What Is Binance Chain and Binance Smart Chain? How Did It Introduce CeDeFi

What is Binance Chain and Binance Smart Chain? How Did it Introduce CeDeFi?

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Blockchain technology has been in great demand by organizations from every industry due to its transparency, security, and decentralized nature. However, the blockchain trend that has caught everyone’s attention is centralized, decentralized finance (CeDeFi). It is said to affect and revolutionize the blockchain infrastructure.

CeDeFi is the combination of decentralized finance (DeFi) and centralized finance (CeFi) and is said to benefit the users from the functionalities of DeFi and CeFi both simultaneously.

What is Binance Chain

As of April 2021, Binance is the largest crypto exchange in terms of trading volume and now serves as a massive ecosystem. In 2018, Binance introduced its blockchain, known as Binance Chain. The fundamental goal behind launching Binance Chain was establishing a high-speed blockchain to carry out more extensive transaction data providing a 24-hour trading volume. Binance offers a platform for trading that allows over 500 cryptocurrencies and virtual tokens, including Bitcoin, Ethereum, Dogecoin, Litecoin, and Binance’s token known as Binance Coin. Binance Chain lets everyone issue, use and exchange digital assets on the blockchain. It also offers a crypto wallet allowing traders to store their crypto funds. Binance exchange has built-in supporting programs that help the users/traders in making investment decisions.

what is binance chain explained
Credit: Binance

The Binance chain was customized to support and process the Decentralized Finance (DeFi) smoothly and accelerate the new trend in the finance world. The establishment of the Binance Chain led the Binance company and its CEO, CZ, to step into the DeFi market. Binance Decentralized Exchange (DeX) is a decentralized exchange platform built on top of the Binance chain infrastructure and is considered the most used decentralized application (dApp) to date. The most significant advantage of Binance DeX is that it allows traders to exchange crypto assets directly on the blockchain ecosystem, where funds stay in their wallets.

What is Binance Smart Chain

Binance Smart Chain (BSC) was introduced in September 2020, a year after the unveiling of Binance Chain. Binance introduced Binance Smart Chain to offer the users a platform to build and develop decentralized applications. It is entirely programmable and supports smart contracts. Instead of deriving an entire smart contract platform from the base, Binance decided to go with Ethereum as users and developers were familiar with Ethereum’s functioning process and forked with Ethereum’s go client – geth. Binance offered the new smart chain at a lower price with the benefit of high transactional data power.

what is binance smart chain explained
Credit: cryptotvplus

The Binance Smart Chain is unique as it provides the ability to create new smart contracts and sophisticated decentralized applications. Since Binance Chain and Binance Smart Chain are built using similar infrastructural designs, they can communicate with one another. Binance Smart Chain is considered a parallel blockchain, creating a dual-chain system by bringing programmability to Binance Chain. Binance and Binance Smart Chain have both gained the attention of developers, traders, and investors.
Some of the Binance Smart Chain (BSC) wallets are:

  1. MetaMask
  2. Math Wallet
  3. Bitkeep
  4. Binance Chain Wallet

What is CeDeFi?

Binance Smart Chain is sometimes also referred to as CeDeFi. DeFi stands for Decentralized Finance, and CeFi stands for Centralized Finance; therefore, the mixture of both is known as Centralized Decentralized Finance (CeDeFi). The CEO of Binance company coined the term CeDeFi. Binance Smart Chain is an example of centralized, decentralized finance.

CeDeFi was introduced to combine centralized and decentralized infrastructure and benefit from both of theirs advantages. Their combined functionalities can provide the modernized and innovative financial infrastructure with the traditional precautions. Binance provides liquidity for protocols through grants and helps in creating economic activity to attract more users.

Therefore, it is most likely that Binance could empower more successful and profitable CeDeFi-based projects.

Benefits of CeDeFi

  1. Users can benefit from CeDeFi infrastructure as they are expected to use the functionalities of DeFi but at a lower transactional fee. They can benefit from various DeFi protocols such as liquidity aggregators, yield framing tools, lending protocols, etc.
  2. CeDeFi allows users to be familiar with DeFi tools such as block explorers, MetaMask, etc.
  3. It allows teams to develop and deploy the smart contracts created by them at a much lower cost than the cost they would pay on Ethereum. It also helps them in testing their projects within the ecosystem.

Binance Smart Chain has seen a lot of popularity recently as it builds on the functionalities of the original Binance Chain. While CeDeFi is set to revolutionize the financial infrastructure, it raises concerns for transparency and the decentralized nature that users are looking forward to and how the industries from the different sectors are likely to accept the new ecosystem.

If you are looking to understand the basics of blockchain technology and explore more about the reach and functionalities of blocks in today’s world, you should start by pursuing a blockchain certification. Certified Blockchain Professional (CBP) by EC-Council is a certification that trains in the fundamentals of blockchain such as cryptocurrencies, decentralized application, etc., to the advanced concepts such as security measures blockchain, open research problems in blockchain, etc. Their hands-on approach allows one to build a private network, use tools to write a smart contract, and much more.

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