Binance Smart Chain (BSC) is a hard fork of the Go Ethereum (Geth) protocol, and as such, shares many similarities with the Ethereum blockchain. However, BSC developers have made significant changes in some key areas. The largest change is BSC’s consensus mechanism, which allows for cheaper and faster transactions.
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Blockchain traffic and DApp ecosystem
Active addresses are also an important on-chain metric to consider. Despite being a newer blockchain, BSC recorded a high of 2,105,367 addresses on June 7, 2021 – more than double Ethereum’s all-time high of 799,580 addresses on May 9, 2021.
So what’s the reason behind BSC’s sudden massive growth? A lot of it comes down to faster confirmation times and low fees. The BSC growth might also be related to the growing hype around NFTs and the compatibility with popular crypto wallets, such as Trust Wallet and MetaMask.
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On the other hand, Ethereum never exceeded 1.75 million daily transactions. For users who need to move their funds regularly, BSC seems to be the more popular choice. Daily transactions need to be seen in the context of active addresses too. As of writing, BSC currently has a higher number of users who also transact more on average.
Most used DeFi DApps on Ethereum and BSC
Transfers between networks
The Ethereum update creates a new pricing mechanism with a base fee per block. The base fee changes depending on the demand for transactions, removing the need for users to decide on the gas price themselves.
Historically, Ethereum gas fees have been much higher than ones on BSC. The highest average seen was in May 2021 at $68.72. This trend has begun to change, but Ethereum is still currently more expensive.
Measuring average transaction times on blockchains can be a bit tricky. While a transaction is technically complete once miners validate the block it is in, other aspects can affect the time you wait:
- If you haven’t set your fee high enough, miners might delay your transaction or even not include it in a block at all.
- More complex interactions with the blockchain require multiple transactions. For example, adding liquidity to a liquidity pool.
- Most services will only consider a transaction valid after a certain number of blocks are confirmed. These extra confirmations reduce the risk of merchants and service providers having the payments reverted in case the block is rejected by the network.
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If we look above at the gas statistics for Ethereum, we can see that the transaction time ranges from 30 seconds to 16 minutes. These numbers take into account successful transactions but not the extra confirmation requirements.
For example, if you deposit ETH (ERC-20) into your Binance account, you will need to wait for 12 network confirmations. With a block mined roughly every 13 seconds, as you can see from the diagram below, this would add an extra 156 seconds when depositing ETH into your spot wallet.
On BSC, the average block time is 3 seconds. When we compare this to Ethereum’s 13 seconds, we’re looking at a speed improvement of roughly 4.3 times.
It’s clear that there are lots of similarities between Binance Smart Chain and Ethereum. In part, this is what has made it so easy for Ethereum users to migrate and start experimenting with BSC. But despite the similarities, BSC adopted interesting changes to try and improve on performance and efficiency. The Proof of Staked Authority (PoSA) consensus mechanism made it possible for users to enjoy even cheaper and faster blockchain transactions.
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