Main Takeaways

This article aims to give information on Solana’s token standard.
It also discusses Token-2022, an extension for SPL.

Solana’s Token Standard

Introduction

Every blockchain needs token standards to define how a token can interact with the network. For example, ERC-20 is a token standard that governs fungible tokens on Ethereum, and BEP-20 is a token standard on BNB Smart Chain (BSC). Similarly, Solana has its own token standard called SPL (Solana Program Library).

What Are SPL Tokens?

SPL tokens are tokens that follow the SPL standard and operate on the Solana blockchain. The SPL standard defines a set of rules for how the tokens should operate. By following these rules, tokens are ensured to be compatible with Solana wallets and smart contracts. Basically, every token on Solana is an SPL token.

Features of SPL Tokens

SPL tokens do not follow the usual Ethereum-based systems on other blockchains like TRON’s TRC-20 and BSC’s BEP-20. This brings SPL some outstanding features.

SPL Tokens Include NFT: Unlike Ethereum, where different types of fungible and non-fungible tokens use different standards, Solona uses SPL as the one standard for these types of tokens. This makes it easier for developers to create and manage various tokens of different types on the blockchain.
Composability: SPL is designed to be composable, meaning the code for an SPL token can be reused to create another token. Developers can efficiently create new tokens without starting from scratch. Depending on the purpose of the token, some adjustments could be made. However, the majority of the code base is reusable.
Scalability: SPL tokens benefit from the rapid transaction speed (up to 65,000 TPS) and the great scalable structure of Solana. This makes transacting SPL tokens faster and more efficient than tokens from other blockchains.

Low Fees

Since Solana’s gas fees are consistently low, transactions with SPL tokens are more economical, even during crowded periods.

Use Cases of SPL Tokens

Like any other token, SPL tokens can be used for a variety of purposes within the world of blockchain. Some popular use cases include:

DeFi (Decentralized Finance): Users can use specific SPL tokens for staking, lending, or yield farming.
NFTs: Digital assets creators can mint unique SPL tokens as digital signatures to their multimedia, gaming assets, or any known use case for NFTs
Governance Tokens: Several Solana-based projects use SPL tokens for governance, enabling decentralized decision-making where token holders can vote on protocol changes and upgrades.

Solana’s Token-2022

Token-2022 program, or Token Extensions, is the extension for SPL, aiming to enhance the functionality of SPL tokens. It unlocks a wider range of possibilities for developers to create innovative token designs. This adds various configurations to the SPL.

Transfer Fees: This feature lets you set fees depending on the value of the transaction.
Closing Mint: This option lets you close the minting account when the supply runs out, which makes sure that the tokens are managed correctly.
Interest-Bearing Tokens: Changes how the UI shows the token amounts, which lets features like accruing interest.
Non-Transferable Tokens: Create tokens that can not be transferred to other addresses. This is similar to releasing a token and then freezing the account, but the account owner can burn and close the account.
Permanent Delegate: You can choose a fixed account delegate for any token account linked to the mint with this option.
Memo Required on Incoming Transfers: Enforces the inclusion of a memo field for incoming transfers.
Immutable Ownership: This feature prevents the reassignment of ownership for the account, which makes it safer and easier to manage.
Default Account State: This changes the state of newly made token accounts to either frozen or thawed.
CPI Guard: Protects account from cross-program invocation (CPI) threats.
Transfer Hook: This feature allows custom logic to be executed during token transfers.

Conclusion

This article discusses what SPL tokens are, the features of SPL tokens, some prominent use cases, and the Token Extensions of SPL. Overall, SPL tokens have gained popularity due to their efficiency, scalability, and interoperability with other blockchain projects.