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6 Reasons to Use the BEP-20 Standard for Lending DApps

Prem KhatriBy: William Dawsey


6 Reasons to Build DeFi Microlending Apps as BSC DApps

Microlending is a growing trend in the financial world, providing a necessary solution for small businesses and individuals who don’t have access to traditional lines of funding.

As reported by Grand View Research, microlending is especially significant in the developing world and is included in initiatives to combat poverty and give underserved populations greater access to capital.

Microlending is defined as the process of issuing small (or "micro") loans to small business owners who wouldn’t otherwise be able to secure them from institutions such as banks. Microlending is part of the broader concept known as microfinance, which refers to the provision of services used for low-and-moderate income households or businesses. Microfinance offerings include small loans, savings accounts, and insurance policies.

According to an Allied Market Research report, the global microlending market size was valued at $134.35 billion in 2019 and could reach $343.84 billion by 2027. Microloans are typically issued by nonprofit organizations, and the terms are more flexible than traditional business loans.

The Link Between Microlending and Decentralized Finance

A substantial aspect to consider in the growth of microlending is its increasing connection to the concept of decentralized finance (DeFi), which challenges the traditional centralized model of finance.

Traditional finance involves centralized systems, regulatory bodies, and gatekeepers. DeFi essentially removes the centralized aspect and the hurdles that come with it, offering peer-to-peer exchanges that empower everyday people. This gives software companies greater incentive to provide software to institutions that offer decentralized financial services, especially microlending. At its core, DeFi is enabled by blockchain technology and cryptocurrency.

In an article by the Consultative Group to Assist the Poor (CGAP), Greta Bull notes that microfinance institutions should use technology to serve customers more efficiently. She adds that these institutions need flexible core IT systems, cost-effective contemporary communication and reach channels, more effective data use, and product diversification.

A decentralized application (DApp) for microlending can be used to help these institutions and their customers.

lending dapps and crypto token standards

Lending DApps and Crypto Token Standards

The advantages of DApps include accessibility, user privacy, security, ease of transactions, and greater flexibility in development. A major platform for the development of DApps is the Binance Smart Chain, owned by Binance, one of the largest exchange companies in the world of cryptocurrency. Hassan Maishera, a columnist for Cryptowisser, reported that the Binance exchange had $9.5 trillion in trading volume in 2021, capturing a 67-percent market share that year.

Binance has two blockchain projects that offer considerable features. There’s Binance Chain, which is where Binance’s centralized exchange (CEX) operates. There’s also the BNB Chain. Binance notes on that BNB stands for Build and Build. The BNB chain can be used for DApps and the operation of smart contracts.

The two blockchains each serve a different purpose but work seamlessly together. Each blockchain has a token standard, which sets the rules and functions for the creation and issuance of new tokens on the blockchain. The token standard for the Binance Chain is BEP-2, and the token standard for the BNB Chain, commonly known as Binance Smart Chain or BSC, is BEP-20. BEP stands for Binance Evolution Proposal.

The BEP-2 Standard

While BEP-2 is very useful in its role, it does have its limitations compared to BEP-20. BEP-2 is used as the standard for all transactions on the Binance crypto exchange, on both their CEX and their DEX (decentralized exchange). This, however, is where BEP-2’s functionality ends, as the token doesn’t work on any other blockchain. BEP-20, on the other hand, can be summed up best with one word: interoperability.

the bep 2 standard

BEP-20 can connect to other blockchains through bridging. It’s compatible with smart contracts on Ethereum, as well as with the Ethereum Virtual Machine (EVM). The EVM software platform can be used to build DApps on the Binance Smart Chain while being compatible with Ethereum and other EVM compatible networks.

The emergence of decentralization—particularly in fields such as finance, NFTs, and crypto games—prompted Binance to build the BNB blockchain. A blockchain network that could support these evolving fields would need to be able to support smart contracts. According to an article on, the Binance Smart Chain served as an answer to Binance Chain’s inability to support smart contracts or complex programming.

The BEP-20 Standard

Using the BEP-20 standard would be integral in creating microlending DApps, as BEP-20 functions as a framework for tokens, boasts cross-chain compatibility, and is supported by wallets like Trust Wallet, MetaMask and, of course, the BSC Wallet itself.

BEP-20 was conceived with the goal of flexibility for developers to have the option to launch a variety of tokens. Crypto tokens can be used as a form of currency or for trading, held as a store of value, and used as components of more complex smart contracts.

Building a DApp requires specialized technical knowledge, so it would be best to hire a software development company with the expertise and tools needed.

bep20 for microlending dapp/the bep 20 standard lists the following as well-known examples of BEP-20-based tokens and applications that were built on the Binance Smart Chain: Binance Coin (BNB) and PancakeSwap (CAKE). The cryptocurrency publication also states that PancakeSwap is the main decentralized exchange where BEP-20 tokens can be swapped. Binance Coin is the main cryptocurrency used on the Binance Smart Chain ecosystem and it is used to pay “gas fees” on all transactions that take place on this network.

There are several key benefits to using BEP-20 to create decentralized applications for microlending: security, privacy, low transaction fees, flexibility, transparency, and time.


With a DApp, you have a greater sense of security because the application doesn’t have a central server that can be attacked and taken offline. DApps run on blockchain networks, which are comprised of nodes. Each node includes a connected device such as a computer and has a complete copy of the blockchain transactions. So, if one node fails, other nodes can be used to maintain the blockchain network.

DApps are protected through cryptography, which guarantees the integrity and authenticity of data. Centralized systems, on the other hand, may become temporarily or permanently unusable because of a compromised server. These centralized systems can suffer catastrophes such as data leaks or theft, leaving both the company and individual users at significant risk. This makes microlending through a decentralized application a more appealing solution.

Security is among the main benefits of using the BEP-20 token standard. The technology behind these tokens ensures the traceability of all transactions, so users know where their money is going.



The protection of user privacy is one of the core benefits of DApps. With no centralized authority controlling the personal data of users, they don’t have to provide real-world identity information to interact with the DApp. Users must connect to a DApp through the use of a crypto wallet. The user can then control which information he or she would like to share.

Low Transaction Fees

According to, BEP-20 transactions incur much lower fees than the token standard, ERC-20. The website notes that BEP-20 transactions cost a few cents and rarely over $1, compared to transaction fees of tens or hundreds of dollars for similar transactions but in the Ethereum blockchain.


A major component of DApps is their flexibility. Ethereum provides a flexible platform for new DApp creation, and this gives developers a good framework for their efforts to find innovative uses for applications.

Another degree of flexibility is the ease with which developers can leverage smart contracts to integrate cryptocurrencies into the basic functions of a DApp. DApps can use various forms of payment without incorporating third-party payment providers.


In the case of BEP-20 specifically, flexibility is found in the interoperability between tokens adhering to the standard. Additionally, there is BEP-20’s compatibility with other blockchains, including Bitcoin and EOS through the use of bridges. This compatibility frees users from having to rely solely on one crypto platform.

BEP-20 tokens can represent anything from shares in a business to stablecoins, which are cryptocurrencies that are pegged to other assets such as a fiat currency or precious metals.


Transparency is crucial in finance, and many people associate centralized finance with a lack of transparency. In the traditional financial system, a person has to trust a central authority, hoping their financial data won’t be misused, tampered with, or hacked. DApp development allows for the use of smart contracts, which are automated and use predetermined rules to facilitate transactions and increase transparency.

A third party or individual can’t manipulate a smart contract. BSC and BEP-20 are highly transparent and have rapid token transactions. Making a DAPP open-source adds another level of transparency and integrity, increasing adaptability and progression.


Speed and efficiency form another valuable component of DApps in the Binance Smart Chain. Downtime is reduced or eliminated since there is no reliance on a single point like a hosting server. This means minimal interruptions or security risks and maximum durability and resilience. Without intermediary institutions like banks and credit companies, transactions can take place 24/7, increasing convenience for everyone involved.

BEP-20 tokens offer significantly faster speeds than credit cards (to settle funds) and other cryptocurrencies. While a credit card may take up to three days to process transactions and settle funds, BEP-20 tokens offer an incredibly short transaction speed.

BEP-20 tokens use a Proof-of-Stake (PoS) consensus algorithm, which is more secure, requires less energy, and better facilitates new scaling solutions.

decentralized apps

Decentralized Apps

Decentralized microlending apps open a world of financial services to people who don’t have access to traditional financial institutions. Blockchain technology and the BEP-20 token standard offer a low-cost way for microlenders to provide access to small business resources for customers, regardless of location or status. Financial transactions can happen at high speed at any time.

Benefits such as privacy, security, transparency, speed, and low transaction fees present a viable solution for institutions working in microfinance, especially in the realm of DeFi.

Developing a decentralized application can be a complex process, as it doesn’t involve a fixed linear order of steps. Instead, it requires frequent adaptation and iterations, which means you must understand layers of communication elements and decentralized systems.

For small-to-medium sized software companies to bring these innovative microlending software solutions to their clients, they should hire a blockchain development company that has experience with blockchain networks, cryptocurrencies, and decentralized applications. If you want to enlist such expertise, contact Chetu today.


Chetu, Inc. does not affect the opinion of this article. Any mention of specific names for software, companies or individuals does not constitute an endorsement from either party unless otherwise specified. All case studies and blogs are written with the full cooperation, knowledge and participation of the individuals mentioned. This blog should not be construed as legal advice.

Chetu was incorporated in 2000 and is headquartered in Florida. We deliver World-Class Software Development Solutions serving entrepreneurs to Fortune 500 clients. Our services include process and systems design, package implementation, custom development, business intelligence and reporting, systems integration, as well as testing, maintenance and support. Chetu's expertise spans across the entire IT spectrum.

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