Binance Chain Is Getting Closer To Launch, Will Support Delegated Proof Of Stake Says CEO CZ
Binance Chain Is Getting Closer; It Will Support Delegated Proof Of Stake Says CZ
Binance, the largest virtual currency exchange in terms of trading volume per day, is getting prepared to launch the so-called Binance Chain. According to Changpeng Zhao, the CEO of Binance, the Binance Chain will be supporting delegated proof-of-stake (dPoS) and it will also be combined with Practical Byzantine Fault Tolerance (pBFT).
He gave these comments during a live stream on Periscope a few days ago. He did not only talk about the Binance Chain but also about the decentralized exchange (DEX) that they are building and how it will change the whole crypto market. Furthermore, he talked about their future plans for the platform.
About the dPoS system that Binance wants to implement, he commented:
“A DPoS-based blockchain counts with a voting system where stakeholders outsource their work to a third-party. In other words, they are able to vote for a few delegates that will secure the network on their behalf. The delegates may also be referred to as witnesses and they are responsible for achieving consensus during the generation and validation of new blocks.”
WIth the dPoS algorithm, there will be a voting system that will be dependent on the reputation of the delegates operating. If there is an error encountered on the node, it will be expelled and replaced by another node. At the same time, this dPoS consensus algorithm seems to be more scalable than other systems such as proof-of-work (PoW) and Proof-of-Stake (PoS).
At the moment, PoS is being used by Qtum, Decred, Statis, among others. Ethereum (ETH) is also trying to implement a PoS algorithm. Meanwhile, Bitcoin (BTC) or Litecoin (LTC) are using the popular PoS consensus algorithm.
The Binance Coin (BNB) will be swapping from the Ethereum blockchain and move to its main net after the DEX launches during the first part of 2019. The Binance Coin was launched in 2017 raising $15 million and it is currently based on the ERC-20 standard.
According to Changpeng Zhao, the new Binance Chain will allow projects to issue their own tokens. After it, they will be able to raise funds in BNB tokens. In order to make the DEX economically viable, Binance will be getting a small fee from each trade on the platform. Additionally, they will also be getting a small fee for projects that launch their token on the Binance Chain.
Mr. Zhao said that each project will have to pay around $100,000 to list their tokens, but this is something that can be adjusted in the future depending on the demand for this service. The intention is to keep scammers away.
It is also important to mar that the Binance DEX will not be managing the users’ private keys. Customers at the platform will be using their own wallets to trade cryptocurrencies. In the beginning, Binance will also have a lot of influence on the network. Indeed, the number of validators will be close to 11.
Zhao believes that as soon as time passes, there will be more and more validators joining the network and the influence that Binance has on it will be decreasing as well. Changpeng Zhao compared the number of validators on the Binance Chain with networks such as NEO or Ripple.
About scalability, he said that the requirements for running a validator will be large. The intention is to generate a block every single second and support several thousands of transactions every single second. Thus, it might not be possible for everyone to be a node in this network.
Decentralized exchanges had several issues to reach a larger audience. One of the main things they’ve faced is that they are not able to scale as easily as other networks. Thus, this created some problems for them. During the last months, their volume dropped to new lows in the last years.
In the future, the intention is to implement other innovative features and allow the network to have cross-chain interoperability. Nevertheless, this may take a longer time to be implemented.
According to CoinMarketCap, Binance Coin is currently the 10th largest digital currency in the market. It has a market cap of $1.14 billion and each BNB coin can be purchased for $8.11. Binance is the largest digital asset exchange in terms of trading volume in the last 24 hours. As reported by CoinMarketCap, the exchange platform handled $524 million on the last day.