BEP-20 is an acronym for Binance Smart Chain Evolution Proposal. It is an extension of the Ethereum token standard for fungible tokens known as ERC-20. BEP-20 makes most attributes that were optional in the ERC-20 compulsory. BEP-20 standardizes and defines the rules for token usage in the Binance Smart Chain ecosystem. Since the BEP-20 standard was evolved from the Ethereum token standard ERC-20, it is also compatible with Ethereum and Binance Chain (now known as Binance Beacon Chain) BEP-2 token standards.
History of Binance Smart Chain
In 2019, the hugely successful exchange, Binance, launched the Binance Chain to facilitate decentralized cryptocurrency trading apart from its centralized exchange known as Binance. The Binance Chain was optimized in design for trading alone and launched with the Binance Decentralized exchange (Binance DEX) in 2019. However, although the optimization of the Binance Chain for trading had succeeded in its goal of fast transactions with cheaper fees, it was not flexible and was limited. The need for a similar chain that supported smart contracts was evident.
In September, 2020, the Binance Smart Chain (now known as the BNB Smart Chain) was launched. The Binance Smart Chain like the Binance Chain has as its native token, the BNB, which is used to pay fees and reward validators on both blockchains. However, it runs as a parallel chain to the Binance Chain and is therefore not a side chain or just a scaling solution for the Binance Chain. As is expected for every blockchain, token standardization goes a long way in improving usage of the underlying blockchain. This was what led to the creation of the BEP-20 standard for Binance Smart Chain.
Components of BEP-20
The BEP-20 is composed of certain attributes that must or should be defined for a token to circulate on the Binance Smart Chain. These include:
- Name: The token name of every token should be defined. It is the only optional component of the BEP-20 proposal.
- Symbol: refers to the ticker symbol of a token on the Binance Smart Chain.
- Decimals: the number of decimals the token uses.
- Total supply: the total supply of the token which must always add up across the Binance Smart Chain and Binance Chain at any point in time.
- Balance of: returns balance of the token in a wallet.
- Get owner: defines the BEP-20 token owner.
- Transfer: transfer a specified amount of the token to a given address.
- Transfer from: allows a third-party permission to transfer from a given address.
- Approve: allows a spender (such as DEX) to withdraw from an account.
- Allowance: How much a spender can still withdraw from an account.
Types of tokens supported by BEP-20
- Native tokens: These are tokens native to the Binance Smart Chain and are compatible with the Binance Chain as well.
- Peggy tokens are tokens that are pegged to another token that is not native to the Binance Smart Chain e.g., BTCB, USDT, ETH, XRP, LINK etc.
- Stable coins are tokens pegged to the value of some asset usually fiat currency e.g., BUSD
- STOs: known as Security tokens are tokens representing securities such as shares in an organization.
Note: The Binance Smart Chain and the Binance Chain have been merged as at February 2022 and renamed BNB chain together. The original Binance Chain is now known as BNB Beacon Chain.