The crypto exchange behemoth Binance has launched a new parallel blockchain to Binance Chain – called Binance Smart Chain (BSC) – to provide an alternative blockchain network for DeFi and Web 3.0 apps.
In this guide, you will learn about Binance Smart Chain (BSC) and discover a list of the top five DApps on BSC.
What is Binance Smart Chain?
Binance Smart Chain is a blockchain that runs parallel to Binance Chain, the original Binance blockchain.
BSC is different from Binance Chain because it supports smart contracts, decentralized applications (DApps) and is compatible with Ethereum Virtual Machine (EVM). DApp support means that people can launch decentralized finance (DeFi) projects on BSC. Also, BSC is cross-chain compatible, allowing users to transfer assets between Binance Chain and Binance Smart Chain.
BSC uses a consensus mechanism called Proof of Staked Authority (PoSA) and has a block time of about three seconds. Participants have to stake BNB, the native cryptocurrency, to become validators. Validators are rewarded in the form of transaction fees.
Since launching BSC in September 2020, the platform has grown substantially. The blockchain’s daily transaction volumes increased by 300 percent to YTD as of February 10, 2021, surpassing Ethereum’s daily transaction volumes by 30 percent.
Binance Smart Chain’s early success can be attributed to its low transaction fees, fast processing speeds, and compatibility with Ethereum Virtual Machine, which makes it easy for developers to switch from Ethereum to BSC.
On April 15, 2021, the daily transaction volumes on BSC were 4.7 million compared to Ethereum’s 1.2 million.
Top Binance Smart Chain DApps
BSC is becoming a popular Ethereum alternative for launching DeFi protocols and deploying decentralized applications. Below is a list of the top five DApps on BSC based on dollar amounts locked in the smart contracts, according to data provided by DApp Radar.
PancakeSwap is an automated market maker (AMM) built on BSC that allows users to trade digital assets that run on BSC. Additionally, PancakeSwap allows DeFi investors to yield farm and stake crypto assets to (potentially) earn high APYs on their virtual asset holdings.
A Binance Smart Chain-compatible wallet is required to use PancakeSwap, such as Trust Wallet or MetaMask. The architecture of the blockchain allows Ethereum wallet MetaMask to interact with BSC DApps. Then, you access the website and connect your wallet.
At this point, you can start to use the platform to swap Binance Smart Chain (BEP20) assets, provide liquidity to trading pools to earn trading fee revenues, and stake liquidity provider tokens to earn yield farming rewards.
You can also play the lottery on PancakeSwap to win rewards and register to win a special NFT. The platform has an Initial Farm Offering (IFO) page where users can access new tokens that have been launched.
PancakeSwap is the largest automated market maker (AMM) on BSC and was launched by anonymous developers. The protocol has been audited by CertiK – a company that offers security audits to blockchain projects.
The total value locked on this platform was $8.2 billion at the time of writing.
Venus is a DeFi lending platform on BSC that enables users to borrow against collateral without having to pass a credit check. Conversely, lenders can deposit funds into a lending pool to receive an above-average variable APY on their digital assets.
The platform has two BEP-20 based tokens: VAI and XVS. VAI is a stablecoin pegged to the US dollar, while the community uses XVS for governance and voting. Users can mint VAI on-demand after releasing a minimum of 200 percent collateral and receive XVS as an incentive to contribute liquidity to lending pools.
To earn interest on your digital assets using Venus, you need to connect a Binance Smart Chain wallet to the DApp. Then, you need to choose which asset you would like to deposit and confirm the amount you want to lend. To complete the process, you will need to sign the transaction using your BSC wallet. You will start earning interest as soon as the next Binance Smart Chain block has been found.
The Venus community controls the governance of the protocol, while Swipe is the project behind the protocol. Currently, Venus boasts a total locked value of $10+ billion.
Autofarm Network is a DeFi platform that provides a DEX and yield aggregator. The platform offers vaults that “automate the best yield farming opportunities.” Vaults execute automated actions, like using assets as liquidity and collateral, and compound yields automatically.
Autofarm also provides an auto-swap feature that allows users to swap from one token to another. This feature is in the public alpha stage of development.
Like all other DeFi platforms, you need to connect your wallet first. Autofarm supports MetaMask, Wallet Connect, and Binance Chain Wallet. The platform offers cross-chain products across BSC and Huobi ECO Chain (HECO).
The total value locked in this platform’s smart contract is over $1.8 billion.
Nerve Finance is an automated market maker that allows users to trade stablecoins and pegged assets on Binance Smart Chain. On this platform, you can swap between tokens and earn the native cryptocurrency NRV for staking LP tokens. You can also earn NRV by LPing the NRV/BUSD pool on PancakeSwap.
Nerve supports MetaMask and Binance Chain Wallet. You will need to connect either of these wallets to start trading or earning using the platform. Users on Nerve also receive vested rewards. That means they can claim a third of the reward upfront and the other two-thirds after six months.
An anonymous team launched Nerve Finance on March 1, 2021. CertiK has audited the platform’s smart contracts. You can view the audit details on the website.
The total value locked on Nerve is $482 million.
xWIN refers to itself as a DeFi investment management platform that aims to make investing easier by providing vaults for DeFi investors who want exposure to BSC assets.
The developers have integrated PancakeSwap into xWIN, which means that users can stake and farm in this protocol. To make use of this feature, deposit Binance Coin (BNB) and the xWIN yield optimizer vault will automatically stake and farm in PancakeSwap to earn yields. The vault will auto-compound the farming returns by reinvesting them in the pool.
xWIN also offers several sector index funds in BSC, a trading vault, and several other vaults to help users maximize returns. Investors can also farm the xWIN token. The total value locked is $1.5 million.
Note that xWIN is in beta, and you will need a MetaMask wallet to use the platform. The co-founders of xWIN are Calvin Thong and Fumihiro Arasawa.
Use At Your Own Risk
Deploying your digital assets in DeFi protocols is considered a high-risk crypto investment practice.
DeFi protocols on Binance Smart Chain are still relatively new and may have code vulnerabilities that are yet unknown that hackers could potentially exploit. Moreover, many DeFi apps have been built by anonymous teams, which means there will be next to no legal recourse if funds are lost due to operational errors or theft.
To avoid these risks, users should only invest what they can afford to lose. Moreover, investors are urged to conduct their own due diligence before depositing funds into any DeFi protocol.
This article is for informational and educational purposes only and should not be construed as investment, financial, legal, or other advice. Investing in cryptocurrencies and tokens is highly speculative, and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.