We created an extensive guide in which you’ll learn what BEP-20 is and the key features of BEP-20 tokens.

Every year, new technology related to cryptocurrencies comes out. This makes the crypto industry very lucrative for investment. One of the new concepts is BEP-20. Some analysts even believe it could replace the ERC-20 standard in the future. Why? Because it enables faster transactions and lower gas fees.

Here’s all you need to know.

Learn in This Article

  • BEP-20 meaning
  • What is BSC
  • Key features of BEP-20 tokens
  • Parameters of BEP-20 tokens
  • BEP-20 vs ERC-20
  • BEP-20 vs BEP-2

What Is BEP-20?

The BEP-20 meaning can be explained as a token standard on the BNB Smart Chain. Its name is an acronym for Binance Chain Evolution Proposal, while the number 20 refers to the standard used. Its role is to determine how the tokens will be used on the network and who can use them.

In addition to that, BEP-20 tokens were created to optimize the speed and costs of transactions. They are also compatible with smart contracts that are based on the Binance Smart Chain. All BEP-20 transactions are paid in BNB, the native token of the BSC network.

The BEP-20 token can also be seen as an extension of the ERC-20 token standard. This means that they are compatible with each other.

What Is BSC Binance Smart Chain?

BSC stands for Binance Smart Chain. This is Binance’s second blockchain, which launched in September 2020. It was designed as an alternative to the Ethereum network. Its goal is to address scalability issues, such as high gas fees and slow transactions. The BEP-20 network uses the Proof of Staked Authority (PoSA) consensus mechanism to achieve that.

This consensus mechanism uses two algorithms — economic stake and reputation or authority. The BSC blockchain also supports smart contracts and is compatible with Ethereum Virtual Machine (EVM).

Key Features of BEP-20 Tokens

The main features of BEP-20 tokens include the following:

Smart Contract Integration

Unlike BEP-2, BEP-20 tokens can be integrated with smart contracts. This allows them to create more complex tokens within the Binance network.

Interoperability

Although they are mainly used on the BSC network, BEP-20 tokens are also interoperable with other blockchains. Since they act as bridges, they can be transferred between different exchanges and wallets.

Innovative Consensus Mechanism

BEP-20 tokens use an innovative consensus mechanism called the Proof of Stake Authority or PoSA. This mechanism makes the network more scalable. It also reduces transaction fees.

Fast Transactions

In addition to low fees, BEP-20 tokens enable fast transactions within the BSC network. Namely, they can validate blocks much faster than Ethereum. This makes them more suitable for peer-to-peer transactions.

Approval Mechanism

BEP-20 tokens use an approval mechanism. This mechanism allows other addresses to spend BEP-20 tokens on behalf of their holder.

Parameters of BEP-20 Tokens Standard

To improve the performance of BEP-20 tokens, its developers have implemented the following parameters:

  • Blacklist: The purpose of this parameter is to ban or exclude malicious BEP-20 addresses that could affect the security of the network.
  • Can Pause: This parameter allows users to pause all operations involving BEP-20 tokens in case of security issues. However, only token creators can use this function.
  • Can Mint: This parameter specifies the conditions and specifications under which new tokens will be minted. This is also how their total supply is determined.
  • Can Burn: This is a deflationary parameter that determines how tokens will be burned to reduce their supply.

Many crypto projects use the BEP-20 standard, such as Binance USD (BUSD), PancakeSwap (CAKE), and Burger Swap (BURGER).

BEP-20 vs ERC-20

]The main difference between BEP-20 and ERC-20 tokens lies in their native blockchains. On that note, BEP-20 tokens are built on the BSC network, while ERC-20 tokens run on the ETH network

The second thing that differentiates them is the transaction speed. Namely, BEP-20 transactions take about 3 seconds, while ERC-20 transactions take about 15 seconds. Furthermore, BEP-20 can handle more transactions per second – 1,400 TPS vs 20 TPS.

Their third difference can be seen in their consensus mechanism. As mentioned above, BEP-20 tokens use the PoSA mechanism, while ERC-20 tokens use the PoS mechanism. PoSA combines PoS and PoA consensus, enabling faster block validations and lower fees. 

BEP-20 also has lower transactional fees since all transactions are paid using BNB. On the other hand, ERC-20 transactions involve ETH, which is known for high gas fees.

However, when it comes to security, ERC-20 tokens take the win. Namely, the ETH network uses more than 400,000 block validators, while the BSC blockchain uses only 21. As you know, a larger number of validators equals safer transactions.

Is There a Difference Between BEP-20 and BEP-2?

BEP-2 is the token standard of Binance Chain, while BEP-20 is the token standard of Binance Smart Chain. This means that their addresses and functions will be different.

What is the BEP-20 address? A unique identifier that’s used to receive and send BEP-20 tokens on the BSC network. BEP-20’s addresses start with “0x”, while BEP2’s addresses start with “bnb.”

Moreover, BEP2 tokens don’t support smart contracts. Likewise, they are not interoperable with other blockchains. On the other hand, BEP-20 tokens support smart contracts, which is why they can be used to create dApps. They are also interoperable with the ETH network.

Conclusion

So, what is BEP-20? BEP-20 is the token standard used on the BSC blockchain. It’s similar to the ERC-20 token. However, unlike ERC-20, which uses the PoS consensus, BEP-20 uses the PoSA consensus. This enables it to validate transactions faster and cheaper. It also has a dual-chain architecture, which makes it interoperable with other blockchains.

The BEP-20 standard uses innovative features to improve the functionality of the BSC network. For example, developers can use it to create dApps and DeFi protocols. In addition, this standard makes the process of creating smart contracts less complex.

FAQs

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