Original - Odaily

Author - Nan Zhi

The Solana Foundation announced the launch of Token Extensions, a new standard for network SPL tokens. Token Extensions is the next generation Solana library standard, designed to help enterprises provide more efficient security and compliance services on the Solana network, and provide solutions for Solana. Digital and RWA assets provide flexible, secure tools.

Token Extensions introduce a new set of methods to extend regular token functions. The original Token standard introduced basic functions such as transfer, freezing, and minting tokens, while Token Extensions include the same functions, but also includes such as private transfers, automatic Define transfer logic, extended metadata, etc. They unlock new capabilities for businesses and developers that, in some cases, were previously impossible on public blockchains.

Solana said that crypto services company Paxos and stablecoin issuer GMO-Z.com Trust Company have now adopted Solana’s Token Extensions to issue stablecoins.

What features do Token Extensions bring?

According to the Solana documentation, there are 13 types of Token Extensions. Their specific functions and official recommended use cases are summarized as follows by Odaily based on the publicity documents and technical manuals:

• Private transfer: Protect the confidentiality of user balances during the transfer process while hiding the transaction amount. Used for on-chain payment, B2B payment, treasury management, etc.

• Transfer Hook: Token issuers control which wallets can interact with their tokens, and how tokens and users interact. Used for KYC verification, token usage restrictions, mandatory royalties, etc.

• Transfer fees: Protocol level charging capabilities. For perpetual royalties, transaction fees, etc.

• Metadata pointer: Establishes a verifiable link between the token and Metadata. Used for token verification, asset distribution, etc.

• Permanent authorization: allows the program to have irrevocable permissions on the token. Used to automate subscription services, update RWA (data) to reflect reality, conduct stablecoin freezing and seizure operations based on compliance requirements.

• Metadata: Allows Metadata to be natively coordinated with consumption scenarios.

• Default account status: Configure and enforce token account permissions. Used for KYC verification, etc.

• Non-transferability: Token owners cannot be changed other than the issuer. For managing external databases, non-transferable NFTs or other assets.

• Mandatory note for transfer: A note must be attached when transferring money. Used for compliance, reporting, audit traceability, etc.

• CPI protection: Restricts the way other programs interact with Token Extensions tokens by prohibiting cross-program calls to certain operations within them.

• Interest-bearing tokens: Allow interest to be set and displayed within the token.

• Immutable owner: The account owner cannot be changed.

• Turn off Mint permissions.

Why do you need Token Extensions?

Solana says Token Extensions can be thought of as a new set of options and features built into the Solana token program. Token issuers, including game developers, programmable token issuers, etc., can choose to enable any Token Extensions in combination to obtain advanced functions that were previously unavailable on the public chain.

• flexibility: Token Extensions provide native support for enterprise-grade functionality without the need for any additional tooling and communication of external protocol adoption. There’s also no need to face the complexity of developing, auditing, and deploying your own custom token contracts.

• low risk: Get enterprise-grade security and reliability using audited and tested Token Extensions that reduce attack vectors and help protect protocols and funds.

• Reduce testing costs: Because Token Extensions are added by simply specifying the extension in code, the possibility of defects and human error is greatly reduced, saving testing time and cost.

• Reduced development time: Because extensions are unified and reusable, the time required to develop applications using extensions is significantly reduced.

Amira Valliani, director of policy at Solana Foundation, said: “More and more businesses are interested in the benefits of blockchain, but wanted to ensure that the technology was adopted in a responsible manner, consistent with its internal compliance processes. One of the many benefits of token scaling is that it simplifies these processes. Extensions like Transfer Hooks, Private Transfers, and Permanent Delegations make compliance obligations easier, ensuringCompanies do not have to spend resources customizing smart contracts to implement their compliance framework。”

Technical use cases

The Solana announcement claims that some stablecoin issuers using Solana have begun applying Token Extensions. For example, Paxos recently uses permanent authorization, Metadata pointers, transfer Hooks, etc.Building their USDP stablecoin. GMO Trust announced the launch of the first regulated Japanese Yen stablecoin and their own USD stablecoin on the Solana network, using permanent delegation, default account status and Metadata pointers. Currently, Phantom, Solflare, and Fluxbeam all support Token Extensions. In addition, Token Extensions, in addition to building more advanced stablecoins, are also suitable for game asset upgrades, RWA asset issuance and governance, etc.