Binance Chain developers have proposed new blockchain specifications that would allow for complex smart contract functionality within the Binance Coin (BNB) ecosystem. The specifications are in its white paper published on April 17.
The new Smart Chain Binance will be independent, but closely integrated with the original Binance Chain. The team explains that to maintain the high performance of the original, which hosts the Binance decentralized exchange, it needed to create a new chain.
The white paper notes that “the execution of a Smart Contract may slow down the exchange function and add non-deterministic factors to the trade.” Instead, the team launches an independent smart contract blockchain compatible with Ethereum to prevent this.
A cross-chain bridge for BNB, which will act as the native token in the new smart contract platform, will connect them though separately.
Thus, the Smart Chain will enable projects within the Binance ecosystem to build complex DApps based on the Virtual Machine of Ethereum. The team said this was a feature often requested from its ecosystem projects.
Proof of Stake-Like Consensus
The new chain’s Consensus Algorithm is called Staked Authority Proof. However, it is very similar on a practical level to the EOS Distributed Proof-of-Stake, as well as many other validator-based systems.
Just like on EOS, there will be a set of 21 active validators that take turns in block production. These will be voted by stakeholders from the BNB who lock their tokens to express their preference — just as they do on EOS.
The consensus algorithm will also feature slashing stake, a mechanism for protecting against illicit behaviour. Slashing punishes validators for signing several proposed versions of a chain, solving the problem of the so-called “nothing at stake”. The whitepaper notes that if less than one-third of validators are malicious the system remains completely secure, which is a common feature among Byzantine Fault Tolerant algorithms.
It is worth noting that the exchange is likely to always have a predominant stake in the network due to BNB’s token economics, which is used to pay the Binance fees.