Introduction to Token Standards
Many of our readers have heard about Ethereum tokens, such as Polygon (MATIC), The Graph, and LINK (which powers Chainlink). The creation and operation of these tokens are determined by fixed token standards. These token standards specify how to create, issue, and deploy new tokens based on their underlying blockchain. Token standards exist so that smart contracts will continue to work for new tokens. In other words, token standards ensure the compatibility of new tokens with existing decentralized exchanges.
Older blockchains like Ethereum require new tokens to follow one of several established token standards. Once tokens are distributed via these blockchains, token functionality cannot be upgraded. Why? Because these upgrades cannot be applied to all tokens in circulation. This safeguard ensures that each token of a given implementation scheme is exactly the same as any other token of that same implementation. For example, there are no special Polygon tokens. Any given Polygon token is exactly the same as all the rest. Ethereum.org explains the inner workings of several popular token standards in detail.
Token Standards on the Internet Computer
The Internet Computer is a game-changer for issuing tokens due to its revolutionary concept of canisters. Unlike on older blockchains, token implementations on the Internet Computer can be updated dynamically by upgrading the associated canister. Thus, new token features can be implemented on-demand across all circulating tokens. In other words, there is no absolute need for universal token standards on the Internet Computer. Instead, the infrastructure of the Internet Computer encourages developing specialized tokens for specific purposes that evolve in response to emerging community needs. This difference has advantages as well as challenges.
But is there still a relative need for token standards on the Internet Computer?
Certainly, new projects shouldn't be constantly forced to reinvent the wheel. Wrapping tokens to transfer across different exchanges can also be tiresome, and working on compatibility between projects after the fact can sap away energy from innovation and creativity.
Check out - Infinity Swap covered all the current standards in their latest blog
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