In brief
- Nervos is a blockchain network that pits itself as a competitor to Ethereum.
- It just launched an alternative to Ethereum’s ERC-20 token standard.
- This will allow anyone to create new tokens on the Nervos Network, much like on Ethereum, but with a twist.
It’s been a year since Nervos Network, a scalable proof-of-work blockchain released its mainnet Lina. To celebrate the anniversary of its Ethereum-like network, the company today announced it’s launching a native token standard: the Simple User Defined Token (SUDT). Just like the ERC-20 standard for Ethereum, it allows anyone to create and issue new tokens on Nervos’s blockchain.
“SUDT is designed to compete with Ethereum’s ERC-20, especially in DeFi use cases,” Cipher Wang, Nervos’s Head of Product told Decrypt.
Nervos claims its implementation of SUDT offers some key advantages over the ERC-20 standard.
For instance, to deploy new ERC-20 tokens, developers have to re-deploy a smart contract on the Ethereum chain, which adds gas fees and technical effort. That’s because although ERC-20 offers clear guidance on its token interface, it does not give guidance on how a token should be implemented. As a result, there is no standardization among different ERC-20 tokens.
Nervos’ SUDT, on the other hand, defines both the token’s interface and its implementation. There are two benefits to this approach, Nervos says: Developers don’t need to re-deploy new smart contracts when they issue new tokens, and standardization ensures that each new token will be created in a defined way and is less likely to contain bugs.
“There is this concept of ‘white list’ in DeFi,” Wang explained to Decrypt. “For example, for the lending protocols such as Maker and Compound, they only select certain assets as collateral. Why? Because many unknown ERC-20 tokens can be malicious or contain bugs, causing all the DeFi hacks.”
Nervos wants to avoid implicit whitelisting on its blockchain ecosystem and create a more stringent token standard.
“In addition, launching tokens on SUDT is much cheaper than ERC-20,” Cipher said. During the height of DeFi mania, deploying a smart contract costs thousands of dollars, but with Nervos, one does not need to deploy a new smart contract and token issuance is no different from a simple transaction, which costs a few cents.
To demonstrate SUDT’s capability, Nervos collaborated with community project Portal Wallet, a crypto wallet built on the Nervos native token, “Common Knowledge Base” (CKB). The wallet also runs in any Ethereum wallet’s dApp browser. The Nervos demo, shown in a video, shows Nervos’s co-founder Daniel Lv buying a cup of coffee using an SUDT token, called COFFEE, at a mobile wallet-enabled Starbucks in China. (Starbucks are mobile-wallet enabled throughout the country.)
“We first airdrop COFFEE tokens to users during Nervos’ 1-year celebration events.The COFFEE token can be redeemed into Starbucks coupons in our online shop, a feature within Portal Wallet, which can be used directly at Starbucks.” Frank Lou, founder of Lay2, the company behind Portal Wallet.
Think of COFFEE as a fungible token that has a 1:1 exchange ratio with Starbucks coffee.
The whole point of Portal Wallet’s COFFEE token is that users won’t feel like they are using a Web3.0 wallet because the user experiences feel like redeeming a coupon from your Wechat Pay or AliPay. And that’s Lou and his team’s aspiration: to connect internet users seamlessly to the Web3.0 digital economy.
“SUDT is just the beginning,” Jan Xie, Co-founder of Nervos, told Decrypt. “We will continue to expand our standard around SUDT and around its governance, deposit and withdrawal. We will also create more tools to help developers build on top of us.”
In addition to launching a token standard, Nervos has worked on other DeFi infrastructure projects such as a privacy protocol with Grin, decentralized oracles, multi-chain wallets, and a stablecoin bridge between Nervos and Ethereum, which allows users to use Ethereum key to sign transaction on Nervos.