A new whitepaper has been released by the Binace Chain developers which specify a new blockchain that can run complex smart contract functionality within the Binance Coin ecosystem. Binance Coin, and its associated blockchain, have been operating for some time now, and this new chain will operate alongside it, but independently.
The reason for an entirely new chain rather than the integration of smart contracts on the original Binance chain is that the developers want to hold onto the power and performance of the original chain which hosts the Binance decentralized exchange.
Smart contracts are quite intensive on performance as this has been seen before with Ethereum when the popularity of CryptoKitties took off and clogged the performance of that smart contract platform.
The white paper notes that “the execution of a Smart Contract may slow down the exchange function and add non-deterministic factors to trading.” To prevent this, the team is instead launching an independent Ethereum-compatible smart contract blockchain.
There will also be a cross-chain bridge for BNB that allows for this coin to act as the native token for the new smart contract platform from Binance.
A new consensus
The decision of what the consensus algorithm would be has taken an interesting turn. The original smart contract platform, Ethereum, is slowly weaning itself towards a proof-of-stake algorithm and away from proof-of-work, in order to maximize its performance.
For the new Binance chain, the algorithm will be proof-of-stake, mostly, but it has some slight differences. The consensus algorithm of the new chain is called Proof of Staked Authority. It is very similar to the Distributed Proof-of-Stake of EOS, as well as many other validator-based systems.
This will mean it features stake slashing, a protection mechanism against illicit behavior that punishes validators for signing multiple proposed versions of a chain, solving the so-called “nothing at stake” problem.
The whitepaper notes that the system remains fully secure if less than one-third of validators are malicious, which is a common feature among Byzantine Fault Tolerant algorithms.
Another big step
Binance has quickly grown to be more than just an exchange as it has looked to corner many different sectors in the cryptocurrency ecosystem, This creation of a smart contract chain represents yet another move to be a part of the different sides to the industry.
Binance has a well-established brand, and has been mostly praised for its work across the industry, so it will be interesting to see where this chain fits in an ever-growing market for smart contract platforms.