Binance Smart Chain (BSC) is a hard fork of the Go Ethereum (Geth) protocol and shares many similarities with the Ethereum blockchain. However, BSC’s developers introduced several key adjustments. The most significant change relates to BSC’s consensus mechanism, which ultimately reduces transaction fees and increases transaction speed.
Introduction
At first glance, Binance Smart Chain (BSC) and Ethereum appear very similar. DApps and tokens built on BSC are compatible with the Ethereum Virtual Machine (EVM). You may have noticed that your public wallet address is the same on both blockchains. Some projects even operate across both networks. Despite these similarities, the two blockchains have notable differences. It’s essential to understand these distinctions before deciding which one to use.
Blockchain Activity and DApp Ecosystem
As of mid-2021, Ethereum hosted over 2,800 DApps, while BSC had around 810. Although Ethereum leads in numbers, BSC’s ecosystem is powerful, rapidly growing, and promising.
Active addresses are another critical on-chain metric. Despite being newer, BSC reached a record 2,105,367 addresses on June 7, 2021—more than double Ethereum’s all-time high of 799,580 addresses set on May 9, 2021.
What drove this sudden growth on BSC? Key factors include faster confirmation times and lower fees. BSC’s expansion may also be linked to the hype around non-fungible tokens (NFTs) and compatibility with popular cryptocurrency wallets like Trust Wallet and MetaMask.
The difference becomes even more apparent when comparing daily transaction data. BSC enables users to transfer funds and interact with smart contracts more quickly and affordably. At its peak, BSC processed around 12 million daily transactions, with a consistent baseline exceeding 4 million.
In contrast, Ethereum has never surpassed 1.75 million daily transactions. For users who need to move funds regularly, BSC often appears more attractive. Of course, daily transaction volume should be analyzed alongside active address counts for proper context.
Most Popular DeFi DApps on Ethereum and BSC
In decentralized finance (DeFi), there’s significant overlap between BSC and Ethereum due to blockchain compatibility. Developers can easily port applications from Ethereum to BSC, and new BSC projects frequently reuse open-source code from Ethereum, sometimes with only a name change.
The top five Ethereum DApps include a diverse mix: two DeFi automated market makers (Uniswap and SushiSwap), one crypto game (Axie Infinity), and a peer-to-peer marketplace (OpenSea). BSC’s top five list shows many similarities.
PancakeSwap, for example, was created as a hard fork of Uniswap. Autofarm and Pancake Bunny are yield farming platforms—a category absent from Ethereum’s top five. Biswap and Apeswap are also automated market makers. Thanks to lower fees and faster transactions, yield farming on BSC is often more efficient, making it a popular choice among users.
In crypto gaming, Ethereum remains home to many iconic titles. While BSC hosts projects similar to CryptoKitties and Axie Infinity, it hasn’t yet captured the same level of player engagement as Ethereum’s classic games.
Transferring Between Networks
If you’ve ever deposited BEP-20 or ERC-20 tokens into a wallet, you may have noticed that Ethereum and BSC use the same wallet address format. For instance, if you accidentally choose the wrong network when withdrawing tokens from an exchange, you can usually recover them from the other blockchain.
If you send ERC-20 tokens to a BSC address, you can retrieve them from that same address on the BSC network. The same process applies if you send BEP-20 tokens to an Ethereum address. Fortunately, in both cases, your funds are not permanently lost.
👉 Learn how to recover crypto sent to the wrong network
Transaction Fees
Both BSC and Ethereum charge transaction fees based on a gas model, which measures computational complexity. BSC users can set gas prices based on network demand, with miners prioritizing higher-fee transactions. However, Ethereum’s London hard fork introduced changes aimed at reducing fee volatility.
Ethereum’s upgrade created a new pricing mechanism where each block has a base fee. This base fee adjusts with transaction demand, eliminating the need for users to manually set gas prices.
Historically, Ethereum’s gas fees have been significantly higher than BSC’s. The highest average fee reached $68.72 in May 2021. While this trend has moderated, Ethereum fees generally remain higher than BSC’s.
For context, transferring an ERC-20 token to another wallet currently costs around $2.46 on average. Using a Uniswap liquidity pool involving multiple transactions increases the cost to approximately $7.58.
A comparable transaction on BSC costs just $0.03. BSC calculates this by multiplying the gas used (21,000) by the gas price (5 Gwei).
Transaction Times
Measuring average transaction time in a blockchain is complex. Technically, a transaction is complete once a miner validates its block, but other factors can delay this:
- If fees are set too low, miners may delay including your transaction in a block.
- More complex blockchain interactions require multiple transactions (e.g., providing liquidity to a pool).
- Most services require multiple block confirmations before considering a transaction final. These extra confirmations reduce the risk of transaction reversals for merchants and service providers.
Ethereum gas statistics show transaction times ranging from 30 seconds to 16 minutes. These numbers reflect successful transactions but don’t account for multiple confirmation requirements.
For example, depositing Ether (ERC-20) into a Binance account requires 12 network confirmations. With an average block time of 13 seconds, this adds an extra 156 seconds to the deposit time.
BSC’s average block time is 3 seconds—about 4.3 times faster than Ethereum’s.
Consensus Mechanisms
Ethereum’s Proof of Work (PoW) consensus mechanism is similar to Bitcoin’s but differs significantly from BSC’s Proof of Staked Authority (PoSA). However, this difference may not last long. With Ethereum 2.0, the network will transition to Proof of Stake (PoS).
BSC’s PoSA combines Proof of Authority (PoA) and Delegated Proof of Stake (DPoS). Twenty-one validators take turns producing blocks and earn BNB transaction fees as rewards. To become a validator, one must run a node and stake at least 10,000 BNB to qualify as an elected candidate.
Other users, known as delegators, stake BNB behind elected candidates. The top 21 candidates with the highest stakes take turns processing blocks. This process repeats every 24 hours. Delegators also share in the rewards earned by validators.
Ethereum’s PoW is a different system that relies on a competition to solve computational puzzles rather than community staking. Anyone can participate but must purchase or rent specialized mining equipment. The more computational power you have, the higher your chance of solving the puzzle and validating a block. Successful miners receive transaction fees and Ether rewards.
Although PoW is effective for achieving consensus and ensuring network security, developers continue to explore more efficient and environmentally friendly alternatives without compromising safety.
For these reasons, the Ethereum network will eventually switch to Proof of Stake. Validators will stake Ether to earn the right to produce blocks. Other validators will attest to the block’s correctness. Validators who produce blocks with false transactions risk losing their staked tokens. Honest validators receive rewards for successful blocks and attestations.
Frequently Asked Questions
What is the main difference between BSC and Ethereum?
The primary difference lies in their consensus mechanisms. BSC uses Proof of Staked Authority (PoSA), which enables faster and cheaper transactions. Ethereum currently uses Proof of Work (PoW) but is transitioning to Proof of Stake (PoS).
Can I use the same wallet address on both BSC and Ethereum?
Yes, the same wallet address can be used on both networks because both are compatible with the Ethereum Virtual Machine (EVM). However, always ensure you are using the correct network when transacting.
Which blockchain is better for yield farming?
BSC is often preferred for yield farming due to its lower transaction fees and faster processing times. This makes frequent transactions more cost-effective, though users should also consider ecosystem maturity and security.
How do I recover tokens sent to the wrong network?
If you send tokens to the wrong network (e.g., ERC-20 to BSC), you can usually recover them by importing your wallet into a tool that supports both networks and adjusting the settings accordingly.
Will Ethereum 2.0 make Ethereum as fast as BSC?
Ethereum 2.0 aims to improve scalability and reduce fees through sharding and PoS. While it may become more competitive with BSC in speed and cost, differences in design and governance will likely remain.
Is BSC more centralized than Ethereum?
BSC relies on 21 validators, leading to some centralization concerns. Ethereum, with its larger validator set in PoS, aims for greater decentralization. Both make trade-offs between performance and decentralization.
Conclusion
In summary, Binance Smart Chain and Ethereum share many similarities. To some extent, Ethereum users can easily migrate and experience BSC. Despite these parallels, BSC has implemented meaningful adjustments to improve performance and efficiency. Its Proof of Staked Authority (PoSA) consensus mechanism offers users cheaper and faster blockchain transactions.