native compatibility will help BSC to take advantage of the rich Ethereum ecosystem that exists today.
BSC uses Proof of Staked Authority (PoSA), a variant of the Proof-of-Stake (PoS) consensus algorithm, and achieves ~3-second average block time that makes it much faster than Ethereum. With PoSA, validators secure the network by staking their BNB coins. Validators also receive transaction fees accumulated from every block they validate.
It’s worth noting that there are no block rewards for validators. They can only stake BNB tokens and accumulate transaction fees of the blocks they validate on the network. BNB is a deflationary token, as it comes with a fixed supply, and the Binance team regularly carries out coin burns.
Binance Chain and BSC have a dual-chain architecture with cross-chain compatibility. These platforms complement each other. Users can seamlessly and quickly transfer assets across both chains using a supported wallet, like Binance Chain Wallet or Trust Wallet.
Another important aspect of major assets such as BTC, ETH and others is that they are already on Binance Chain as Peggy Coins (BNB tokens pegged to external assets). You can seamlessly transfer these pegged coins to BSC and use them in various DApps on the BSC platform.
What Is BEP-20?
BEP-20 is a Binance Smart Chain token standard that extends Ethereum’s ERC-20 standard. BEP-20 defines a framework and a set of rules that BSC-based tokens have to follow. BEP-20 is fully compatible with both ERC-20 and Binance Chain BEP-2 token standards.
The BEP-20 token standard applies to all kinds of tokens that will launch on the BSC platform, such as tokenized securities and stablecoins. Peggy Coins, which are BEP-20 tokens pegged to other crypto assets such as BTC and LINK, also follow the BEP-20 token standard.
The transaction fees for all the BEP-20 tokens are paid with BNB, the native token of the Binance Chain. This mechanism is part of the PoSA consensus rules and provides an incentive to the validators, as they accumulate transaction fees for the blocks they validate on the BSC network.
Since Binance Chain and BSC complement each other and run in tandem, BEP-20 tokens can be used on the Binance Chain for fast trading on the Binance DEX platform. However, BEP-20 versions of the pegged tokens outside the Binance ecosystem need to be swapped for their native asset because the cross-chain interoperability is only between Binance Chain and BSC.
Creating your BEP-20 token is relatively simple and straightforward, even if you don’t have any prior programming experience. CoinTool provides an intuitive user interface for creating your BEP-20 tokens. You only need to provide the name of your token, a symbol, and a few other parameters to successfully create your BEP-20 token.
Let’s briefly discuss these parameters for a better understanding of the BEP-20 token standard.
Can Burn — This parameter specifies whether the BEP-20 tokens can be burned to decrease the supply over time, making it deflationary.
Can Mint — This parameter is opposite to Can Burn, and it specifies whether new BEP-20 tokens can be minted to increase the supply over time, making it inflationary.
Can Pause — This parameter is crucial in case of a malicious attack or software vulnerability. It specifies whether all the operations associated with your tokens can be paused when needed. Only the creator of a token or an address with necessary permission can pause all the operations.
Blacklist — This parameter is similar to Can Pause. It gives you the ability to blacklist specific addresses that are acting maliciously. Both of these parameters give a lot of control to the central authority (the creator), so they won’t be suitable for many use cases.
Once all the parameters are specified and the token is generated, you will have complete ownership of the token, and it will be disbursed to your specified address. The smart contract for the token will be automatically published to BSC, and you only need to pay the required transaction fees.
BEP-20 vs. Other Tokens
There are many programmable blockchain platforms with the ability to run smart contracts, and each one has a different token standard. This section will compare BEP-20 with two of the most prominent and leading token standards available today: ERC-20 and BEP-2.
BEP-20 vs. ERC-20
BEP-20 and ERC-20 token standards have many similarities. BEP-20 is an extended version of the ERC-20 standard and has the same functions for providing foundational elements, such as token issuance, token transfer and ownership.
Binance has recently introduced a cross-chain bridging service called the Binance Bridge which provides interoperability between different blockchains. The project currently supports cross-chain transfers for ERC-20 and TRC-20 tokens.
With Binance Bridge, you can convert your native crypto assets to BEP-2 or BEP-20 tokens. Let’s explain this with the following example: If you’re transferring ERC-20 stablecoin to BSC, Binance Bridge will do the cross-chain conversion, from ERC-20 to BEP-2/BEP-20 tokens, which can be used on either Binance Chain or DApps running on BSC.
Binance Bridge charges no conversion fees, and you only have to pay the network fees of the associated blockchain for the transaction. You have to be a little patient while waiting for conversion because it takes a few minutes.
This process of conversion from the native blockchain (ERC-20) to BEP-20 is called Peg-in. This conversion also works in the opposite direction (called Peg-out), i.e., converting back from BEP-20 to the native blockchain (ERC-20). A compatible wallet such as Binance Chain wallet or MetaMask is needed to complete the Peg-in and Peg-out process.
BEP-20 vs. BEP-2
BEP-2 is the token standard on Binance Chain. The BEP-20 and BEP-2 standards work in parallel, and they are fully compatible with each other. BNB, the native token of both Binance Chain and BSC, fuels the BEP-20 and BEP-2 across the network.
Binance Smart Chain can be thought of as an extension of the Binance Chain. They both follow the dual-chain architecture and are fully interoperable with each other. Users can easily swap BEP-20 tokens from the BSC with BEP-2 tokens on the Binance Chain right from their supported wallet (Binance Chain Wallet, Trust Wallet).
Even though Binance Chain and BSC work in parallel, you have to use their native tokens. If you’re on Binance Chain or Binance DEX, you can only use BEP-2, and if you’re interacting with a DApp on BSC, you can only use BEP-20 or a wrapped implementation (pegged assets).
The Binance Bridge Project also provides cross-chain liquidity on Binance Chain and Binance Smart Chain. Users can easily Peg-in and Peg-out their BEP-20/BEP-2 wrapped assets. The swapping between BEP-20 and BEP-2 happens seamlessly right from the supported wallet.
Major BEP-20 Tokens
The Binance Smart Chain ecosystem is flourishing, and the platform is getting enormous amounts of traction. This section will discuss some of the most prominent and popular BEP-20 tokens launched on the BSC platform.
Binance Pegged Tokens (Peggy Coins)
Peggy Coins are a class of BEP-20 tokens on the BSC platform which are pegged and fully backed 1:1 crypto assets. As of this writing, there are a total of 34 most-popular pegged BEP-20 tokens available on the BSC platform, including ETH, BTC, USDT, LTC and ADA.
Users can either purchase these pegged tokens or swap them with their existing tokens to use on the BSC platform. Additionally, users can redeem these pegged tokens to the native crypto assets. Many Decentralized Finance (DeFi) takes the decentralized concept of blockchain and applies it to the world of finance. Build... DApps are launching on the BSC platform, and these pegged tokens allow users to interact with them and benefit from their offerings.
PancakeSwap Token (Cake)
PancakeSwap is by far the single most popular DApp on the BSC platform, with a market cap surpassing $5.17 billion as of writing. Think of PancakeSwap as a BSC counterpart of Ethereum’s SushiSwap and Uniswap, with added perks and features.
PancakeSwap is a decentralized exchange (DEX) that allows users to swap BEP-20 tokens. Unlike centralized exchanges like Binance, PancakeSwap doesn’t use the traditional order-book mechanism to execute trades. Instead, it uses liquidity pools and the Automated Market Maker (AMM) model to execute trades in a decentralized manner.
Liquidity Providers (LPs) provide funds to the liquidity pool and earn LP tokens as a reward. Using LP reward tokens, liquidity providers can farm CAKE, a BEP-20 governance token of PancakeSwap. They can further stake their CAKE tokens into PancakeSwap syrup pools to earn more rewards.
BakerySwap is another decentralized exchange on the BSC platform, with total The market capitalization (or market cap) of a cryptocurrency is a measurement of its market value. In other words, it... surpassing $3.5 billion as of writing. It might sound similar to PancakeSwap, but it comes with more enhanced features, such as an NFT Supermarket, BakerySwap Launchpad, and NFT Combo pool.
Like PancakeSwap, BakerySwap is a decentralized exchange that uses Automated Market Maker (AMM) and liquidity pools instead of a traditional order-book mechanism. Liquidity providers earn LP tokens as rewards, according to their share of the pool. By using their LP tokens, liquidity providers can farm BAKE, a BEP-20 governance token of BakerySwap.
BakerySwap also comes with an NFT Supermarket where you can buy and trade different non-fungible tokens. BakerySwap also has a dedicated launchpad where you can get early access to newly launched NFT projects on the BSC platform.
How Do You Get BEP-20 Tokens?
Getting BEP-20 tokens is as simple as obtaining any other token. Here are four different ways you can get hold of some BEP-20 tokens:
Binance — Binance is one of the biggest centralized crypto exchanges. You can create an account there, search for your desired BEP-20 token and purchase it either with fiat or crypto.
Binance DEX — Binance DEX is the decentralized version of the Binance crypto exchange. You can use Binance DEX to discover and buy promising BEP-20 tokens in a non-custodial environment.
Trust Wallet — Trust Wallet is the most popular multicurrency wallet available on the market today. You can discover and purchase BEP-20 tokens right from your Trust Wallet interface, which is super convenient.
PancakeSwap — You can also use an AMM-based decentralized exchange to accumulate BEP-20 tokens by swapping your existing crypto assets supported on PancakeSwap.
How Do You Store BEP-20 Tokens?
Storing your BEP-20 tokens is as easy as it can get. All you need is a wallet that supports BEP-20 tokens. Here are three different ways you can store your BEP-20 tokens:
Metamask — Even though Metamask is a popular Ethereum wallet, you can connect Metamask with BSC and store your BEP-20 tokens.
Trust Wallet — Trust Wallet is a decentralized multicurrency wallet. With Trust Wallet you can send, receive, store, swap and purchase BEP-20 tokens without even leaving the app’s interface.
Binance Chain Wallet — Binance Chain Wallet comes as a browser extension available on Chrome and Firefox. It is super easy to use and helps you store BEP-20 tokens and interact with DApps on the BSC platform.
The Bottom Line
Binance Smart Chain was launched back in May 2020. Since then, it has gained significant momentum, and we can see a lot of promising DApps with BEP-20 tokens on the platform already.
With low fees and high transaction throughput, BEP-20 tokens provide a much better alternative to Ethereum’s ERC-20 counterpart. Seamless swapping between BEP-20 and BEP-2, along with BEP-20 versions of the pegged assets, can be game changers for the entire ecosystem.