What Is BEP-20? Understanding the Token Standard

TL;DR

In the past, launching a new cryptocurrency required building a dedicated blockchain or modifying Bitcoin's codebase. Ethereum changed this by enabling token creation directly on its platform. The introduction of the ERC-20 token standard made the process significantly easier by providing a widely accepted foundation for new tokens.

BNB Smart Chain (BSC) offers an alternative approach, streamlining token creation within the crypto ecosystem. Designed to mirror Ethereum's ERC-20 model, BSC fosters greater competition in the DeFi space. BEP-20 tokens emulate the functions and roles of ERC-20 tokens within their respective blockchain environments.

The upcoming BNB Chain Fusion will merge two blockchains, improving both security and operational efficiency. This initiative marks a pivotal move toward simplifying blockchain processes and enhancing interoperability between networks.

What Is BEP-20?

BEP-20 is a token standard on BNB Smart Chain (BSC). It serves as BSC's counterpart to Ethereum's ERC-20 token standard, making both models interoperable.

The BEP-20 standard lets users create new tokens on BNB Smart Chain without extensive programming skills. Developers aren't required to build a blockchain from scratch or limit themselves to Ethereum's token standards.

BEP-20 has enabled the creation of utility tokens and the launch of numerous projects. These tokens are fully compatible with BSC's smart contract infrastructure and play a major role in the expanding DeFi ecosystem.

BEP-20 is also essential for asset tokenization, integrating traditional financial assets onto the blockchain. Through tokenization, BEP-20 tokens can serve as digital assets bridging conventional and digital finance. All BEP-20 transactions settle in BNB, the native token for BNB Beacon Chain.

BNB Beacon Chain—the ecosystem's original blockchain—also supports BEP-20 tokens, operating in parallel with BSC. This allows BEP-20 tokens to access decentralized exchanges and trade on BNB Beacon Chain.

BSC (BNB Smart Chain) is the ecosystem's second blockchain, launched in September 2020 as DeFi gained mainstream traction. Features like staking, decentralized lending, and other DeFi services existed for years but only recently caught the broader crypto industry's attention.

This momentum led to BSC's launch as a development platform, attracting users, talent, and projects. As a result, BSC is now widely seen as a strong competitor to Ethereum, and BEP-20 has emerged as a rival to the ERC-20 token standard.

What Are the BEP-20 Token Standard Parameters?

BEP-20 includes several parameters that govern token functionality, such as Blacklist, Can Mint, Can Burn, and Can Pause.

The Blacklist parameter helps identify and block malicious addresses associated with a token. Can Mint specifies whether additional tokens can be created, functioning as an inflationary control by enabling supply increases.

Can Burn complements Can Mint by allowing token supply reduction through burning—a common deflationary mechanism used to decrease available supply and potentially increase asset value.

Can Pause is an innovative and practical feature designed to protect against malicious attacks. If the platform faces an attack or malfunction, users can temporarily halt BEP-20 token operations. However, this introduces a degree of centralization, which is typically discouraged within the crypto community.

BNB Smart Chain hosts a wide variety of BEP-20 tokens, many developed directly on BSC. Several projects with their own blockchains also issue BEP-20 versions of their coins and tokens. PancakeSwap, the native token of a leading decentralized platform and AMM on BSC, is one example. Autofarm, a popular yield aggregator and decentralized platform, is another.

BEP-20 vs. ERC-20

BEP-20 serves the same purpose as ERC-20. How do the two standards compare, and can one be considered superior?

BEP-20 and ERC-20 share many similarities—unsurprising since BEP-20 is designed as an ERC-20 alternative. Both function as token templates, supporting ownership, transferability, and issuance.

With specialized bridges now available, the two networks can connect directly, enabling interoperability. However, ERC-20 tokens must be converted to BEP-20 format for use on BSC. Once converted, they can operate within the relevant network or DApps built on BSC.

Transferring assets between networks is called Peg-in, and the process is reversible, allowing tokens to move in both directions.

Ultimately, the two token models are very similar. While they run on different networks, they fulfill the same role, and tokens created under either standard can be converted between the two. They are essentially twin models.

How Does BEP-20 Differ from BEP-2?

When comparing different cryptocurrency standards, it's important to distinguish between BEP-20 and BEP-2. While both standards exist within the broader crypto ecosystem, BEP-2 is used on BNB Beacon Chain—the original network for governance—whereas BNB Smart Chain is focused on development.

The two standards operate in parallel and are fully compatible. Both networks use BNB as their core native digital asset, powering both token models.

Although BSC is a separate network for digital assets, it can be seen as an extension of BNB Beacon Chain. Both feature a dual-chain architecture, allowing seamless interaction. Exchanging BEP-20 and BEP-2 tokens is straightforward.

However, BEP-2 tokens can't be used directly on BSC, nor can BEP-20 tokens operate on BNB Beacon Chain. Users must convert their tokens to the appropriate format for the desired network. Since each serves distinct functions, their use cases rarely overlap, and users choose networks based on their needs.

DeFi, GameFi, and DApp enthusiasts gravitate toward BSC, while those focused on decentralized platforms or BNB Beacon Chain typically use BEP-2. Special bridges link the two networks, enabling substantial cross-chain liquidity and facilitating Peg-in and Peg-out swaps for crypto tokens.

What Is BNB Chain Fusion?

The ecosystem is consolidating its BEP-2 and BEP-20 blockchains into a unified BNB Chain Fusion. This initiative aims to enhance both security and efficiency. It merges the dual-chain system into a single blockchain, requiring users to convert BEP-2 and BEP-8 tokens into BEP-20 to retain their assets.

This merger addresses vulnerabilities that arise from maintaining two blockchains and streamlines transactions. Users must act promptly to transfer their tokens, as late conversions are only supported via the command line interface and on a limited basis.

Conclusion

BEP-20 is a token standard for BNB Smart Chain and is fundamentally similar to Ethereum's ERC-20. Both standards are compatible and widely adopted. While some view different crypto ecosystems as rivals—extending competition to token standards—this is less relevant in the context of Web3's vision to unify the industry.

Building bridges between blockchains and projects will drive future growth, making interoperability a key consideration. The ability to work together and foster innovation is what truly matters.

Understanding BEP-20 equips users to navigate decentralized finance and token ecosystems more effectively. The BEP-20 standard continues to evolve, providing developers and users with practical tools for creating and managing digital assets.

FAQ

What does BEP-20 mean?

BEP-20 is a token standard for the BNB Smart Chain network, similar to Ethereum's ERC-20. It enables straightforward creation and management of tokens on the blockchain platform.