Key Points
- Token Standards: Rules regulating assets on the blockchain and defining token functionality.
- BEP-20 Standard: The technical standard of the Binance Smart Chain.
- Smart Contracts: Algorithms within the blockchain that regulate operations, execute specified actions, and ensure compliance with rules.
- BEP-20 Smart Contracts: Used for issuing new tokens, burning issued assets, blacklisting malicious addresses, and pausing operations for specific addresses.
- Similar Standards: BEP-20 and ERC-20 share similar functionalities, while TRC-20 is the TRON standard compatible with the Ethereum Virtual Machine (EVM) and based on ERC-20 principles.
- BEP-20 Token Advantages: Low fees, high transaction processing speed, and support from many decentralized applications.
- Centralization Risks: BEP-20 tokens are centralized and are sometimes exploited by scammers.
What are Token Standards?
A token standard is a specific set of rules and agreements regulating the operation of a digital asset on a particular blockchain. This includes the types of data contained in the cryptocurrency and the actions the token owner can perform.
Technical standardization provides a common functionality for tokens. This is necessary for the seamless operation and interaction of different applications within a single cryptocurrency ecosystem. A coin issued according to the BEP-20 technical standard will be compatible with all existing platforms, decentralized applications (dApps), services, and BNB Chain wallets.
History of BEP-20
BEP-20 is the standard of Binance Smart Chain, launched in January 2020 to expand the functionality of the existing Binance blockchain. As the decentralized finance (DeFi) sector was rapidly growing and most DeFi applications were based on the Ethereum blockchain, Binance recognized the potential of DeFi and created the BEP-20 standard.
Functions of BEP-20 Smart Contracts
For users, the blockchain structure appears as addresses with cryptocurrency balances, managed by either the users or smart contracts. A smart contract is an algorithm programmed within the blockchain, with immutability and the complete execution of specified sequential actions as core principles.
A smart contract for a decentralized trading platform, for example, would regulate the process of cryptocurrency exchange on the platform, excluding third-party interference in trading operations. Blockchain users can create their own digital assets, called tokens, through software code. Essentially, tokens are part of the smart contract and their parameters are defined there, including balance retrieval, transfer, and ownership.
Key Functions of BEP-20 Smart Contracts
- Issuance of New Digital Assets: Allows users to create their own tokens.
- Burning of Issued Assets: Enables the destruction of a certain amount of crypto assets, reducing total supply over time.
- Blacklisting: Can block or blacklist malicious addresses.
- Pause: Allows an address owner to freeze all operations and resume them later, useful during malicious attacks.
Differences Between BEP-20, ERC-20, and TRC-20
ERC-20, the standard of the Ethereum network, served as a prototype for BEP-20. Both are similar models of tokens, but the main difference lies in the blockchain protocol on which they operate. The Binance team adopted the Ethereum Virtual Machine (EVM) principles, so BEP-20 and ERC-20 standards share similar functionalities. TRC-20 is the TRON specification, compatible with the EVM and based on ERC-20 principles.
Comparison of Standards
- BEP-20: Offers fast transaction finalization with low fees but has fewer applications and less decentralization than ERC-20.
- ERC-20: More decentralized and has the largest number of applications.
- TRC-20: Leads in daily transactions with the lowest fees but lags in decentralized applications compared to Ethereum and BNB Chain.
Pros of BEP-20 Tokens
- Support for decentralized applications
- Ability to issue new digital assets
- High transaction processing speed
- Low commission fees
- Supported by many decentralized applications
Cons of BEP-20 Tokens
- Centralization: Developers can freeze tokens and blacklist addresses.
- Fraud: A high percentage of fraudulent projects are based on BEP-20 (12% of the total, according to Solidus Labs).
Popular BEP-20 Tokens
Top 5 BEP-20 tokens by market capitalization (according to CoinLore data):
- NEAR Protocol (NEAR)
- THORChain (RUNE)
- PancakeSwap (CAKE)
- Cheelee (CHEEL)
- Trust Wallet Token (TWT)
Decentralized Applications and Wallets Supporting BEP-20
Top dApps by Number of Unique Wallets (Dapp Radar):
- StarryNift
- PancakeSwap V3
- Hooked
- PancakeSwap V2
- TinyTap
Top Non-Custodial Wallets for BEP-20:
- Trust Wallet
- MetaMask
- Exodus
BEP-20 Token Explorers