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BEP2 vs BEP20 vs ERC20: Comparison of Token Standards

BEP2 vs BEP20 vs ERC20: Comparison of Token Standards

Technology
18 min
1271
27.03.2024

To transfer a particular crypto asset from different wallets or exchanges, users are faced with choosing a network where the transfer will be made. All these networks are standards based on different blockchains on which tokens are created and transferred. 

We would like to explain the differences between modern networks and delve into the BEP2, BEP20, and ERC20 token standards. These popular standards determine a general set of rules, such as how transactions will be accepted, the process for transferring a token, how individuals will access token data, and the overall supply of tokens. In short, these standards offer all the key information about a token.

  • ERC20 is the tech standard for smart contracts on the Ethereum blockchain for creating tokens. 
  • BEP2 is the tech standard for creating and launching tokens on the BNB Beacon Chain.
  • BEP20 is the token standard on the BNB Smart Chain.

Let’s consider these three types of token standards in detail.

Definition of tokens and the importance of their standardization

Tokens are digital units in a blockchain platform. They are often application-specific and are used for the following aims:

  • Making transactions,
  • Savings of valuables,
  • Purchasing digital assets, for example, game credits,
  • Accessing control/voting rights for associated platforms or applications.

Around 20,000 cryptocurrencies exist, but a portion of these are inactive. Annually, hundreds of modern dApp (decentralized application) projects present their own tokens on blockchains such as BNB Smart Chain and Ethereum. These tokens must match the platform's token standards to comply with the underlying blockchain. 

The market uses certain technical terms to differentiate between tokens created on diverse blockchains. It is a token standardization, which means a set of rules and formats that must be followed when issuing new tokens.

A brief overview of BEP2, BEP20, and ERC20 token standards

Binance introduced two distinct token standards, namely BEP2 and BEP20, tailored to cater to the distinct requirements of diverse projects. Specifically, BEP2 is crafted to serve projects with a demand for rapid transaction processing, whereas BEP20 is developed for projects seeking greater adaptability. In turn, the ERC20 token standard offers a robust foundation for the development and functionality of diverse tokens within the Ethereum ecosystem.

Let's consider a table comparing BEP2, BEP20, and the well-established ERC20 token standards to discover the main features that set them apart. 

CriteriaBEP2BEP20ERC20
PurposeFacilitates trading on the Binance ChainSupports smart contracts and decentralized apps (dApps)Enables the creation of tokens on the Ethereum blockchain for diverse applications
Blockchain networksBNB Beacon ChainBNB Smart Chain (BSC)Ethereum
Consensus mechanismProof of work (PoW)Proof of staked authority (PoSA)Proof of stake (PoS)
Transaction speedGenerally fastFasterSlower (high demand)
Transaction costLowerLower to moderateHigher
Smart contract supportNo smart contract supportSmart contracts are supportedSmart contracts are supported
Address examplebnb1xy7w...0x899a...0xbd7e...

BEP2 tokens

BEP stands for BNB Evolution Proposal. This standard outlines the specifications for token issuance on the BNB Beacon Chain. Notable wallets like Ledger, Trust Wallet, and Trezor Model T support BEP2 token transactions.

To engage in transactions with BEP2 tokens, users must utilize BNB coins to cover gas fees, entailing transaction costs. While BEP2 offers the convenience of decentralized exchange (DEX) trading between various cryptocurrencies, it lacks support for smart contracts, a crucial feature for many tokens and dApps.

Examples

  • LINK: Chainlink serves as a decentralized oracle network facilitating secure interactions between smart contracts on various blockchain platforms and real-world data sources. LINK is the token of Chainlink realized on the base of BEP2. 
  • USDT: USDT, also known as Tether, is a stablecoin pegged to the US dollar's value. Widely utilized in the cryptocurrency market, USDT enables seamless value transfer and trading across different exchanges and platforms. This token is also built on the BEP standard. 

Use cases of BEP2

Let’s consider some popular use cases of the BEP2 token standard. 

Transaction and trading advantages: BEP2 tokens, exemplified by BNB (Binance Coin), bring forth a spectrum of advantages within the BNB ecosystem. Notably, these tokens can be utilized to cover trading fees on the Binance exchange platform, resulting in users enjoying discounted fees when employing BNB for transactions. Furthermore, BEP2 tokens extend their utility to transaction fees, offering to offset costs associated with withdrawals or deposits.

Token sale participation: The BEP2 token standard, particularly prominent in tokens like BNB, is pivotal in token sales conducted on Binance Launchpad. This facilitates users in acquiring new cryptocurrencies and tokens at preferential rates, leveraging BNB for such transactions.

Governance participation: Certain projects, adhering to the BEP2 token standard on the Binance Chain, extend governance features to token holders. This empowerment enables token holders to actively take part in the decision-making processes of the respective projects through established governance mechanisms.

Facilitating digital asset transfers: BEP2 tokens are a seamless conduit for digital asset transfers within the BNB Chain. This includes transferring assets between different accounts or across diverse applications developed on the BNB Beacon Chain. In essence, BEP2 tokens contribute to the fluidity of asset movement and transactions within the BNB Chain.

Pros and cons of BEP2

Advantages of BEP2 tokens:

Velocity and security: The BNB Beacon Chain, meticulously designed for swift and secure trading, incorporates a high-speed trading engine and minimal latency. This architectural emphasis renders BEP2 tokens an optimal choice for high-frequency trading scenarios.

Simplicity: Distinguishing itself from BEP20 tokens reliant on smart contracts, BEP2 tokens exhibit simplicity and user-friendliness. This characteristic broadens their accessibility, catering to a diverse user base that may not be well-versed in smart contract technology.

Cost efficiency: Transaction fees within the BNB Beacon Chain typically register lower values compared to those on the Ethereum network. This inherent cost efficiency proves advantageous for users seeking to economize on transaction expenses.

Cons of BEP2 tokens:

Restricted functionality: While BEP20 tokens boast the capability to support smart contracts and facilitate the creation of decentralized applications, BEP2 tokens primarily concentrate on streamlining trading processes.

Limited adoption: Despite BEP2 tokens being native to the BNB Chain ecosystem, they may encounter limitations in acceptance and usage by other exchanges or platforms. This restricted adoption hampers liquidity and poses challenges for users looking to buy or sell these tokens.

Incompatibility with the Ethereum ecosystem: BEP2 tokens lack compatibility with the Ethereum ecosystem, hindering their integration with existing wallets and exchanges designed to function with Ethereum tokens. This limitation curtails users' ability to seamlessly trade and store BEP2 tokens.

BEP20 tokens

BSC (BNB Smart Chain) is a blockchain built on top of Binance Chain to add smart contract functionality to the Binance Chain ecosystem that is compatible with Ethereum.

As the equivalent to Ethereum's ERC20 standard, BEP20 sets forth a framework of regulations and features governing the creation and functionality of tokens on the BSC.

These tokens share the fungibility characteristic and can represent an array of digital or tangible assets. Widely versatile, BEP20 tokens find applications in various domains within the BSC ecosystem, encompassing payments, investments, decentralized finance (DeFi) endeavors, gaming, and others. 

Examples

  • PancakeSwap (CAKE): Positioned as a premier decentralized exchange (DEX) on the BSC blockchain, PancakeSwap facilitates the exchange of BEP20 tokens within liquidity pools through its automated market maker (AMM) system.
  • Seedify.fund (SFUND): The Seedify platform promotes blockchain gaming, offers and manages initial coin offerings (ICOs), and fosters the creation of a gaming community. The holders of a native token SFUND obtain benefits such as staking and farming SFUND in different pools and participating in IGOs (initial game offerings).
  • Trust Wallet Token (TWT): The BEP20 utility token of Trust Wallet, known as Trust Wallet Token, presents numerous benefits and incentives to the wallet's users. These include accessing discounts for in-app cryptocurrency purchases and utilizing decentralized exchange (DEX) services.
  • Swipe (SXP): A comprehensive DeFi protocol, Swipe serves as a bridge between fiat and cryptocurrency realms. Its noteworthy products include Visa debit cards and a versatile multi-asset DeFi wallet, enabling swift conversions between cryptocurrencies, fiat currencies, and stablecoins.

Use cases of BEP20

These tokens have diverse applications. Below, we will discover some of them.

Transaction medium: BEP20 tokens extend beyond mere utility, acting as a medium for transactions in the exchange of goods and services, emulating the traditional functionality of currencies.

Investment vehicles: Many BEP20 tokens are strategically crafted as investment instruments, providing users with the opportunity to acquire and hold them as potential assets for long-term growth.

Decentralized finance (DeFi): Within the BSC ecosystem, BEP20 tokens are essential for supporting a spectrum of decentralized finance applications. These apps include lending platforms, automated market makers, and yield farming protocols. BEP20 tokens often serve as the native currency within them.

Gaming and NFT integration: The versatility of BEP20 tokens extends to the gaming sector and non-fungible token (NFT) spaces. Gaming platforms leverage BEP20 tokens for in-game transactions, allowing users to acquire various items. Similarly, certain NFT marketplaces facilitate the buying and selling of digital assets through BEP20 tokens.

Staking and governance: Some BEP20 tokens assume the role of governance tokens, granting users the ability to actively participate in decision-making processes within specific protocols or platforms. Additionally, these tokens may offer staking functionalities, enabling users to earn rewards or exercise voting rights based on their holdings.

Pros and cons of BEP20

Pros of BEP20:

Fast and low-fee transactions: BSC has faster block times and lower fees than Ethereum, making BEP20 tokens more cost-effective for users.

Scalability: BSC is built for scalability, handling more transactions, and reducing congestion at peak times.

Double-chain framework: Binance's BNB Chain Fusion aims to merge BEP2 and BEP20 chains in 2024, bolstering both security and efficiency. 

Drawbacks of BEP20:

Ecosystem dependency: BEP20 tokens are dependent on the functioning and development of the Binance ecosystem. Reliance on a single platform for token transactions may create dependency and vulnerability to changes in Binance's policies or infrastructure. 

Smart contract risks: BEP20 tokens function on smart contracts. This makes them susceptible to risks connected with smart contract vulnerabilities, such as bags or coding errors.

Centralization concern: The BNB Smart Chain consensus mechanism raised concerns about centralization due to fewer validators than Ethereum.

ERC20 tokens

ERC20, or Ethereum Request for Comments 20, is a widely adopted standard for developing and launching tokens on the Ethereum blockchain. These tokens have become the foundation for various decentralized applications and projects built on the Ethereum platform.  Tokens of ERC20 are fungible. So, each token is interchangeable with other tokens of this type.

Although ERC20 tokens operate within the framework established by the Ethereum team, the framework is quite broad, providing developers greater flexibility when creating tokens.

Examples

  • USDC (USD Coin): A stablecoin that operates on the Ethereum blockchain connected to the US dollar. These tokens are widely used for transactions and trading.
  • Chainlink (LINK): These are tokens of a decentralized oracle solution facilitating smart contracts to get access to real-world data.
  • Uniswap (UNI): It is a governance token of the Uniswap decentralized exchange, empowering token holders to participate in decision-making.
  • Wrapped Bitcoin (WBTC): These tokens represent Bitcoin on the Ethereum blockchain, enabling Bitcoin to be utilized in Ethereum-based applications.
  • Maker (MKR): The governance token for the MakerDAO project, involved in decentralized governance decisions within the MakerDAO ecosystem.

Use cases of ERC20

Crowdfunding (ICO/STO): ERC20 tokens are commonly used for initial coin offerings (ICOs) and security token offerings (STOs) as a means of raising capital for blockchain projects. This democratizes fundraising and allows global participation.

Decentralized exchanges (DEX): Many tokens traded on decentralized exchanges are ERC20 tokens. Platforms like Uniswap and SushiSwap rely on ERC20 standards for compatibility, enabling a diverse range of assets to be traded.

Smart contracts and dApps: ERC20 tokens serve as a native currency within decentralized applications and smart contracts deployed on the Ethereum blockchain. This fosters the creation of a variety of apps, from decentralized finance to gaming.

Governance tokens: Projects often issue ERC20 tokens as governance tokens. Such types of tokens give holders the ability to be involved in decision-making processes related to the project. This democratic governance model enhances community involvement.

Pros and cons of ERC20

Pros of ERC20:

Fungible: ERC20 tokens are fungible. This means that each token is interchangeable with another.

Wide adoption: The wide acceptance and integration of ERC20 tokens across various platforms contribute to increased liquidity, providing users with more options for trading and exchanging. 

Simple token creation: The ERC20 standard offers a simple template for token creation. This fosters a surge in tokenized assets, ICOs, and the token economy.

Cons of ERC20:

Transaction fees: ERC20 tokens on the Ethereum blockchain are subject to variable and sometimes quite high transaction fees during congestions. This makes small-value transactions less cost-effective for users.

Cross-chain compatibility: ERC20 tokens aren't natively compatible with other blockchains for direct transactions to other networks. In the case of transferring assets to other blockchains, ERC20 tokens require bridges or some mechanisms for interoperability, adding complexity.

Scalability issues: The inherent scalability issues of the Ethereum network may contribute to slower transaction processing times for ERC20 tokens, impacting the overall efficiency and promptness of token transfers.

The choice between BEP2, BEP20, and ERC20

When delving into token development, the choice of a token standard holds paramount importance. ERC20 vs BEP2 and vs BEP20 present distinct characteristics, each with unique advantages.  

Given the enhancing popularity of dApps and smart contracts, ERC20 and BEP20 tokens are used much more often than BEP2. In turn, the standard of BEP2 vs ERC20, and BEP20 may interest those who want to trade cryptocurrencies using different coin pairs. However, BEP2, with its absence of support for smart contracts, will not allow engaging in the rich world of dApps. 

A comprehensive examination of the key disparities between BEP2, BEP20, and ERC20 can aid in making a well-informed decision.

BEP20 vs BEP2

Despite both BEP2 and BEP20 being native token standards within the same blockchain ecosystem, significant differences set them apart. 

  • Smart contracts capabilities: The most prominent distinction lies in their smart contract capabilities. BEP2 tokens lack support for smart contracts, while the BEP20 standard is explicitly designed for tokens leveraging smart contracts.
  • Compatibility with Ethereum: Another noteworthy difference between BEP20 and BEP2 pertains to their consensus mechanisms: proof-of-work for BEP2 and proof-of-stake for BEP20. Additionally, BEP2 tokens are incompatible with the Ethereum network, whereas BEP20 tokens seamlessly integrate with Ethereum.
  • Differences in fee percentages: A substantial variance in transaction fees further distinguishes BNB BEP20 vs BEP2. While BEP2 tokens entail transaction fees on both centralized and decentralized exchanges, BEP20 tokens remove the need for such fees on the BNB Smart Chain.

BEP20 vs ERC20

Standard specification requirements: Both BEP20 and ERC20 encompass six identical functions for determining total supply, displaying token balances, managing token transfers, and specifying withdrawal permissions. However, BEP20, as an advanced standard, introduces four additional functions specifying token name, symbol, decimals, and owner's address.

  • Transaction fees (gas fees): the transactions gas fees in BEP20 vs ERC20 fees are significantly lower due to BSC's proof-of-stake authority validation. ERC20 transactions can involve higher gas fees, often exceeding 12 USD.
  • Block verification speed: The proof-of-stake Authority mechanism contributes to faster block verification in BEP20 transactions, completing in approximately 3 seconds on BSC compared to the 15-second duration for ERC20 transactions on Ethereum. 
  • Platform security: In terms of security, ERC20 holds an advantage due to higher network decentralization. BSC relies on 21 validators for block verification, whereas Ethereum has over 70,000 validators, ensuring greater security.
  • Variety of tokens: Ethereum boasts a more extensive array of tokens, with around 4,500 dApps based on ERC20. Conversely, BSC hosts over 5,000 dApps, mainly utilizing the BEP20 standard. While Ethereum offers a broader choice for established dApp tokens, newer projects often opt for BEP20 tokens.

Choose a token standard wisely based on your unique requirements and the ultimate goal of your blockchain project.

Peiko’s expertise in creating robust blockchain solutions

At Peiko, we are a seasoned team of experts specializing in software and blockchain development services. Our collective expertise spans a wide spectrum of projects, such as crypto wallets, cryptocurrency development, the creation of DeFi solutions, smart contracts, and more.

One of our notable achievements is the creation of Bitcoin Additional, a versatile and feature-rich mobile cryptocurrency wallet. This wallet offers users a seamless and secure solution for managing plenty of cryptocurrencies. Its functionalities include smooth transfers to contacts, compatibility with multiple coins, and an innovative offline payment feature to enhance the user experience.

The user-friendly interface implemented within the Bitcoin Additional wallet makes sending and requesting coins a straightforward and efficient experience. Recognizing the diverse user base, we ensure accessibility for both seasoned crypto-users and individuals new to the cryptocurrency sphere. We develop solutions that are simple to use to ensure that everyone, regardless of their familiarity with digital assets, can navigate and utilize the app effortlessly.

Also, we prioritize user convenience, and we place a paramount focus on the security of our applications. The development process of Bitcoin Additional includes comprehensive measures to ensure the application's security. Understanding the critical need to protect digital assets in the volatile crypto landscape, our team has implemented robust security protocols to instill confidence and peace of mind in our users.

Peiko's reputation as an industry leader in software and blockchain development is proof of our commitment to excellence. Recently, we were mentioned by Clutch as a top blockchain development firm for 2023. We thrive on overcoming challenges and delivering solutions that exceed clients’ expectations. As forward-thinking experts, we are always dedicated to exploring new horizons and trends in the evolution of blockchain technology.

Conclusion

The fundamental distinctions between BEP2, BEP20, and ERC20 standards lie in their respective blockchain infrastructures, transaction velocities, costs, and consensus mechanisms. Thorough consideration of these aspects is imperative for developers and users contemplating the adoption of either standard in their projects or investments. 

As blockchain constantly evolves, the growing significance of interoperability among diverse networks and standards is evident. 

If you aim to create your own profitable blockchain product, such as a token or cryptocurrency, turn to us. The Peiko team is eager to help you bring your ideas to life!

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