Binance has released a white paper detailing a new smart contract blockchain that it says offers a high-performance base-layer for decentralized apps – but might also be a challenge to Ethereum.
The cryptocurrency exchange said Friday that the new Binance Smart Chain (BSC) would work as a smart contract layer running parallel to its existing Binance Chain. The new blockchain is claimed to come with a matching engine capable of fast trade executions and a new consensus mechanism designed to combine fast confirmation times with strong on-chain governance.
Although Binance does not explicitly state that BSC would be a rival to Ethereum, it drops hints throughout the white paper that the new smart contract layer could perform better on several key metrics.
For one thing, its low latency platform will have faster execution times. For another, its consensus mechanism – a hybrid of EOS’ delegated proof of stake (dPoS) system and a proof of authority (PoA) system – is designed to be more efficient and environmentally friendly than Ethereum’s proof of work (PoW). (It’s worth noting that Ethereum is moving to PoS soon, via an upgrade informally dubbed Ethereum 2.0.)
Furthermore, in a statement to CoinDesk, a spokesperson said BSC was designed to ensure dapps could scale while still running on a high-performance layer to ensure a “fast and smooth user experience.” That might give an edge over Ethereum, where scalability limitations have sometimes created bottlenecks leading to soaring transaction fees and extended confirmation times. Indeed, popular game CryptoKitties quickly became so popular that it managed to put a strain on the network.
Binance, which only moved its token Binance Coin off Ethereum in 2019, denies it is looking to rival the original “world computer,”though.
On the contrary, the Binance spokesperson said the two would in fact complement one another in growing the blockchain ecosystem: “The industry needs more high-performance infrastructures, not just one single blockchain.”
Binance also wants to make BSC fully compatible with Ethereum. As it says in its white paper, it would give the new smart contract layer direct access to an ecosystem filled with “relatively mature applications and community.”
One of the main problems that have beset other smart contract protocols is it can be devilishly difficult to convince existing dapps to move away from Ethereum. The process can be long and complicated: developer teams have to familiarize themselves with a new protocol and codebase. At the end of it, there’s no guarantee existing users will follow them onto the new chain.
But by building a door straight into Ethereum, Binance could be looking to smooth the path making it easier for projects to switch protocols. As the exchange says in its white paper, being fully compatible means “most of the [Ethereum] dApps, ecosystem components, and toolings will work with BSC and require zero or minimum changes.”
There have, of course, been other contenders for the mantel of “Ethereum Killer,” but Binance’s innovation may be less the potential high-performance capability of the platform and more that it has minimized the risk for dapps migrating onto a new chain.
Maybe BSC’s de facto motto should be: “What have you got to lose?”
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