The crypto exchange Binance is preparing to enter the smart contracts market by launching a new Ethereum-compatible blockchain. The move is set to increase the utility of Binance’s native token, BNB, which could see its price jump.
Binance to Enable Smart Contracts
Binance announced the introduction of Binance Smart Chain (BSC). It will run in parallel to the exchange’s current Binance Chain and will enable support for smart contracts.
The world’s largest cryptocurrency exchange by trading volume revealed that BSC will employ the interoperability and programmability features of the Ethereum Virtual Machine (EVM).
“BSC chooses to be compatible with the existing Ethereum mainnet. This means most of the dApps, ecosystem components, and toolings will work with BSC and require zero or minimum changes,” reads the whitepaper.
The Binance Chain Development Community will be responsible for maintaining the new blockchain. This community will work to entice developers and entrepreneurs to build their decentralized applications and digital assets on top of BSC.
Binance Coin (BNB) will help power BSC, similar to how Ether runs on Ethereum.
BNB will be used as the gas to perform any transaction or run contract on the new protocol. It will also allow holders to earn staking rewards.
“[This is an] attractive opportunity for all BNB holders who are interested in staking BNB to support the development of Binance Smart Chain and earn rewards,” reads the announcement.
Since BNB is a non-inflationary token, an expansion of its utility, as well as the number of holders on the network who seek to earn staking rewards, could have serious implications for the token’s price.
BNB Is Poised for a Further Advance
From a technical perspective, BNB has been contained within a descending parallel channel since mid-2019.
Since then, each time this cryptocurrency rises to the upper boundary of the channel, it drops down to hit the channel’s bottom. From this point, the token bounces back again. These are the primary characteristics of a channel.
Since Binance Coin surged over 150% as of the Mar. 12 crash, it has managed to move back above the middle line of the channel and turn it into support.
Based on historical data, BNB could be on its way up to test the resistance provided by the upper boundary of the channel, which will eventually determine where the token is headed next.
It is worth mentioning that the bullish outlook will depend on the strength of the $14 support level.
If this price hurdle fails to hold, BNB could pull back to the lower boundary of the channel. Such a bearish impulse would represent a 40% correction from the current price levels.
The smart contracts giant, Ethereum, could soon face serious competition as Binance prepares to launch BSC.
According to Binance, the new staking-based consensus will enable better network performance over proof-of-work tokens, speeding up block times and increasing transaction capacities. Meanwhile, the dual-chain strategy is expected to allow users to “take advantage of the fast transferring and trading on one side, and flexible and extendable programming on the other side.”
Although Binance is working to make it easier for startups to switch networks, it remains to be seen whether or not Binance Smart Chain will trigger a massive exodus from Ethereum-based projects.
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