BEP20 vs ERC20 vs BEP2: Which Is the Best?
BEP20 vs ERC20 vs BEP2
The crypto market is thriving today, creating excellent opportunities for those who’ve decided to tap into the crypto world. Among the multiple ways to capitalize on crypto, token development looks especially promising. If you’re considering token development, this guide is for you. It explores and compares the most popular token standards and more. Let’s get down to business.
What Is a Token?
“Token” is a term used to describe a certain digital asset that is built and runs on top of an existing blockchain. Crypto tokens can perform a wide range of functions, from processing transactions to voting on a dApp. Beyond that, tokens can be traded like a cryptocurrency and used by startups to raise funds.
Popular Token Standards
Every year, hundreds of new tokens are launched on various blockchains; Ethereum and the BNB Smart Chain (previously known as Binance Smart Chain) are among the most widely used. Still, these tokens need to conform to specific rules to adequately perform within their blockchains.
To streamline the token development process, Ethereum and Binance established token standards. A token standard is a set of rules and conditions that determine how a token works.
A token standard involves rules governing various aspects of the token industry, including the total token supply, transaction processes, and the way you create tokens. Token standards help prevent fraud and mitigate technical issues.
The most popular token standards are BEP20, ERC20, and BEP2. Let’s take a more detailed look at each.
What is BEP20?
So what is BEP20? BEP20 is a token standard on the BNB Smart Chain (BSC) that extends ERC20, the most widely used Ethereum token standard (we’ll look into that further in a moment). BEP20 was intended as a technical specification for the BNB Smart Chain, aimed at providing token developers with a flexible layout for launching different tokens. At present, BEP20 token standards are widely used due to their faster transaction speed and cross-chain compatibility.
Benefits of the BEP20 token standard
- You can utilize BEP20 tokens as a layout for developing similar tokens.
- Wallets such as Trust Wallet allow users to hold and withdraw BEP20 tokens in a convenient and accessible way.
- BEP20 tokens are cross-chain compatible, meaning you can work with Ethereum, Stellar, NEO, and other tokens.
- The BEP20 token standard significantly streamlines crypto trading, ensuring greater transparency and faster transactions.
- Tokens based on different blockchains can be pegged to a BEP20 token and used on the BSC.
Top 5 BEP20 tokens
- C.R.E.A.M.: An open-source decentralized finance (DeFi) protocol serving individual and institutional users on Ethereum, BSC, Polygon, and Fantom. It enables you to deposit assets and earn yield similarly to a conventional savings account.
- PancakeSwap: A pioneering decentralized exchange on the BSC blockchain. PancakeSwap allows users to swap BEP20 tokens in liquidity pools through an automated market maker.
- BurgerSwap: One of the first BSC-based decentralized exchanges. BurgerSwap makes it possible to make crypto swaps using its automated market maker.
- Safemoon: An automated DeFi protocol focused on safe gains. The latter is achieved through static rewards, manual burns, and automatic liquidity protocols.
- Swipe: A DeFi protocol that links fiat money and cryptocurrency. Swipe’s principal products are a Visa debit card and a multi-asset DeFi wallet that enables immediate conversions between fiat currencies, cryptocurrencies, and stablecoins.
What is ERC20?
ERC20 is the standard for fungible tokens built using the Ethereum blockchain. ERC20 stands for Ethereum Request for Comment, with the “20” referring to the recommendation identifier for this protocol. All crypto coins and NFTs running on the Ethereum blockchain are considered ERC20 tokens. The ERC20 token standard belongs to the earliest and most trusted token standards that can be used for creating different tokens. Ethereum smart contracts are deployed to launch ERC20 tokens.
Benefits of the ERC20 token standard
- ERC20 tokens allow for more efficient confirmation of transactions.
- ERC20 tokens are smart contract integrated, resulting in more secure transactions.
- ERC20 transactions are fast.
- The ERC20 token standard makes token development easier.
- ERC20 tokens can be instantly converted into cash since they have high liquidity.
Top 5 ERC20 tokens
- Uniswap: A decentralized crypto exchange that employs smart contracts to execute trades.
- Tether: One of the first stablecoins and cryptocurrencies pegged to a fiat currency (USD).
- USD Coin: A stablecoin pegged 1:1 with the US dollar, meaning that a token owner can redeem 1 USD coin for 1 USD at any time.
- Dai: A stablecoin on the Ethereum blockchain. Its token value is maintained as close to 1 USD as possible through a smart contract system.
- BUSD: Another stablecoin pegged 1:1 with the US dollar. BUSD is widely used for loans, payments, and any other transactions available to ERC20 tokens.
What is BEP2?
BEP2 is a standard for token issuance and implementation on the BNB Beacon Chain. It contains a set of rules tokens must follow to function in the BNB Beacon Chain environment.
Benefits of the BEP2 token standard
- BEP2 is easy to use. It allows users to easily trade crypto assets on Binance crypto exchanges, both centralized and decentralized.
- You can easily swap BEP2 tokens for their BEP20 equivalent.
- BEP2 token transactions are supported by most popular wallets.
Top 5 BEP2 tokens
- BEP2 USDD: A native token. BEP2 USDD is a stablecoin pegged to USD 1:1 and additionally backed by TRX and BTC.
- Binance Coin: One of the most popular utility tokens and a cryptocurrency that supports the BNB Chain ecosystem.
- Binance USD: A fiat-backed stablecoin launched by Binance and Paxos. Each BUSD token is backed with 1 USD held in reserve.
- Polkadot: A multichain protocol that allows for cross-chain token transfer.
- Fantom: A Layer-1 blockchain intended to improve scalability and cost efficiency through an aBFT consensus mechanism.
Expert DeFi Token Development
We build decentralized financial tokens for a variety of uses.
Major Aspects of Token Development
In addition to its technical side, token development is associated with numerous aspects that everyone planning to launch a new token should know. Let’s explore further.
Token compatibility means that tokens developed should comply with the token standard.
Token cap is the maximum supply of tokens that will be developed and available in the market. It ensures token buyers that the assets are available in a restricted quantity.
Token supply is the supply of tokens at the birth of the project. Not all tokens are released in the market at once.
This is how the tokens will be issued (staking, mining, or both).
Token minting is a decentralized method that allows a user to generate a new token without any central authority involved. The owner determines the process of token minting and can decide to stop it to increase the token value.
Token burning means removing coins from the overall supply to reduce the amount available or increase the demand. It’s important to decide whether your tokens will be burned, how often, and in what volumes.
This aspect determines what rights are given to token holders, e.g., governance rights, voting rights, etc.
Token listing means making a token available to be traded on an exchange or over several exchanges.
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BEP20 vs ERC20 vs BEP2: Understanding the Key Differences
Before investing in token development, it’s critical to decide on what token standard to follow. BEP2, ERC20, and BEP20 are different, each with its own benefits. Here’s a more detailed look at the key differences between BEP2, BEP20, and ERC20 to help you make a more informed choice.
BEP20 vs BEP2
Although BEP2 and BEP20 are native token standards inside the same blockchain ecosystem, there are a couple of major differences between them.
The key difference between BEP2 and BEP20 lies in each token standard’s smart contract capability. While BEP2 tokens don’t support smart contracts, the BEP20 token standard was designed for tokens that utilize smart contracts.
Another BEP20 vs BEP2 difference is their consensus mechanisms: Proof-of-Work (PoW) for BEP2 and Proof-of-Stake (PoS) for BEP20. Additionally, BEP2 tokens can’t run on an Ethereum network while BEP20 tokens are compatible with Ethereum.
Finally, there’s a significant BEP20 vs BEP2 difference regarding transaction fees. While BEP2 tokens involve transaction fees on both centralized and decentralized exchanges, BEP20 tokens don’t require any transaction fees.
Is BNB BEP2 or BEP20?
BNB tokens can be issued following either BEP20 or BEP2 token standards since they both run within one ecosystem — BEP2 on Binance Chain and BEP20 on BNB. Still, Binance tokens in the BEP2 format can only be used as transaction fees on the Binance Chain and BNB. For more extensive use, they are converted into BEP20 tokens.
5 BEP20 vs ERC20 differences
Now, let’s compare ERC20 vs BEP20. Here are five fundamental differences between the two standards.
BEP20 vs ERC20: standard specification requirements
Each token standard contains parameters, also known as functions, to be used by wallets, smart contracts, and marketplaces when they interact with a specific token. BEP20 and ERC20 involve six identical functions to determine the token’s total supply, display the token balance on the network, determine how tokens are transferred to and from an address, and specify whether multiple withdrawals from an address are allowed.
However, as a more advanced standard that extends the ERC20 token standard, BEP20 features four additional functions that specify the token name, its symbol, the number of decimals for a token unit, and the token owner’s address.
BEP20 vs ERC20: transaction fees (aka gas fees)
Another dramatic difference between ERC20 and BEP20 lies in gas fees. Again, BEP20 wins this ERC20 vs BEP20 battle: BEP20 transactions involve way lower fees due to BSC’s Proof-of-Stake Authority block validation method. A typical BEP20 token transaction costs no more than a couple of cents in gas fees, while ERC20 token transfer gas fees can reach 12 USD or more.
BEP20 vs ERC20: block verification speed
In addition, thanks to the Proof-of-Stake Authority method, BEP20 token transactions boast a higher block verification speed compared to ERC20 token transactions — around 3 seconds for BSC versus 15 seconds for Ethereum.
BEP20 vs ERC20: variety of tokens
Ethereum is the global leader with around 3,000 dApps, most of which are based on the ERC20 token standard. On the other hand, BSC hosts over 800 dApps, with the majority based on the BEP20 token standard. However, BSC is getting more and more traction, with plenty of new BEP20 projects likely to appear. So if you’re willing to invest in tokens of established dApps, the Ethereum-based token standard can provide you with a greater choice. Still, for newer dApp projects, BEP20 tokens are a good way to go.
BEP20 vs ERC20: platform security
Finally, let’s compare ERC20 and BEP20 from a security perspective. Although BEP20 tokens are renowned for lower gas fees and faster block verification speed, the ERC20 token standard has the advantage here. BEP20 features lower levels of network decentralization: while BSC relies on 21 selected validators for block verification, Ethereum has over 70,000 validators.
All in all, BEP20 and ERC20 tokens have many advantages over BEP2, which might interest someone who prefers to trade crypto using various coin pairs. Comparing BEP20 and ERC20, BEP20 tokens offer better gas fees and execution times; however, they fail to provide the same security and decentralization levels as ERC20. Given that, if you’re principally focused on security, ERC20 tokens might be your best choice.
BEP20 vs BEP2 vs ERC20 FAQ
What is a token standard?
A token standard is a set of rules determining how a token will operate on a particular network. It contains technical specifications, such as the programming language used to run the token, and business rules, such as the specific functions of the token.
What does BEP20 mean?
In a nutshell, BEP20 can be defined as a token standard on the BNB Smart Chain (BSC) that extends ERC20, the most common Ethereum blockchain token standard. It’s a set of rules for using tokens. The acronym BEP stands for Binance Smart Chain Evolution Proposal. BEP20 is designed to be compatible with both BEP2 and ERC20 standards, ensuring compatibility with the Ethereum Virtual Machine.
Is BEP20 the same as BSC?
No. You can’t compare BEP20 vs BSC since they refer to different things. BSC is a blockchain dedicated to running smart contracts while BEP20 is a token standard that is used for creating tokens on the BSC blockchain. Likewise, you can’t compare ERC20 vs BSC or BEP2 vs BSC, since ERC20 and BEP2 are token standards while BSC is a blockchain.
BSC vs ERC20: What’s the difference?
You can’t compare or choose between ERC20 or BSC because they mean quite different things. BSC, rebranded as the BNB Chain in February 2022, is a blockchain network designed for running smart-contract-based applications. ERC20 is a token standard that governs blockchain tokens on the Ethereum network.
Written by Vitaliy Basiuk
COO & Co-founder at EvaCodes | Blockchain Enthusiast | Providing software development solutions in the blockchain industry