How To Use BNB Chain in 2022
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How To Use BNB Chain in 2022

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3 months ago

CoinMarketCap Alexandria looks at the recently rebranded BNB Chain, what it aims to achieve and how you can participate.

How To Use BNB Chain in 2022

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The Binance Smart Chain was recently rebranded to the BNB Chain in an effort to emphasize on the “Build and Build” narrative that Binance has been trying to push forward. It was also aimed at moving users away from viewing Binance Smart Chain (BSC) as a centralized (or less decentralized) layer-1 (L1) chain because of the number of validators that participate in network transactions.
The new BNB Chain will comprise of two components: Binance Chain will be rebranded to BNB Beacon Chain, and the Binance Smart Chain (BSC) will now be known as BNB Smart Chain. The number of validators will also increase from 21 to 41.
Under the larger BNB chain name, Binance is committing $1 billion to help build and expand the ecosystem of decentralized applications (DApps), as it competes with Ethereum and other L1s. In this guide, we will be exploring some functionalities of the BNB chain and understand the different ways we can use it.

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Understanding the BNB Chain

The BNB chain is a combined name that is given to the previous chains, BSC and Binance Chain. The former is now known as BNB Smart Chain (BSC) and the latter as BNB Beacon Chain. The objective is to make the name of the chain easily relatable to the native cryptocurrency on Binance, BNB. This also helps remove the attention from the chains individually, as the problem of centralization on Binance Smart Chain still exists. That aside, the BNB token is a governance token used to participate in governance decisions on BSC.

Leading up to the rebranding of the two chains as BNB chains were the significant

BEP95 upgrade, which introduced an auto-burn mechanism to BNB. This helped make BNB a deflationary asset, absent a mining algorithm that issues new tokens.

Understanding the BNB Beacon Chain

Remember that the BNB Beacon Chain is now responsible for all governance related activities on the BNB chain and also helps in staking. It is also used as the primary chain for making exchanges across the ecosystem. With the Beacon Chain, you can send/receive your BNB tokens, make changes to the chain by submitting governance proposals, and also issue new tokens. In addition to this, you can share proposals for creating new pairs of assets for trading and even create buy/sell orders on some trading pairs using the SDK.

In addition to this, you can retrieve on-chain data and even run your own node to participate in network activity.

Understanding the BNB Smart Chain

The BNB Smart Chain is the Binance Smart Chain (BSC) from before. It’s primary objective, when launched, was to introduce smart contract functionality to the Binance ecosystem and also make it EVM (Ethereum Virtual Machine) compatible. Compatibility with the EVM ensures that developers are able to port over their applications on Ethereum to Binance and easily provide a seamless experience to the users here at lower transaction costs (remember that BNB Smart Chain is cheaper to use than Ethereum). This compatibility is why you are able to easily configure your MetaMask wallet for BNB Smart Chain and use the funds on the chain to access various DeFi applications on EVM and BNB Smart Chain.

With this chain, you do almost all the things that you can do with the BNB chain. The added advantage of EVM compatibility implies that you can easily have your Ethereum applications ported over to Binance.

Now that we have covered the basics about the BNB chain, let’s get down to understanding how we can a) access the two chains and b) understand how we can use them for various applications.

Under the larger BNB brand, Binance also aims to take a step forward towards decentralization as it hopes to increase the validator set from 21 validators to 41 validators. They are also aiming to launch more on-chain governance mechanisms and take a deep dive into building more applications and furthering the Binance DeFi ecosystem. But one of the most crucial changes that they aim to bring with this change is that of MetaFi — metaverse and DeFi. But what is it? Let’s understand.

Binance’s Push for MetaFi

In a nutshell, MetaFi is a narrative that aims to push for standardized blockchain infrastructure for varied applications across DeFi. It is a combination of metaverse and DeFi and with this narrative, Binance hopes to establish itself as the leading protocol that helps support a variety of metaverse, DeFi and even non-fungible token (NFT) projects. As you can imagine, if a single protocol is able to give the opportunity for several developers to build on its own ecosystem, then all these DeFi applications can seamlessly integrate with each other and provide for an all-encompassing experience to their users.
While the narrative is not new, the packaging of the narrative and the way Binance aims to push it forward certainly is. This is putting the BNB chain in an entirely new light making it seem like the protocol that can help support hundreds (if not thousands) of different DeFi applications. In the article where Binance explained what MetaFi means — an umbrella term for projects encompassing the metaverse, GameFi, SocialFi, Web 3.0 and NFTs.

What Upgrades Do the BNB Chain Bring Over BSC?

We must remember that the BNB chain now comprises both the Binance Smart Chain and the Binance Chain. One of the key upgrades is scalability — BNB Chain is the first blockchain to introduce a considerable block size with a 100m gas ceiling. However, as the block space increases, it also becomes incumbent on the validators to acquire specialized hardware to be able to sync the entire chain consistently. To help avoid the added overheads of specialized hardware and to make network participation a smoother process, Binance is working on introducing Erigon that will help decrease both time and storage overheads on validating nodes.

Next, to support BNB Chain’s vision of MetaFi and onboard the next billion users to crypto, it needs more than one chain. Hence, it aims to support partition chains and transition into a multi-chain ecosystem, where cross-shard and cross-chain elements will be key. This will be achieved by implementing new technologies using the BNB Chain Application Side Chain (BAS) and BNB Chain Partition Chain (BPC) infrastructure layers.

Finally, the BNB Chain Core Team aims to grow the community, develop a native crypto talent pool and expand open-source technology. Events like the BNB Chain 2022 Hackathon and BNB Chain 2022 Summit, part of the $1 billion funding and talent development are on the roadmap.

How Can I Use the BNB Beacon Chain and BNB Smart Chain?

To access both the chains, you need to have a wallet that will help facilitate transfers between different accounts and even dApps on the BNB Smart Chain. If you need to use the BNB Beacon Chain, then you can access the web wallet here. You can use this wallet for generating crypto keys, addresses and checking your balances across different trading positions.
For BSC, you can simply access it using your MetaMask wallet. It is fairly easy to add BSC as a network to your MetaMask wallet — you can refer to a guide to do so here. Once you have integrated it, you can easily make BNB transfers across different wallets and even use it to stake your tokens within the network to start earning staking rewards.

What Is the BNB token?

BNB token is the native cryptocurrency of Binance and it is used to participate in various governance decisions on the platform. When launched, it was based on the Ethereum network but since then has been swapped with the BEP-2 type token on the Binance network. To further facilitate a seamless experience across both the Binance Chain and the Binance Smart Chain, a new token type (BEP-20) was created. This means that the token can now be accessed on all chains: as BEP-2 on Binance Chain, as BEP-20 on Binance Smart Chain and as ERC-20 on Ethereum.

But remember that if you want to use any dApps on Binance, then you will have to use the BEP-20 tokens. Because the two token standards here, BEP-2 and BEP-20 are not the same, if you transfer some of your BEP-2 tokens from your BNB Beacon Chain to your BSC, then the tokens will not be credited.

How Can I Buy BNB Tokens?

You can purchase BNB on most exchanges. The best (and the most obvious) way to get the token would be the Binance exchange itself, where you can easily buy the token for its current market price.

Once it’s added to your Binance account, you can transfer it to your MetaMask wallet and then use it for participating in various DeFi applications on Binance.

You can also use Trust Wallet to store your tokens across the Binance ecosystem. Since the wallet is under the Binance umbrella, it is very easy to use and can be accessed from your phone. Remember though that the Trust Wallet does not have a browser extension, so if you want to access Binance on your computer, you’re going to have to use MetaMask.
To access data about validators and transactions, you will have to use the BNB Smart Chain explorer here. It is just like Etherscan and helps you to explore different transactions that users make, the number of validators, the prevailing gas fee and so on. If you are looking at following a whale on Binance then you can simply put their address in the top bar (as shown in the screenshot) to understand what kind of transactions they are making with their wallet. You can even key in the transaction hash of the transaction and get the wallet address.

How To Transfer Tokens From Binance Exchange to MetaMask?

The best way to access dApps on Binance is to integrate the BSC network to your MetaMask wallet. When you open your MetaMask wallet, head to your wallet and select “Add Network''.

When you’re prompted to add the technical information, simply copy and paste it from here and you’ll see the network added in your wallet.

When you want to send some BNB from your exchange account to your MetaMask, you’ll have to copy the address from your MetaMask wallet. Remember that this address will be the same across different networks, with the only difference being your BNB (if transferred across BSC) will only reflect in the Smart Chain. If you’re confused which network you’re on, simply head over to the top right and select the Smart Chain network.

Transferring your tokens from Binance Exchange to MetaMask is fairly simple as you only need to add your MetaMask wallet address in Binance. Here’s how to get it done.

When you access your Binance exchange account, head over to Wallet and select Deposit and Withdraw.

You will be redirected to a new screen. Simply select Withdraw in the top-right corner and you’ll be able to withdraw your crypto.

You will be redirected to this screen where you’ll have to key in your MetaMask wallet address and also select the token you want to transfer and the network you want to use to make that transfer.

Make sure to select the Network as Binance Smart Chain if you’re transferring across the Smart Chain. If you select the wrong network, then you won’t receive your tokens where you want them to! Once you’ve inputted all the necessary information, you’ll be able to make the transfers. When you have some BNB in your MetaMask, you can then use that wallet to access several DeFi protocols on Binance.

How To Use DApps on Binance With My MetaMask?

With your MetaMask now set-up with BSC, you can use it for transactions across Binance dApps like Pancakeswap. Here’s a step-by-step guide on how to do it.

Head over to pancakeswap.finance to get started. If you haven’t already, connect your wallet on the top-right of the screen.
PancakeSwap is a decentralized exchange (DEX) and hence can be used for multiple different purposes. For instance, if you wish you can easily swap your existing tokens with other tokens that you are looking to collect. For that, simply head to “Trade” in the top-left corner and select “Swap”.

You will be directed to a new screen that will look like this. Now, you can decide to swap between any supported token on the DEX.

In this case, I can swap some of my BNB to ALPACA tokens and then use them on Alpaca Finance protocol.
Once you decide which token you’d like to swap your existing tokens with, simply decide the slippage amount and initiate the swap. Wait, what’s slippage? Slippage is the amount of cryptocurrency you lose while doing a swap because of the highly volatile market conditions. If you decide to swap your token at price x, and if at the moment of the swap the price increases by x + 0.002 then you will have to pay a tad extra to execute the trade. While this might seem low in this instance, the slippage can be extremely costly for traders who are swapping highly volatile cryptocurrencies with a large position.

If you are executing the trade for the first time, then you will have to pay a small fee at the beginning to approve the transaction. Once you approve the transaction, you can do these swaps any time you want without having to pay this fee again.

In addition to this, you can even provide liquidity to some token pairs on PancakeSwap. For that simply head over to the menu in the top-left and select “Liquidity”. You can do several things with PancakeSwap Finance, the details of which can be found here.

Let’s look at a few other protocols that you can access on Binance.

How To Use Venus Protocol on Binance?

Venus Protocol is a money market platform on Binance. You can supply your tokens on the platform to earn yield and you can even borrow from the protocol. After connecting your wallet, you will be able to see the dashboard on the app like this.
When you scroll down, you will be able to see the different supply and borrow markets and the current APY for each. As you can see, as of writing, you are getting the highest APY by supplying USDT to the protocol.

In addition to this, you can also borrow from the market and pay, or even earn, an interest rate.

Once you have connected your MetaMask wallet, you can easily supply or borrow crypto assets by simply clicking on the asset in either market. The process is quite similar to that of supplying assets on other protocols like Compound.

On Venus, you can also stake some tokens to generate yield. Head to vault in the left side and you will be able to see the type of tokens that you can stake and how much yield you can generate out of them.

You can also access a variety of other DApps on Binance since your MetaMask wallet already has integrated the BSC.

In addition to this, remember that you can use your Trust Wallet on your mobile and do several similar transactions. You can swap your BNB with other cryptocurrencies on the go and also stake your BNB to start earning staking rewards.

Is Using BSC Still Useful?

Yes, it is. Not a lot has changed since the renaming of Binance Chain and Binance Smart Chain to BNB chain. In fact, if anything, the number of validators has only increased. This should be considered a good signal for all crypto users. While the key issue of centralization hasn’t been solved, Binance still offers much lower transaction costs.

What Are the Best DApps on Binance?

Some of the best dApps on Binance include PancakeSwap, Venus, Alpaca Finance and more. Binance has a vibrant DeFi ecosystem on top of it — thanks to its quicker transaction speeds and much lower costs. The top three DApps on Binance have a combined TVL of roughly $9.89B.

Is BSC Cheaper Than Ethereum or Solana?

When it comes to transaction costs, yes BSC is much cheaper than Ethereum. However, when compared with Solana, BSC’s transaction costs are proportionate (if not exactly the same). Solana is also a blockchain that offers higher transaction speeds at lower costs. Check out a more detailed comparison of Solana and Binance Smart Chain, including what each blockchain aims to solve, the benefits and ecosystem.

Is BNB Staking Profitable?

BNB staking is profitable for users who are wishing to stake their assets for a longer time. Compared with Ethereum staking or Solana staking, the APYs can vary depending on the network inflation and a couple other factors. However, staking is considered one of the most sustainable ways of generating yield across a plethora of different networks. Users can stake directly on Binance, through locked staking of 30 to 120 days and DeFi staking.

Should I Use MetaMask or Binance Trust Wallet?

Choosing between the two wallets should only depend on your usage. If you are someone who is looking to use mainly Ethereum and EVM-compatible dApps like those on Binance and other protocols as well, then you can choose MetaMask. However, if you are looking to store other cryptocurrencies beyond Ethereum and Binance, Trust Wallets support Bitcoin, Litecoin and 100 other cryptocurrencies. Also, remember that Trust Wallet does not have a browser extension available. So if you are looking to access some Binance dApps on a desktop browser, then you will have to use MetaMask. You can still use both, though, and transfer coins in/out whenever you want.

Closing Thoughts

Binance is an incredibly successful exchange that has taken the world by a storm. It has got billions of users and is successful because it has been able to provide a very seamless experience to its users and has been able to cater to both inexperienced and more experienced traders and crypto users. The success of BSC, however, is attributed to the lower transaction costs and higher speeds that it offers. While that is definitely a draw towards the ecosystem, we mustn’t forget that it does come at the cost of decentralization.

Compare this with Ethereum, which has focused heavily on decentralization and is the largest smart contracts platform within DeFi. When it comes to true DeFi users and crypto maximalists, they favor decentralization over other things. That said, Binance’s rebranding and lofty goals for BNB Chain signals an intent in achieving greater decentralization, while not sacrificing scalability and improvements in the core blockchain.

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