DeFi on the Binance Smart Chain (BSC)

[blockchainXtech]

DeFi on the Binance Smart Chain (BSC)

The Binance Smart Chain is therefore a blockchain parallel to the Binance Chain , which also works with bep20 token generator BNB, and which was intended to allow the creation and execution of smart contracts . The BNB token can also be staked on this blockchain, in order to operate the network.

This blockchain is based on the Proof of Stake Authority (PoSA). This mechanism, unlike Proof of Work (PoW), consumes almost no electricity, and allows extremely fast transactions. But if you’ve been following our other articles, you know that performance doesn’t come without a cost. On the BSC, only 21 nodes are used to validate transactions, and these nodes are chosen based on a vote, where BNB holders can vote for the nodes they want to see used. The BSC is therefore not that decentralized.

As one might suspect, it is extremely dependent on Binance and its token, BNB. The strike force and gigantism of Binance, however, makes it possible to bring both a lot of credit and a supply of projects to the BSC, and the advantages it offers tend to make users forget its centralization.

In the future, new competitors will come to face the BSC and the Ethereum blockchain, such as the Cardano blockchain for example. Only the arrival of competition will allow us to see if the DeFi world prefers decentralized options that are not backed by a central entity.

Introducing DeFi

As you probably know, DeFi (or decentralized finance ) aims to replicate the financial system we know, without any intermediary with a central authority. The markets are free and regulated by supply and demand, and many financial mechanisms (loans, derivatives, futures, borrowings, etc.) are integrated to offer users a truly complete financial system.

DeFi had exploded in 2020 with the Ethereum blockchain, which allowed smart contracts to be executed, and ERC-20 tokens to be created. These tools have given the possibility to many projects to be created, by offering services in the DeFi universe by means of smart contracts and new cryptocurrencies.

Prior to the release of the Binance Smart Chain, DeFi was already recording almost $10 billion in value locked in smart contracts (total value locked) on the Ethereum blockchain alone. Since then, the amount locked in DeFi has risen to $30 billion, and it shows no sign of slowing down.

While BSC is still just a young foal in DeFI, it is growing at full speed, recently going from 300 million to 600 million in just a few weeks.

create bep20 token has proven itself as a smart contract platform and DeFi has begun a transition to BSC.