Binance Smart Chain, the company's parallel chain, creates a formidable ecosystem to decentralize financial services with blockchain app development.
It's not unreasonable to expect that DeFi will be the next "great thing" in global finance, given its rapid growth and the amount of new developing use cases.
Decentralized Finance (DeFi) is an acronym for decentralized finance.
DeFi refers to the internet-native financial market. It presents opportunities to develop and offer products and services similar to traditional finance but in the form of decentralized, autonomous applications built on blockchain technology, like crypto exchange platform development.
Decentralized apps can be built on a variety of blockchain networks, which DeFi initiatives can take advantage of. As a result, selecting a robust blockchain protocol that provides a dependable, inexpensive, fast, and user-friendly platform for DApps is one of the most critical decisions a DeFi project must make.
Binance Smart Chain (BSC) is one of the greatest blockchains for decentralized finance and DApp development since its inception in September 2020.
Binance Smart Chain (BSC) is a blockchain protocol developed by Binance that works alongside Binance Chain. It, on the other hand, powers smart contract capabilities and is compatible with the Ethereum Virtual Machine, unlike Binance Chain (EVM).
Furthermore, BSC boasts one of the fastest blockchain transaction times and lowest fee structures, making it desirable for developers to develop DeFi dApps on the Binance Smart Chain protocol.
BSC secures the network through a consensus process known as Proof of Staked Authority (PoSA), in which 21 validators stake BNB, the Binance ecosystem's native token.
However, unlike many other blockchains, BSC does not provide block subsidies or allow for the minting of new BNB as a block reward. Validators, on the other hand, get paid transaction fees in exchange for securing the network.
The BEP-20 token from BSC follows the same format as the popular ERC-20 tokens from the Ethereum network. There are already 60+ DApps in operation on it, with the majority focusing on decentralized finance solutions.
Also, Read | Binance Smart Chain (BSC) for Smart Contracts Development
The Binance Smart Chain is constructed on a dual-chain architecture, allowing users to transfer assets between blockchains with ease. Its interoperability allows users to tap into a huge ecosystem with a wide range of applications. Interoperability is a major element that DeFi proponents value and BSC is at the forefront of making this feasible.
Users' cost when they make a transaction on a blockchain is referred to as transaction fees or blockchain fees. When block miners or validators verify that a transaction is genuine and has been processed and stored to the blockchain, they receive this fee as a reward for transaction validation
The majority of DeFi apps entail a large number of transactions, each of which incurs a cost. Thus, it becomes essential to consider a blockchain for a DeFI protocol or dApp with significantly lower fees.
The Binance Smart Chain and Ethereum blockchains are two of the most popular blockchains for DeFi projects. When it comes to blockchain costs, however, BSC is far less expensive than Ethereum.
Ethereum recently recorded fees of over $100 for a single transaction, but BSC charges between $0.01 and $0.05 for similar services.
Before a transaction can be completed, it must receive several confirmations on the blockchain. The purpose of confirmations is to prevent double-spending.
The greater the confirmation time, the longer it will take to complete a transaction. Another thing DeFi developers must consider before picking a blockchain is avoiding needless transaction delays.
Scalability issues have hampered Ethereum, resulting in congestion and lengthier transaction completion times.
Binance Smart Chain was created to improve scalability in high-throughput blockchains so that smart contracts may be easily implemented to create scalable decentralized apps. It has a similar structure to the existing chain, which is a high-performance, low-latency blockchain, however, it cannot accommodate smart contracts due to a design choice to improve speed.
It is compatible with smart contracts for decentralized app development and linked to the high throughput of its parallel chain to achieve faster transaction processing speeds and quicker confirmation times while remaining programmable.
Also, Read | Exploring BEP-20 Token Standard on Binance Smart Chain
The followings are a few leading DeFI dApps on Binance Smart Chain.
PancakeSwap is one of the leading automated market maker (AMM) protocols operational on the BSC platform. It will not be justified to mention BSC in 2021 if we do not describe the PancakeSwap exchange properly built over it.
In 2021, the BSC-based decentralized exchange saw significant growth in both trading volume and its governance token CAKE. PancakeSwap, like Uniswap and SushiSwap, allows you to swap tokens for BEP-20 tokens. Users can also make passive revenue by supplying liquidity, participating in NFT lottery draws, participating in token sales, competing for leaderboard positions, and so on.
After Ethereum's UniSwap, PancakeSwap has become the second most popular DEX.
BakerySwap is a decentralized automated market-making (AMM) system on BSC, as well as the platform's first NFT trading platform, Bakery NFT Supermarket. BakerySwap aspires to be a more efficient and cost-effective version of Uniswap.
BAKE tokens are the platform's native BEP-20 governance tokens, and users can earn them by providing liquidity on BakerySwap. BAKE is a one-of-a-kind NFT that can be used to create a random combo meal (Non-fungible token). Your one-of-a-kind NFT combination is both a collectible and a BAKE farming equipment. Each NFT combination has a staking power that may be used to earn BAKE by staking it.
On BSC, Venus resembles a cross between Compound and MakerDAO. It's an Ethereum borrow-lending system similar to Compound or Aave. It's a decentralized money market where you may borrow and lend BEP-20 tokens at interest rates determined by an algorithm. Venus also supports VAI, a decentralized stablecoin backed by a basket of crypto assets.
Binance Smart Chain offers faster and less expensive transactions than most blockchains, and developers may easily migrate from Ethereum to BSC. Furthermore, Binance is aggressively supporting the creation of new DeFi dApps with Binance Smart Chain by launching a $100 million developer fund to fund promising initiatives.
Connect with our team of blockchain development experts for more information about how to enter the BSC development space for your DeFi projects.