BEP-20 is a token standard on Binance Smart Chain that extends to Ethereum’s ERC-20 standard. You can think of it as a blueprint for tokens that defines how they can be used, who can use them, and the rules for using them. Because it is similar to Binance Chain’s BEP-2 and Ethereum’s ERC-20, it is compatible with both.
BEP-20 was conceived as a specification for the Binance Smart Chain, with the goal of providing a flexible format for developers to launch a range of different tokens. They can represent anything from shares in a business to dollars stored in a bank (i.e. a stablecoin).
Of course, one can create native assets such as BEP-20 tokens or even peg tokens from other blockchains to make them usable on the Binance Smart Chain. This is what is done with the “pegged” coin, which is essentially the BEP-20 version of other crypto assets (such as LINK or XRP).
Like BEP-2 tokens on Binance Chain, BEP-20 token transfers are paid for in BNB. This creates an incentive for validators to include transactions in the blockchain, as they will collect BNB as a fee for their work.
Binance Smart Chain is envisioned as an extension to Binance Chain. With a dual-chain architecture, both chains complement each other – Binance Smart Chain serves decentralized applications without clogging the original chain, optimized for ultrafast transactions.
Due to this architecture, much emphasis is placed on cross-chain compatibility. For that reason, BEP-2 tokens can be swapped for a BEP-20 equivalent. The easiest way to do so is probably through the Binance Chain Wallet extension.
According to The Block
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