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Looking for how Binance Bridge works?, then “Ultimate Guide to Binance Bridge” is for you.
The Binance Bridge Project aims to increase interoperability between different blockchains. It lets anyone convert their crypto assets into (and back from) Binance Chain and Binance Smart Chain wrapped tokens.
Why can this be useful? Well, this way, you can use your BTC, ETH, USDT, or other assets in Binance Smart Chain (BSC) DApps. Do you HODL BTC but want to harvest the latest yield farming opportunity on BSC? No worries, you can maintain exposure to your Bitcoin while still participating in DeFi on Binance Smart Chain.
Currently, there is a bit of an issue in the crypto space. Different blockchains can’t really talk to each other. If you make a Bitcoin transaction, the Ethereum blockchain won’t be able to know that it happened. If we zoom out a little bit and look into the future, this problem will likely be solved somehow with new technology. However, a much faster solution that is already available now is wrapped coins and tokens.
Wrapped tokens let you use coins and tokens native to other blockchains as tokens on a different chain, such as Binance Smart Chain. We’ve already seen how this can work with tokenized BTC on Ethereum. The Binance Bridge Project introduces this concept to Binance Chain and Binance Smart Chain.
What is the Binance Bridge Project?
The Binance Bridge Project is a cross-chain bridging service that aims to increase interoperability between different blockchains. It essentially lets anyone convert selected coins into wrapped tokens (or “pegged tokens”) to be used on Binance Chain and Binance Smart Chain. This brings digital assets such as BTC, ETH, USDT, LTC, XRP, LINK, ATOM, DOT, XTZ, ONT, and more to the Binance Chain ecosystem.
By using the Binance Bridge portal, you can access cross-chain liquidity on Binance Chain and Binance Smart Chain with just a few clicks.
How does the Binance Bridge Project work?
Wrapping a coin or token into a Binance Chain version is actually quite straightforward. Using the Binance Bridge service, you can convert cryptoassets between the native blockchain and Binance Chain/Binance Smart Chain. For example, if you transfer USDT from Ethereum to Binance Smart Chain, Binance Bridge will support the cross-chain conversion of Ethereum ERC-20 to Binance BEP-2 or BEP-20. It’s worth noting that these wrapped coins are backed by real coins and tokens on public addresses.
Currently, the Binance Bridge Project supports ERC-20 and TRC-20 cross-chain transfers. As you may already know, ERC-20 is a widely popular token standard on Ethereum. TRC-20 is a similar standard for the TRON network.
As a sidenote, BEP-2 is a token standard on Binance Chain, while BEP-20 is a token standard on Binance Smart Chain. The native currency of both chains is BNB. If you’d like to read more about how these parallel blockchains work, check out An Introduction to Binance Smart Chain (BSC).
Once you’ve set the parameters, the conversion time is quite short, and it should take around a few minutes to execute a cross-chain conversion. This, of course, depends on blockchain network confirmation times. What does this mean exactly? Well, depending on the blockchain you’re trying to convert from, the process may take more during times of congestion and high activity.
As far as fees are concerned, Binance Bridge charges zero conversion fees. You’ll only need to pay network transaction fees on the blockchains that you are converting between.
Do you need a Binance account to use the Binance Bridge? No. The Binance Bridge interface is open to any address without the need to register a Binance account.
On the other hand, if you do have a Binance account, deposits and withdrawals are open for a number of BEP-2 and BEP-20 assets. This way, you don’t have to worry about wrapping the assets yourself, and you can store, trade, and transfer them like any other token.
What is “Peg-in” and “Peg-out”?
The “Peg-in” feature allows you to convert from native blockchains to Binance Chain/Binance Smart Chain tokens. Conversely, “Peg-out” means converting from Binance Chain/Binance Smart Chain tokens to native blockchain tokens.
To complete a Peg-in, first, you’ll need a compatible wallet, such as Binance Chain Wallet or MetaMask.
Select the chain where you’d like to convert from, and specify the amount. Binance Bridge will generate an address for you that you have to deposit to. You’ll have a window of time to deposit to that address. If you send the funds to the address during that time, Binance Bridge will send you an equivalent amount of wrapped tokens to your Binance Chain or Binance Smart Chain address. You can find a step-by-step guide for how to do this in How to Get Started with Binance Bridge.
Once a transaction is complete, Binance Bridge will lock the tokens, and the peg to Binance Smart Chain is complete. This is when you can start using your pegged tokens.
Please note that if you’d like to convert a large amount, it may be better to start with a small amount first. This way, you can check that everything is in order before committing a large sum. Alternatively, you can do the same process directly on Binance.
The Binance Bridge Project is an important tool for increasing cross-compatibility in the blockchain space. Anyone can peg coins and tokens to be used on Binance Chain/Binance Smart Chain. The number of tokens to be supported will increase over time, leading to better access to liquidity on Binance Smart Chain.
The Binance Bridge is just one piece of a bigger project. Binance aims to increase even more the cross-chain liquidity between different blockchains