Differences between BEP2 and BEP20 in the Binance ecosystem

If you plan on buying and trading cryptocurrency on a regular basis, chances are you will or have already used Binance, the world’s largest cryptocurrency exchange. Which is why it is a good idea to gain an understanding of the two token formats currently used by Binance — and the different decentralized networks that it currently operates.

There are two of each, both of which are used for different purposes with their own native tokens. Although they were brought together earlier this year with the launch of the new BNB Chain system, they still have their differences. In this AAG Academy guide, we’ll look at the BNB Beacon Chain, the BNB Smart Chain, and the BEP2 and BEP20 tokens they use.

What is BEP2?

BEP2 is the token format for Binance Beacon Chain (BNB), which is used for all transactions on the Binance cryptocurrency exchange platform. BNB is accepted on both the centralized (CEX) and decentralized exchanges (DEX) offered by Binance, and it is most commonly used to pay network transaction fees — also known as “gas” fees.

One important thing to note about BEP2 BNB tokens is that they are exclusive to the BEP2 blockchain platform, and therefore can not be used on other third-party networks. In other words, if you attempt to send BEP2 tokens to a wallet on another blockchain, the transaction will either fail or you will lose those tokens.

What is the BNB Beacon Chain?

BNB Beacon Chain (BNB) is the relatively new name for the Binance Chain (BC), the original Binance blockchain, which first launched in 2017 as a decentralized marketplace for exchanging digital assets. It hosts Binance’s decentralized exchange, which is used to acquire tokens that may not be listed on the centralized, more mainstream alternative.

Like other decentralized exchanges, BC was designed to make the exchanging process as quick and as affordable as possible. Users can use it to swap cryptocurrency assets directly with one another, with no need for a middleman or third-party facilitator, so the transaction fees are low. And those fees are paid with BNB, the blockchain’s native token.

BC employs the delegated proof-of-stake (DPoS) consensus mechanism, in which users vote to decide which network nodes will verify new blocks. It uses 11 validators per block, and the time to process a block is typically less than one second — hence why BC is so fast.

What is BEP20?

BEP20 is the token format for the BNB Smart Chain (BSC) network, which, unlike the original BC network, is capable of hosting decentralized applications (DApps). BEP20 tokens, unlike BEP2 tokens, aren’t limited to being used on BNB exclusively. They are compatible with both BEP2 and Ethereum’s ERC-20, and they use the same address format as ERC-20.

What is the BNB Smart Chain?

BSC, which first launched in 2020, and was known as Binance Smart Chain until earlier this year, is an Ethereum Virtual Machine (EVM), which means it is compatible with all DApps that are built to run on Ethereum. This gave BSC a huge advantage because it meant that existing DApps that were already incredibly popular, such as the MetaMask wallet, for instance, were immediately ready to run on BSC when it made its public debut.

This allowed Binance to more easily get into the decentralized finance (DeFi), NFT and wider web3 industries, which were taking off at an incredible rate at the time. What’s more, when developers are building new DApps for BSC, they can use code already well established for Ethereum, making things much simpler and boosting support for BSC itself.

BSC used the proof-of-staked authority (PoSA) consensus mechanism — a combination of DPoS and proof-of-authority (PoA). With PoSA, validators take it in turns to create new blocks, and it takes around five seconds to fill one block. BCS fees were paid using the native BEP-20 token.

What is BNB Chain?

Now, here’s where things get a little complicated. You see, BC, as it was formerly known, and BSC are no longer entirely separate entities. Earlier this year, Binance merged them into what’s called BNB Chain, a multi-network system that incorporates both BNB and BSC. So, users can now enjoy the best parts of both blockchains within a single system.

BNB Chain, which Binance refers to as just “BNB” for short — the same name given to its native token — is just as open as its predecessors, just as permissionless, and forever decentralized. BNB remains open-source, and it promises to be the best Binance network yet, with support for large-scale applications like GameFi, SocialFi, the Metaverse, and more.

Some of the improvements made with BNB include scaling from one chain to a multi-chain system, improving scaling solutions, boosting the throughput of BSC, and adding on-chain governance mechanisms. Binance calls these “major technical updates” that will also allow the company’s new “MetaFi” mission, bringing together everything web3 in one place.

BEP2 vs. BEP20 comparison

The BNB Chain merge doesn’t make a whole lot of difference to BEP2 and BEP20 tokens. Both still exist, and BEP2 remains the token standard for BNB coin, the native token on the Binance DEX. It is also still a unique standard, exclusive to Binance, only usable on Binance, and not compatible with other blockchains. Therefore, its primary use is still paying fees.

BEP20 tokens, on the other hand, continue to use the same ERC-20 token standard as Ethereum. That means that in addition to being able to use them within Binance’s own blockchains, they are also compatible with Ethereum smart contracts, and therefore any DApp originally built for the Ethereum blockchain, of which there are more than 500,000 today.

References

• Difference between bep2 and bep20
• Binance chain vs binance smart chain
• Introducing bnb chain the evolution of binance smart chain
• Introducing binance bridge