Cryptonomics: Beginners Handbook to BSC DeFi

It's been a long search for a blockchain protocol that will enable scalability while still upholding decentralization and security integrity. The Binance Smart Chain (BSC) has brought just that, scalability alongside quick and cheap transactions.

By
Rebecca Asseh
on
March 24, 2021
Category:
Cryptonomics

What Exactly is the DeFi Ecosystem?

The DeFi market’s growth has been exponential. The total value locked (TVL) in DeFi contracts grew from just $2.1 million in September 2017 to a present $41.34 Billion. There has been a massive increase in the market capitalization of almost all decentralized applications (dApps).

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However, the question is - what exactly are DeFi coins? The term DeFi stands for Decentralised Finance. The DeFi market is built on the blockchain and is a decentralized ecosystem. These markets offer traditional financial services in a decentralized manner. One category of dApps is decentralized exchanges (Dex) that allow direct peer-to-smart contract trading without identification. DeFi platforms also offer more than just crypto exchanges; they allow for the borrowing and lending of cryptocurrency, derivatives, and various yield farming mechanics.



What is Binance Smart Chain?

Most DeFi projects are built on the Ethereum blockchain. The network usually is swamped with transactions. Users are laden with high transaction fees and slow transaction times. Hence, the need for a solution; the Binance Smart Chain (BSC) launched in September 2020. The BSC is a blockchain protocol that runs parallel with Binance Chain (a blockchain software developed by Binance and its community). The Binance Chain was created to facilitate fast trading and deal with large transaction loads.  Unlike Binance Chain, the Binance Smart Chain uses the proof of stake authority consensus algorithm and focuses on powering smart contracts. With the proof of stake authority algorithm, 21 validator stake BNB to secure the network. In turn, they receive transaction fees as a reward for securing the network.

BSC is also compatible with the functionality of the Ethereum Virtual Machine (EVM). The EVM allows for Ethereuem dApps to be easily migrated or built on the BSC. More than 60+ DApps are operating on BSC. Applications such as MetatMask have been configured to work with BSC. Even TrustWallet offers BSC compatibility, supporting multiple BEP-20 tokens, the native BSC token standard.

With the Binance Smart Chain, any user can access a plethora of dApps. You can also explore blocks on the chain via BscScan, allowing you to check your transaction history. On the other hand, developers can issue new tokens, migrate across existing Dapps, develop wallets, and even become validators of BSC.


Navigating the Binance Smart Chain Ecosystem

When trading on Binance DEX using the Binance Chain, you’ll need to use BEP2. However, the BSC supports the BEP-20 token standard, boasting smart contract capability. To receive BEP-20 tokens, users can use TrustWallet, the Binance Bridge, or withdraw from the Binance exchange. Using the Binance Bridge, users can convert tokens between TRC-20, ERC-20, and BEP-20 token standards.

There is a ton of dApps on the BSC, but the main categories consist of Dexs, yield optimizers, synthetics, NFTs, and etc. Some popular Dapps on BSC include Pancake, BurgerSwap, Spartan Protocol, and Autofarm. A great place to dive into projects is through our yield farming and project page.



How to use Binance Smart Chain on Trust Wallet

Now that we have established what the BSC is all about and how we can navigate its ecosystem. Let’s take a look at how to use Dapps through third-party wallets. Trust wallet is one of the best cryptocurrency wallets to store your BEP-2, BEP-20, ERC-20 and ERC721, tokens. The TrustWallet dApps integration allows you to access DeFi projects and swap tokens with ease while using the wallet to store them. In the following tutorial, usage of TrustWallet and how to interact with the PancakeSwap dApp is explained.



Conclusion

The BSC offers innovation in the DeFi ecosystem, providing faster and cheaper transactions. Also, it is easy to build on, and migration is not complicated. DeFi is currently taking over the financial landscape, and having a more reliable protocol to handle transactions is a welcomed development. DeFi provides more returns, and getting onboard is hassle-free when compared to traditional finance. The possibilities are endless, and DeFi growth is just beginning to spur; don’t miss the train! Overall, the BSC offers users an efficient gateway into the DeFi sector.

For those who wish to learn more about the Binance Smart Chain and DeFi, browse through the following articles:

Essentials: Cryptonomics

Essentials: Tutorials

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Rebecca Asseh

Rebecca Asseh is a crypto and blockchain Writer with an interest in emerging technologies and financial psychology. When she's not writing, she's watching medical and crime shows.

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