SPL Token is the term we use to define Solana tokens, used for different functions and utilities. SPL is Solana's standard token, analogous to the ERC-20 tokens of the Ethereum network. The most well-known and important is SOL, the Solana Blockchain governance token, used as a currency for payment, transfer of value, execution of contracts or participation in the governance of the network.
The term SPL stands for "Solana Program Library", that is, SPL Token means a token that comes from the Solana program library, which follows certain standards.
What Are SPL tokens?
Fundamentally, SPL tokens are tokens that operate on the Solana blockchain. SPL defines the set of rules that define how tokens should operate on the Solana network, where compliance with these standards will ensure interoperability with Solana wallets and smart contracts.
SPL tokens run parallel to the Solana native coin and can be spent like any other cryptocurrency. However, they are abstracted from the core operations of the Solana blockchain, unlike the native coin. Therefore, SPL tokens are not used in the network’s consensus, and every transaction involving SPL tokens comes with a network fee which is paid in the native Solana coin.
The SPL defines operation standards for fungible and non-fungible tokens on the Solana blockchain. Unlike ERC, where different standards are set for different types of non-fungible and fungible tokens, the Solana Primary Library doesn’t have a specially computed standard for the different token types.
So, the SPL standard applies to fungible and non-fungible Solana tokens. The difference in operation is defined at the token creation stage, but this is basically in terms of the number of tokens minted, divisibility, and extra attributes that could be abstracted.
How Are SPL Tokens Created?
SPL tokens are created by interacting with the smart contract facility of the Solana blockchain through pieces of code developed using the Solana blockchain’s programming language (Rust). This process is known as Minting.
To mint an SPL token, you can write the code from scratch or modify the codebase for an existing SPL token. Certain applications have also been developed to help creators mint SPL tokens without doing much coding. During the minting stage, the core properties of the token are defined. For instance, to create a non-fungible SPL token, the supply is set to one and the decimal function is removed. For fungible tokens, the developer defines the decimal function to allow the token to be sent in splits. Also, the supply data is adjusted according to the project’s tokenomics strategy.
Key Points
Tokens represent ownership over either fungible (interchangeable) or non-fungible (unique) assets.
The Token Program contains all instruction for interacting with both fungible and non-fungible tokens on the network.
The Token Extensions Program is a new version of the Token Program that includes additional features while maintaining the same core functionalities.
A Mint Account represents a unique token on the network and stores global metadata such as total supply.
A Token Account tracks individual ownership of tokens for a specific mint account.
An Associated Token Account is a Token Account created with an address derived from the owner's and mint account's addresses.
Most Common Use of SPL Tokens
Some use cases for SPL tokens include:
DAOs
Decentralized autonomous organizations (DAOs) can also tokenize the governance of the project using SPL tokens. Projects can issue SPL tokens to their community and develop voting portals that accept these tokens for submitting and voting on proposals. Each SPL token issued for this purpose represents an opinion, where the number of SPL tokens held by an individual is proportional to their influence in the community decisions.
NFTs
Digital asset creators can mint unique SPL tokens as digital signatures to their multimedia, gaming assets, or any known use case for NFTs. In this case, the creator mints an SPL token with a supply set to ‘one’ and no decimal function. This removes the fungibility aspect and such tokens can function as an NFT. There are provisions for extra functions like defining the NFTs attributes and transfer arrangements. Some notable NFTs on Solana include Mad Lads and Famous Fox Federation.
Solana’s Token-2022
The Solana token program is set for a couple of new introductions as part of the Token-2022 program currently in development. Token-2022 is meant to enhance the functionality of SPL tokens, giving way for new abilities in addition to the existing attributes. Token-2022’s new introductions will expand the minting and spending properties of SPL tokens and will allow users to explore even more use cases for SPL tokens. The new introductions are classified into Minting and Account functions.
New Minting Functions
Interest-bearing tokens: Allows creators to add interest-bearing logic to an SPL token.
Transfer fee: Developers can introduce extra fees when an SPL token is transferred.
Transfer functions: Developers can specify advanced transfer operations for an SPL token. Tokens can be set as non-transferrable.
Last Words
Well, today we learned what SPLs are. Actually, before researching, I thought they were Axie Infinity's SLPs haha. It tends to confuse people, but now we can properly say that they are Solana network tokens, like Binance's BEP-20, or Tron's TRC-20. All of this is super interesting. Solana is a world of possibilities, and every day you learn something new and you are driven to want to know more and more.
Resources:
https://solana.com/docs/core/tokens
https://spl.solana.com/token
