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What is the BEP-20 token standard?
BEP-20 tokens are cryptocurrency that are minted on the Binance (Smart) Chain. The Binance Smart Chain is a parallel Binance Chain that enables smart contracts. It allows developers to build decentralized applications and digital assets that make it possible to benefit from the Binance Chain while also taking advantage of fast trading on the smart chain.
The BEP-20 standard is fully derived from the ERC-20 standard, which is the most common standard used on the Ethereum Network. BEP-20 tokens are also fully compatible with the ERC-20 standard. These standards basically decide how a token can be created, transacted, spent, who can spent them, etc.
Various modifications were made to improve the protocol, while decreasing transaction costs and increasing transaction speed. The Smart Chain is also fully compatible with smart contracts, meaning that BEP-20 tokens can reflect value of all sorts of assets, such as shares in a company to dollars (stablecoins) and real-world assets (synthetic assets).
Besides the BEP-20 variant, Binance also introduced BEP-2 tokens. These are used on the Binance Chain, but can be directly ‘bridged’ to the smart chain, a BEP-20 token.
Why did BEP-20 tokens become popular?
BEP-20 tokens became incredibly popular during the fourth quarter of 2020 and to date are still very popular for decentralized finance (DeFi) applications.
This is mainly due to the low transaction costs the Binance Smart Chain charges for transactions. While the Ethereum Network is camping with high transaction fees ($10-25), the smart chain pushes transactions through for about $0.3.
Examples of projects that use BEP-20 tokens
CoinGecko offers an overview of all BSC projects. Though, some examples of well-known projects that launched on the BSC are:
Interested in learning more about different types of cryptocurrency? Check out our overview, where we explain utility tokens, security tokens, non-fungible tokens, and many more.
