BNB Chain (BNB), the layer 1, or base, blockchain of crypto exchange Binance, announced a major rebranding and a push towards expansion, according to a press release shared with CoinDesk.
BSC is rebranding to BNB Chain, which stands for Build and Build, in an effort to draw a connection to Binance’s BNB token, the governance token for the protocol, the press release said.
The BNB Chain is made up of two parts: BNB Beacon Chain, previously Binance Chain; and BNB Smart Chain, formerly BSC. BSC is compatible with the Ethereum Virtual Machine (EVM), where smart contracts are executed, and serves as a hub to access other blockchains.
BNB (Build and Build) (formerly called Binance Coin)
Binance BNB is the native token of BNB Chain, and it can be used to trade and pay fees on the Binance cryptocurrency exchange.
BNB Beacon Chain (previously Binance Chain) - BNB Chain Governance (staking, voting)
BNB Chain is the original blockchain of Binance. However, it had some programmability limitations, and so BNB Chain was built to overcome these limitations. It is a decentralized and transparent blockchain and you can store your crypto funds securely and create trading pairs with other cryptocurrencies.
BNB Smart Chain (BSC) (previously Binance Smart Chain) - EVM compatible, consensus layers, and with hubs to multi-chains
BNB Chain runs in parallel with BNB Beacon Chain, and is not a replacement for the original one. Using BSC, the platform can support Ethereum-based applications and smart contracts, unlike BNB Chain.
Sidechains
What are sidechains? How they work, and why we need it scale the network?
Sidechains are a separate blockchain that is connected to another blockchain through a two way pegged to help process some of the data from the main blockchain.
Now before we move on too much. Let's go over a quick review of what a layer 2 scaling solution is and why we need them.
Layer 2 Scaling Solution
Basically main blockchains are really slow and if we want to try to speed them up they either aren't as secure or they aren't as safe. So we have to find a secondary method to make them faster. These solutions are called layer 2 scaling solutions.
Now sidechains attempt to take some of the work that a main blockchain needs to do, and do it for them. Well, how do they do this?
Most sidechains attempt to take some of the work that a main blockchain are little more centralized than the main chain but this is okey because we will trade off security for speed just we don't want to do it on the main chain. This may be our first important point side chains. They are responsible for their own security.
Another point is that sidechains need their own validators or miners. They can even have their own consensus mechanism. Meaning if they wanted to, they could use proof of stake or proof of work. Validators or miners usually earn rewards for their work in a sidechain in the same manner that all other blockchains work.
Merge Mining
Now I want to talk about Merge Mining. Because one of the cool things about sidechains is that many of them allow what is called merge mining. And this is the term that means you can mine or validate two blockchains at once earning double the rewards with roughly the same amount of work.
Two way pegged
Now the next big point is to explain the two way pegged. Two way pegged because they are pegged moving onto the sidechain and then pegged moving back to the main chain. We call these two processes locking up and releasing.
Locking Up :-
Let's go over locking up first. So when you move your coins and tokens from the main chain to side chain. You have to lock them up, otherwise you had have a bunch of free tokens on both chains.
Locking them up usually means they go to a wallet or a contract control by a machine or code not a human, and you have to do something special to get them back. Nevertheless when you lock up your coins on the main chain, you get your coins and tokens on the sidechain. They are basically the same things but this allows to move things back and forth without allowing people to duplicate their coins.
Releasing :-
The second part of this pegged is called releasing. So when you locked up your coins and tokens on the main chain, the protocol accept them and actually mint you free coins and tokens on the sidechain that are representation of what you have on the main chain. When you want to switch back you destroy your coins and tokens on the sidechain, and you get to release your funds on the main chain.
So if you did all the transactions and data processing on the main chain. It would get super congested and backed up. In case of a sidechain it is meant to be a bit centralized but allow many more transactions so that the network can scale.
When users are ready to move back to the main chain they just have to move their funds through locking and releasing mechanism and hope that the federation lets them.
Federation
This brings us to our next point, The Federation.
A Federation is the technical term for the middle man that is in charge of locking and releasing those funds and assets between two chains. Now, not all sidechains need a federation but many of them do because they are quite useful.
Some Federations are completely code while many federations are actually controlled by the sidechain organization. The Federation is in charge of making sure whatever is locked up is exactly what's on the sidechain. This way the sidechain never has more value and tokens in it than those that are locked up on the main chain.
Example
We couldn't talk about sidechains without talking about Ethereums sidechain Polygon. Polygon or the Matic network is roughly a sidechain for Ethereum. Ethereum has been crazy backed up in the past couple of months. Meaning high transaction fees.
Polygon which was formerly named Matic is a sidechain to Ethereum that allows you to perform almost the same interactions. Although tenths to hundreds or even to a thousand times cheaper.
The block time on Polygon is 2seconds compared to Ethereums 10seconds. Using the Matic bridge you can move assets from Ethereum to Polygon in less than an hour at anytime that you want to. You can also move them back. Polygon is one of the most well known sidechains due to its mass adoption and ability to interact with Ethereum.
One thing to keep in mind about sidechains is that they are permanent solutions that are kind of difficult to greatly change once they are in place.