BEP-20 vs ERC-20: Why Can Two Parallel Chains Interoperate?

Question

If you’ve been in the crypto space for a while, you’ve definitely heard of ERC-20 and BEP-20. But what exactly is the difference between them, and why do some tokens need cross-chain conversion? Let’s break it all down today.

Why do we need BEP-20?

Back in the early days, launching a token was tough—you either had to build a new chain or fork Bitcoin. Then Ethereum came along and introduced the standardized ERC-20 token framework, making token launches much easier.

Binance saw the opportunity and, in September 2020, launched its own chain—BSC (Binance Smart Chain)—with its token standard, BEP-20. Why? Because Ethereum’s gas fees were expensive, and Binance wanted to offer users a cheaper, faster option.

What does BEP-20 look like?

BEP-20 is basically ERC-20’s twin brother. Both can:

Transfer tokens
Allow others to spend your tokens
Mint/burn tokens
Manage blacklists
Pause transfers (for hacking protection)

But BEP-20 has one unique feature: all transaction fees are paid in BNB, creating a closed loop within the Binance ecosystem.

Are they interoperable?

Yes. Binance built the Binance Bridge, allowing ERC-20 tokens to cross over to BSC and become BEP-20 tokens, and vice versa. The conversion fee is zero, but keep in mind: once bridged, they’re assets on different chains, which can split liquidity.

That’s why you might see the same token with different prices on Uniswap and PancakeSwap—they’re different chain versions.

How’s the BEP-20 ecosystem?

Projects like PancakeSwap and Autofarm are well-known on BSC, and DeFi activity is high. But to be honest, Ethereum still has the deepest ecosystem. BEP-20’s main advantages are low fees and high speed, making it ideal for users who interact frequently on-chain.

What about BEP-2?

Binance also has an older chain called Beacon Chain, which uses the BEP-2 standard. BEP-2 is mainly for trading on Binance DEX and managing BNB, with simpler functionality. Now, Binance plans to merge both chains into BNB Chain Fusion in April 2024, meaning all BEP-2 tokens will need to convert to BEP-20—a major move.

In one sentence

BEP-20 = Binance’s version of ERC-20: cheap, fast, and interoperable but independently run on separate chains. Which chain you choose depends on your ecosystem and fee needs—Ethereum’s is larger but more expensive, BSC is cheaper but a bit less developed. The future of Web3 is cross-chain interoperability, so these two aren’t competitors—they’re complementary.