What is BEP-20? Exploring the token standard

In the infancy of cryptocurrency, generating a new token was a complex task. It required either the creation of an entirely new blockchain or the use of a Bitcoin fork. However, this landscape underwent a significant shift with the advent of Ethereum, which repurposed blockchain technology as a development platform.

The subsequent arrival of the ERC-20 token model offered a foundational blueprint for developing new cryptocurrency tokens.

Innovative projects surfaced as the cryptocurrency ecosystem matured, boasting bespoke blockchain technologies. One such venture is the BNB Smart Chain (BSC), which introduced its own token standard, the BEP-20.

This guide will explore the nuances of the BEP-20 token, detailing its characteristics and drawing comparisons to the well-established ERC-20 token model.

TL;DR

• Developing a new cryptocurrency used to require a new blockchain or a modification of Bitcoin's blockchain. However, Ethereum made it possible to build on its platform.

• The introduction of the ERC-20 token model by Ethereum simplified the creation of new tokens, setting a foundational blueprint that's since been widely adopted.

• The BNB Smart Chain (BSC) is a new option created to make it easier for people to make tokens on Binance's system. It's similar to Ethereum's ERC-20. This helps to make the DeFi market more competitive.

• BEP-20 tokens mirror ERC-20 tokens in function and purpose within their own network ecosystems.

• The upcoming BNB Chain Fusion aims to combine Binance's two chains. This will make it more secure and efficient. It's an important move towards making blockchain operations and connections easier.

What is BEP-20?

BEP-20 is a token standard created on BNB Smart Chain (BSC), formally known as Binance Smart Chain. BEP-20 is BSC’s equivalent to ERC-20, the token model used on the Ethereum blockchain. This means that the two token models are compatible with one another.

The BEP-20 token model allows users to create a new token on the BNB Smart Chain easily. The process is simple, and it doesn’t require extensive programming experience. Developers don't have to start from scratch, form a new blockchain, or be limited to the Ethereum Token Standard only.

Many have used BEP-20 to create utility tokens and launch all kinds of projects. BEP-20 tokens are compatible with BSC-based smart contract technology, many of which are a part of the ever-growing decentralized finance (DeFi) space.

BEP-20 tokens are also valuable for the process of tokenization. Through tokenization, assets from traditional finance can merge into the blockchain. As such, BEP-20 tokens can become digital assets that connect traditional and digital finance. All transactions involving BEP-20 tokens are paid in BNB, which is the native token of BNB Beacon Chain, formally known as the Binance Chain.

BNB Beacon Chain — Binance’s original blockchain — also supports BEP-20 tokens. The two blockchains run alongside one another in tandem. As a result, BEP-20 can access Binance’s DEX (decentralized exchange) platform and trade on BNB Beacon Chain.

What is BSC?

BSC, or BNB Smart Chain, is Binance’s second blockchain. It was created in September 2020, after the Decentralized Finance (DeFi) sector went mainstream. Things like staking, decentralized lending, and other DeFi services were available for years. However, they never captured the attention of the wider crypto industry.

This ultimately led Binance to launch BSC as its development platform. The idea was to attract users, talent, and projects, which has worked well so far. Today, many consider BSC to be the biggest rival to Ethereum as BEP-20 is deemed a rival to the Ethereum Token Standard ERC-20.

BSC also allows users to create smart contracts, which opens the doors to decentralized applications (DApps), DeFi, the metaverse, and more.

What are the parameters of the BEP-20 token standard?

BEP-20 has various parameters which aid the performance of the token standard. Some of BEP-20 standard parameters include Blacklist, Can Mint, Can Burn, and Can Pause.

The first of the four parameters is the Blacklist. This can help with blacklisting or banning malicious addresses associated with this token standard. Then there's Can Mint, which serves as the inflationary parameter. Essentially, it provides specifications involving certain possibilities for minting additional tokens and increasing the BEP-20 supply.

The third one is Can Burn, which is a parameter that complements Can Mint. Its purpose is to be a deflationary device. It can specify the possibility of reducing tokens by burning the supply. This is commonly used by crypto tokens to reduce the supply and boost the asset’s price.

The last parameter is Can Pause, which is an innovative and very useful parameter. Its purpose is to safeguard against malicious attacks. If one does happen, or if the platform is down, users can pause BEP-20 token operations. However, this also makes this parameter centralized, which is typically frowned upon within the crypto space.

Examples of BEP-20 tokens

Binance Smart Chain is filled with BEP-20 tokens, many of which are projects that have launched on BSC. However, there are also many projects that have their own chain, with BEP-20 versions of their coins and tokens.

One example is PancakeSwap, which is the native token of the largest BSC-based DEX and AMM. PancakeSwap is also one of the largest DEXs in the crypto industry. Another prime example is Autofarm. This has been a very popular yield aggregator and another DEX built on BSC.

Users can obtain any of these, or other BEP-20 tokens, on the Binance exchange, Binance DEX or PancakeSwap.

BEP-20 vs. ERC-20

We mentioned earlier that BEP-20 serves the same purpose as ERC-20. However, how do the two compare? Can it be said that one is better than the other?

The two token standards share many similarities, which isn't surprising since BEP-20 is simply an alternative to ERC-20. On the whole, the two share the same functions, serving as token models or blueprints. They also share the same foundational elements, including token ownership, transfer, and issuance.

With Binance introducing Binance Bridge, the two chains even established a direct connection. This allowed interoperability between them. Of course, transferring ERC-20 tokens to BSC would require them to convert to a BEP-20 token model. When this transition occurs, they can then be used on Binance Chain or DApps that run on BSC.

There's no conversion fee for doing it and using the bridge, so anyone can use it without being penalized financially. This process of converting assets from one chain into assets on another is known as Peg-in. The process is also reversible, meaning you can transfer tokens both ways.

With all that said, we can conclude that the two token models don't differ that much. They run on different networks, but they serve the same purpose. Tokens created using them can even be converted from one to the other. As such, they can even be considered twin models.

What is the difference between BEP-20 and BEP-2?

Speaking of different cryptocurrency standards, we also wanted to see how BEP-20 compares to BEP-2. Both cryptocurrency standards exist in Binance’s wider ecosystem. However, BEP-2 is the token standard on the BNB Beacon Chain. This is the exchange’s original chain, used for governance. At the same time, BNB Smart Chain is used for development.

But how do the two cryptocurrency standards compare? Well, they work in parallel. Not only that, but they're fully compatible with one another. Both chains feature BNB as their main native digital asset, and BNB fuels both token models.

While BSC operates as a separate chain for digital assets, it can be considered an extension of the BNB Beacon Chain. Both feature the same dual-chain architecture, which allows them to communicate with one another. The two chains are interoperable, and swapping BEP-20 tokens with BEP-2 tokens is simple.

Of course, that doesn’t mean you can use BEP-2 on BSC or BEP-20 on BNB Beacon Chain. Users still have to convert their tokens into the appropriate model for the chain they wish to run them on. But since the two are meant for different things, they don’t often overlap. Users use whichever chain they need based on their desire.

Those interested in DeFi, GameFi, and DApps would go to BSC. Those who wish to use Binance DEX or BNB Beacon Chain would stick with BEP-2. Since the two chains are connected via Binance Bridge, there's also plenty of cross-chain liquidity. That makes it easier to Peg-in or Peg-out your crypto tokens and swap them seamlessly.

What is BNB Chain Fusion?

Binance is merging its BEP-2 and BEP-20 chains into a single BNB Chain Fusion by April 2024. The project aims to boost security and efficiency. Announced on January 8, 2024, this move combines Binance's dual-chain system into one, requiring users to convert BEP-2 and BEP-8 tokens into BEP-20 to maintain their assets.

The fusion addresses vulnerabilities in operating two chains. It simplifies transactions, while users must act by April 2024 to make sure their tokens are transferred, with limited support for late transfers through a command-line interface.

The final word

BEP-20 is a token model on BNB Smart Chain, which doesn’t differ much from Ethereum’s ERC-20. The two are similar enough to be compatible. Some consider Binance’s and Ethereum’s ecosystems to be rivals, and they also transfer that rivalry onto the token models.

On some level, this might be true, or maybe it was at some point. However, with the concept of Web3 seeking to connect the crypto industry, this no longer matters.

Building connections between chains and projects is beneficial for the future, so compatibility is the key. As long as they can work together to create an innovative environment for development, that's what matters.

FAQs

What is a BEP-20 address?

A BEP-20 address is an address that can hold BEP-20 tokens. These are tokens that run on Binance Smart Chain — Binance’s second blockchain. The chain was launched to offer a more scalable development space for crypto talents.

Is BEP-20 the same as ERC-20?

Like ERC-20, BEP-20 is a token model, and the two share many similarities. However, BEP-20 runs on BSC, while ERC-20 is on Ethereum’s network. As such, ERC-20 tokens need to be converted into BEP-20 tokens if transferred from chain to chain.

What is the BEP-20 address in Binance?

The BEP-20 address is an address where you can store or receive BEP-20 tokens. Both Ethereum and BSC have addresses that start with “0x.” This is why it's important to clarify to the sender which token you want and which network to use.

What is a BEP-20-compliant wallet?

BEP-20 compliant wallet is a wallet that supports BEP-20 tokens. OKX Web3 Wallet is a good example of this, as it started supporting BEP-20 in October 2022.