BNB Smart Chain (BSC) is a hard fork of the Go Ethereum (Geth) protocol and thusly, shares numerous similarities with the Ethereum blockchain. However, BSC developers have rolled out significant improvements in some key areas. The biggest change is BSC’s consensus mechanism, which allows for cheaper and faster transactions.
At first glance, BNB Smart Chain (BSC) and Ethereum look very similar. DApps and tokens based on BSC are compatible with the Ethereum Virtual Machine (EVM). You might have noticed that your public wallet addresses are something very similar on both blockchains. There are even cross-chain projects that operate on the two networks. In any case, there are a few noticeable distinctions between the two chains. If you’re wondering which one to use, it’s best to be know and understand the differences.
Blockchain traffic and DApp ecosystem
As of June 2021, Ethereum has more than 2800 DApps on the blockchain compared with approximately 810 on BSC. It’s a significant difference, however considering BSC’s young age, it shows a strong and growing ecosystem.
Active addresses are additionally a significant on-chain metric to consider. Despite being a newer blockchain, BSC recorded a high of 2,105,367 addresses on June 7, 2021 – more than double Ethereum’s all time high of 799,580 addresses on May 9, 2021.
So what’s the reason behind BSC’s sudden massive growth? A lot of it comes down to faster confirmation times and low fees. The BSC growth might also be related to the Growing hype around NFTs and the compatibility with popular crypto wallets, such as Trust Wallet and MetaMask.
If we look at daily transactions, there’s an even larger difference between the two. On BSC, it’s faster and more cost-efficient for users to move their assets and connect with smart contracts. You can see below BSC’s peak of around 12 million daily transactions and its current status at over for million.
Binance Smart Chain Daily Transactions Chart
On the other hand, Ethereum never exceeded 1.75 million daily transactions. For users who need to move their funds regularly, BSC seems to be the more popular choice. Daily transactions need to be seen in the context of active addresses too. As of writing, BSC currently has a higher number of users who also transact more on average.
Ethereum Daily TransSaction Chart
Most used DeFi DApps on Ethereum and BSC
When it comes to decentralized finance, there’s a large amount of DApp cross-over between BSC and Ethereum due to the blockchains’ compatibility. Developers can easily port applications from Ethereum to BSC, and new BSC projects often reuse open-source code from Ethereum under a different name. Let’s take a look at the top five DApps on Ethereum by users on DAppRadar.
/Here you can see a mixture of two DeFi Automated Market Makers (Uniswap and SushiSwap), a crypto game (Axie Infinity), and a peer-to-peer marketplace (OpenSea). If you take a look at BSC’s top five, you’ll see a lot of similarities.
PancakeSwap was created as a hard fork of Uniswap. Autofarm and PanCake Bunny are yield farms- a category we don’t see in Ethereum’s top five. Biswap and Apeswap are both Automated Market Makers. As fees are so cheap on BSC and transactions significantly quicker, yield farms tend to be more effecient on BNB Smart Chain. These factors make them a popular choice for BSC users.
When it comes to crypto games, Ethereum really is the home of the most popular titles out there. Despite the fact that there are projects on BSC that are basically the same as CryptoKitties and Axie Infinity, they failed to get as big audiences as the classic games on Ethereum.
Transfers between networks
If you’ve made any BEP-20 or ERC-20 deposits into your wallet, you might have noticed your Ethereum and BSC wallet addresses are identical. In this way, for example, you pick some wrong network while withdrawing your tokens from an exchange, you can easily retrieve them from the other blockchain.
If you accidentally withdraw ERC-20 tokens to BSC, you can still find them in the corresponding BSC address. You can also go through a similar process if you accidentally send tokens from BSC to Ethereum. In both these cases, your assets are detail guide. check out How to Recover Crypto Transferred to the Wrong Network on Binance.
BSC and Ethereum both use a gas model for transaction fees that measure the complexity of a transaction. BSC users can set a gas price according to network demand, and miners will prioritize transactions with higher gas prices. Ethereum’s London hard fork does, however, bring in some new modifications that will likely remove the need for high fees.
The Ethereum update creates a new pricing mechanism with a base fee per block. The base fee changes depending on the demand for transactions, removing the need for users to decide on the gas price themselves.
Historically, Ethereum gas fees have been much higher than ones on BSC. The highest average seen was in May 2021 at $68.72. This trend has begun to change, but Ethereum is still currently more expensive.
Let’s look at the average costs for Ethereum from Etherscan to get a better picture. The top three figures show current gas prices on Ethereum. For both BSC and Ethereum, one gwei is equivalent to 0.000000001 BNB or ETH separately. If you pay the lower price, your transaction will take significantly longer to go through.
For a simple transfer of an ERC-20 token to another wallet, the avrage price at the time of writing is $2.46. This number increases to $7.58 while using a Uniswap liquidity pool that includes multiple transactions.
Below, we can see a transaction on BSC with a fee of just $0.03, equivalent to the ERC-20 transfer in the Ethereum gas tracker. BSC has calculated this by multiplying the gas used by the transaction (21,000) with the gas price (5 gwei).
Measuring average transaction times on blockchains can be a bit tricky. While a transaction is technically finished once miners validate the block it is in, different aspects can effect the time you wait:
If you haven’t set your fee high enough,
miners might delay your transaction or even include it in a block at all.
More complex interactions with the blockchain require multiple transactions. For example, adding liquidity to a liquidity pool.
Most services will only consider a transaction valid after a specific number of blocks are confirmed. These additional confirmations reduce the risk of providers and service providers having the payments reverted in case the block is rejected by the network.
If we look above at the gas statistics for Ethereum, we can see that the transaction time ranges from 30 seconds to 16 minutes. These numbers consider successful transactions however not the extra confirmation requirements.
For example, if you deposit ETH (ERC-20) into your Binance account, you will need to wait for 12 network confirmations. With a block mined roughly every 13 seconds, as you can see from the diagram below, this would add an extra 156 seconds when depositing ETH into your spot wallet.
On BSC, the average block time is 3 seconds. When we compare this to Ethereum’s 13 seconds, we’re looking at a speed improvement of roughly 4.3 times.
While the Ethereum Proof of Work (PoW) consensus mechanism is similar to the one of Bitcoin, it’s vastly different from the BSC’s Proof of Staked Authority (PoSA). However, this difference won’t last for long. With Ethereum 2.0, the network will use a Proof of Stake (PoS) mechanism instead.
BSC’s PoSA combines aspects of Proof of Authority (PoA) and Assigned Proof of Stake (DPoS). 21 validators alternate to produce blocks and, consequently, receive BNB transaction fees as a reward. Turning into a validator requires running a node and staking at least 10,000 BNB to become an elecated candidate.
Different users, known as delegators, stake BNB behind a chosen candidate. The top 21 chosen candidates by the amount staked will then take it in goes to process blocks. This whole process rehashes every 24 hours. Delegators likewise get a portion of the prizes that validators procure.
Ethereum’s PoW is a very unique framework. Instead of the community picking validators, there is a competition to solve a computational riddle. Anybody can partake, yet they should purchase or lease specific mining gear. The more calculation power you have, the more logical you will solve the riddle first and validate a block. Successful miners get transaction charges and an ETH reward.
While PoW is an effective way of creating consensus and ensuring network security, developers have since explored the use of other mechanisms. Their goal is to find more efficient and environment-friendly alternatives without compromising security.
For these reasons, the Ethereum network will eventually switch over to Proof of Stake. Validators will stake ETH for a chance to produce blocks. Other validators will “attest” the block and check that it is correct. If someone produces a block containing false transactions, they will risk losing all of their staked coins. Validators then receive rewards for successful blocks and for any attestations they make. By directly depositing and staking large amounts of ETH, malicious validators risk losing their funds.
It’s clear that there are lots of similarities between BNB Smart Chain and Ethereum. In part, this is what has made it so easy for Ethereum users to migrate and start experimenting with BSC. But despite the similarities, BSC adopted interesting changes to try and improve on performance and efficiency. The Proof of Staked Authority (PoSA) consensus mechanism made it possible for users to enjoy even cheaper and faster blockchain transactions.
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