$62 804
+1,53%
$3815,81
+0,17%
$1,09
+0,17%
$0,3706
-0,69%
$0,0675
+0,34%
Published by: 03:09, 15 September 2019

The world of tokens and tokenization of assets

Since 2016, the tokenization process has been launched, hundreds of thousands of tokens have been created on various blockchains, most of them using the Ethereum blockchain. This report discusses and analyzes the diversity of token standards across different blockchains that support the issuance of new tokens.

ethereum бутерин мир токенов

1.  Ethereum Network Token Standards 

Ethereum was the first programmable blockchain to serve as a "world computer".

In 2013, the document for Ethereum was written by Vitalik Buterin. It describes an open source, open source, open source blockchain-based distributed computing platform that can execute smart contracts: applications that run exactly as programmed, without any possibility of downtime, censorship, fraud, or third party intervention.

Ethereum allows developers to create and deploy smart contracts as well as issue their own cryptocurrency directly on the Ethereum blockchain, eliminating the need for developers to create their own new blockchains for their services. This not only saves developers the time it takes to build the blockchain, but also allows them to leverage the security and decentralization of Ethereum.

ethereum world of tokens

As a result, Ethereum has become the blockchain standard for creating tokens and raising capital. In addition, new decentralized apps like DeFi apps have resulted in positive network effects, driving the majority of blockchain developers to build Ethereum.

We can distinguish utility tokens from security tokens at the code level, with security tokens referring to tokens whose built-in functionality is designed to comply with both existing and future securities regulations. In particular, the security token standards introduce new methods for issuers such as whitelisting wallet addresses, transfer and ownership restrictions, and the creation of central authorities.

 1.1 Utility tokens 

When it comes to utility tokens on Ethereum, the most common standards are ERC-20 and ERC-721. This subsection discusses many token standards: adopted, in development, or in draft form.

  ERC-20  & nbsp;  is the technical standard used for smart contracts on the Ethereum blockchain for the implementation of tokens. In particular, this refers to the general set of rules that an Ethereum token needs to implement in order to allow developers to program how exactly tokens function in the Ethereum ecosystem. Thanks to these rules, this provides more predictability when moving tokens from one address to another.

Prior to the introduction and actual adoption of this set of rules by all Ethereum developers, tokens could not be transferred with full predictability, which led to compatibility issues.

  ERC-223   - built on top of ERC-20, belongs to additional standard functions that can be implemented in contracts related to tokens to prevent accidental sending of tokens to contract addresses. In addition, token transactions behave like ethereal transactions. In particular, it expands on the ERC-20 standard to address problems that could result in the loss of some funds permanently.

  ERC-777  . Similar to the ERC-223 standard discussed earlier, ERC-777 refers to additional standard functionality that a token contract can implement to prevent possible loss of tokens.

These functions allow for preliminary checks to ensure that the contract has all the necessary functions to support tokens obtained using certain functions. In a nutshell, operators can send a token on behalf of a different address, be it a contract or a regular account, while holding tokens gain more control over their tokens. In addition, it de facto supports blacklisting certain addresses as operators can now be whitelisted.

  ERC-721   refers to an open standard that describes how to create and deploy non-functional or unique tokens on the Ethereum blockchain. While most tokens are fungible, all ERC-721 tokens are unique. One of the first popular examples of the use of such tokens was CryptoKitties at the end of 2017.

According to  Binance Academy , the creation of non-functional tokens based on the blockchain allows tokenization:

  • Physical assets (such as houses, artwork, and vehicles)
  • Virtual collectibles (like CryptoKitties or collectible cards)
  • Assets with a negative value (for example, loans)

All ERC-721 tokens must also comply with the  ERC-165 interface , which standardizes the way smart contracts interact with tokens that conform to other standards (i.e. not ERC-20).

  ERC-998  & nbsp;  is the standard extension for any immiscible holding token another immiscible ERC-721 token or a mixed ERC-20 token. In particular, transferring ownership of token composition means transferring the entire hierarchy of elements.

This standard extension for any non-replaceable token can allow new creations such as:

  • Meta-NFT (e.g. NFT as part of other NFTs)
  • Packages and individual portfolios for digital asset managers (for example, sets in Recruitment Protocol)

  ERC-1155 & nbsp;  (Enjin)  refers to the standard interface for contracts, which manage several types of tokens. This allows one contract to include any combination of fugue tokens, non-fugue tokens, or other configurations such as partially fugue tokens.

This standard interface allows the use of a token identifier to differentiate between items included in the same contract. Each token identifier represents a new custom token type that can have its own unique metadata, resources, and other specific attributes. In particular, the design of this interface offers several advantages, such as the ability to transfer multiple types of tokens (e.g. in-game items) at the same time.

 1.2 Security tokens 

ERC-20 was the main type of token standard used in ICO Mania 2017, during which many market participants took advantage of the global regulatory uncertainty associated with cryptocurrencies and ICOs to raise capital from investors.

Since then, the SEC and other financial bodies have created a different regulatory framework for security tokens. As a result, Ethereum developers and researchers are working on various token standards to comply with current and future regulations around the world.

Security tokens are intended to represent “full or partial ownership interests in assets and/or organizations”. While utility tokens have no restrictions on who can send or receive tokens, security tokens are subject to stricter restrictions based on identity, jurisdiction, and asset category.

In particular, these key features include the ability to differentiate ownership of tokens, the right to freeze certain tokens by a central custodian, or the inclusion of links to documents (such as KYC documents).

When it comes to Ethereum security token standards, one of the most prominent standards is ERC-1400 combined with ERC-1410 for Partially Non-Hygienic Tokens (PFT).

 ERC-1400/ERC-1410 

  ERC-1400   is a library of standards for security tokens in Ethereum. This set of standards was conceptualized, designed and developed by the main developers of Ethereum, namely Adam Dossa, Pablo Ruiz, Stefan Gosselin and Fabian Vogelsteller.

These standards are the umbrella of several other standards (discussed briefly below) that are all backward compatible with ERC-20 and ERC-777 interfaces.

  ERC-1410 : Partially Rectified Token Standard 
ERC-1410 refers to both differential ownership and transparent constraints. This interface supports owner tokens for grouping into sections, each represented by an identity key and balance.

Some of these sections may be used interchangeably while others are not. For example, a non-functional section of tokens may have certain conditions (for example, a transition period defined for security holders).

  ERC-1594 : Basic Security Token Standard 
This standard provides an interface that introduces checks for potential in-chain constraints, off-chain data entry for transmission constraints, and issue/redemption semantics.

Data injection refers to rules that are defined off-chain that can be applied and updated by the contract administrator to determine the set of applicable issuance and redemption mechanisms and potential restrictions on transfer between addresses.

  ERC-1643 : Document & Legend Management 
This standard allows you to associate documents with a smart contract and provides a standard interface for requesting or changing these contracts, as well as for receiving updates (via events) of changes in these documents.

  ERC-1644 : Controller Token Standard 
This standard allows "a token to transparently declare whether a controller can unilaterally transfer tokens between addresses."

A controller refers to a program that controls or directs the flow of data between two addresses.

  ERC-884  
The ERC-884 token is an ERC-20 compliant token that was developed by David Sag in accordance with Delaware General Corporate Law.

Delaware corporations can use blockchain technology to create a tradable ERC-20 token and support Delaware corporation-issued shares.

  ERC-1404  
ERC-1404 is an add-on to ERC-20 compliant tokens that includes an additional feature to restrict the transfer of tokens. This standard was created by TokenSoft, a technology provider for companies looking to issue and manage digital securities on the blockchain while meeting regulatory requirements.

Specifically, it adds the following functionality on top of the existing ERC-20 compliant token functionality:

  • Token Holder Identification (KYTH): Maintaining a whitelist of accredited investors who are allowed to own tokens.
  • Application of complex restrictions: country-specific restrictions or restrictions on the maximum number of token holders or the maximum number of shares per token holder.
  • Support for proprietary standards: Integration with proprietary token standards such as ST20 or R Token, which are described.

  ERC-1450  
ERC-1450 (also called LDGRToken) refers to an ERC-20 compliant token that complies with the new Securities Law Rules: Crowdfunding Rule, Rule D and Rule A. This standard was developed by Start Engine.

1.3 Proprietary token standards (proprietary standards)

This subsection discusses the main proprietary token standards for security tokens.

Branded Token Standards refer to token standards developed in-house by companies such as Polymath, Securitize or Harbor.

 CT-20 (Polymath) 
ST-20, developed by Polymath, is an ERC-20 compliant token standard that includes the ability to restrict asset transfers.

It is designed according to the ERC-1400 set of standards, which was also developed by Polymath.

  DS Token  (Securitize) 
DS Token (Digital Security Token) was developed by Securitize, with part of its platform focused on enabling digital securities to be issued on the blockchain while meeting compliance requirements.

The DS token is an ERC-20 compliant token that implements certain functions of the DS protocol. DS Token reviews compliance with regulatory requirements through additional checks through the Compliance Service, which checks whether a transfer should be accepted between the two addresses.

In addition, the DS protocol adds methods for issuing security to either lock wallets or freeze tokens to comply with regulatory requirements. In addition, it offers special features for securities issuers to perform certain services, such as paying dividends directly to a list of investors (referenced by their wallet addresses).

  R-Token  (Harbor) 
R-Token is developed by Harbor as part of its decentralized compliance protocol to standardize the processes of cryptocurrencies that are issued and sold on blockchain networks.

R-Token is an open source standard that defines a set of rules for crypto securities traded by address, in accordance with existing rules. R-tokens are authorized ERC-20 tokens on the Ethereum blockchain, which must synchronize operations with the on-chain regulator service before any approval.

In particular, the Regulatory Service introduces special rules designed specifically for each type of security in order to comply with relevant regulations, KYC policies, AML requirements and tax laws.

  S3  (OpenFinance) 
Part of their own ecosystem (ie the OpenFinance Network), S3 is a library built on many modular contracts that aim to offer a library with specific regulatory needs. Specifically, this library solves the problem of limiting compliance, AML/KYC, investor accreditation, and intruder checks (via blacklisting).

This library also covers many registered and restricted offerings such as Rule D, Rule S, Rule A + and Rule CF. These offerings allow issuers to easily and accurately create a security token.

  Atomic-DSS  (Atomic Capital) 
Atomic DSS Tokens, developed by Atomic Capital, offer an extension to the ERC-20 token standard to “issue digital security and automatic compliance”.

Atomic DSS (Digital Security Standard) tokens are authorized ERC-20 tokens on the Ethereum blockchain designed for digital securities that impose transfer restrictions based on the "Regulator Service" contract, which can be updated over time to comply with changes into the regulatory environment. Specifically, this standard is intended to ensure compliance with “KYC and AML requirements, accredited investor audits, trade blocking periods, tax laws and other contractual agreements.”

1.4 Limitations in the Ethereum network

Despite Ethereum's dominance as a blockchain for creating new tokens, other programmable blockchains have been developed and have been dynamically developing in recent years.

Today, one of the main problems with Ethereum is related to the scalability of its base layer, which sometimes leads to high gas fees and slow transactions. While this can be interpreted as a sign of blockchain popularity, newer blockchains have begun to compete in different segments.

Despite the full range of promises from ICO projects in 2017 to create payment systems, gaming and other service systems at the basic level of Ethereum, the most significant example of using Ethereum at the moment was the actual fundraising for these projects. The vast majority of these “promises” have never been fulfilled since then, simply due to Ethereum's scalability issues.

Since Ethereum is viewed as a universal blockchain in which almost anything can be created, albeit with relatively slow and inefficient transactions, other blockchains are looking to create more specialized and niche areas, for example  TRON  with more efficient distributed storage solutions and transactions leading to better support.

Level 2 scaling solutions (e.g. Celer Network or  Matic ) or Ethereum upgrades for Plasma could potentially be solutions for these scalability issues, although new blockchains are becoming more aggressive in the fight for market share in tokenization.

2. Tokens in various blockchain networks

This section discusses the main characteristics of programmable blockchains that support embedded tokens running on-chain. It also compares activity, number of developers and tokens between chains.

2.1 Overview of token standards in blockchains

This first subsection introduces all the main blockchains (both by deploying smart contracts and by default) and additional layers (for example, Omni Layer, Simple Ledger Protocol) that support token creation.

By its own standard, we mean a blockchain that natively supports the creation of special tokens in its chain, and Binance Chain is a prime example of the BEP-2 standard. For example, in terms of code, tokens running on Binance Chain as BNB (Binance Chain's own token behave just like all other BEP-2 issued tokens, they all run on Binance Chain.

On the other hand, the developed standard refers to a blockchain whose tokens are maintained as part of a smart contract function, with Ethereum and Tron being two familiar examples. For example, ERC-20 tokens are not recognized at the blockchain level and run in a virtual machine (Ethereum virtual machine).

Table 1 - Blockchains and core layers supporting tokens

World of tokens and asset tokenization
World of tokens and asset tokenization
World of tokens and blockchain asset tokenization

Sources:  Binance Research , GitHub

** Every EVM compatible blockchain like MOAC or Tomochain can be used with Solidity, Vyper, or other high level languages.

*** Token status is defined as:

(1) Active - Ability to issue on-chain, with more than 3 tokens with value and/or stablecoin issued on the blockchain

(2) Active but not in use - Possibility of issuing on-chain, does not have 3 value tokens or stablecoins issued on-chain, or any transactions (3) In development - Development to create the first token standard

The next two subsections are devoted to both blockchains supporting decentralized applications (DApps) classified by DApp.Review and the main blockchains by market cap. As a result, the rest of this report will only focus on the following nine blockchains: Ethereum (ETH), Binance Chain (BNB), Tron (TRX), EOS (EOS), IOST (IOST), Steemit (STEEM), Ontology (ONT). NEO (NEO) and Tomochain (TOMO).

2.2 Activity and developer comparison between chains

Table 2 - Blockchains, built standards and core levels supporting tokens on the chain

World of tokens and tokenization of Ethereum blockchain assets

There is no doubt that Ethereum has the largest number of tokens running on its blockchain. However, the vast majority of these tokens are useless due to the release cost limited by smart contract deployment.

It should be noted that for most of the competing blockchains, the bulk of the generated tokens are also useless.

In contrast, Binance Chain is the second most valuable token after Ethereum with over 50+ positively valued tokens. The third blockchain for utility tokens is NEO, with over 30 positive tokens.

2.3 Comparison of issuance fees, transaction/gas fees, etc.

Table 3 - Issuance costs, transactions and gas charges (estimated)

Ethereum blockchain

Issue costs are relatively cheap on most blockchains. Typically, the more complex a contract is to deploy, the more expensive it becomes. In addition, although the Binance Chain is the most expensive to issue a token, it has the second largest number of positive tokens (over 50 tokens traded on DEX) after Ethereum. NEO has over 30 positive tokens.

Transfer rates and average gas charges vary widely across networks. Blockchain networks like STEEM or EOS rely on a resource-driven contribution model. On the other hand, blockchains such as Ethereum, Tron, or TomoChain rely on gas charges to transfer tokens from one address to another. The cost of gas payments depends on the dynamics of supply/demand in the market in real time.

After all, some blockchains like Binance Chain have fixed transaction fees.

The next subsection will discuss the use of DApps on the blockchain of these networks.

2.4 State of Decentralized Applications (DApps)

In this subsection, decentralized applications are analyzed using one user and volume per blockchain. It draws on data provided by DApp Review, one of the leading websites for DApp data and metrics.

The following categories are used in DApp Review: Games (like CryptoKitties), Social (like PeepETH), Casino (like TronBet), Finance (like Compound), Exchange (like Switcheo), Others (like Triip Protocol) and high risk.

However, the high risk category applies to Ponzi schemes and other questionable decentralized applications. As a result, volumes and users in this category were excluded from our analysis.

Table 4 - Average daily volumes on DApps (January 2019 - July 2019)

Ethereum blockchain

* Adjusted based on July 31st (UTC) closing price

** Irregularities in volume with clear evidence of flushing.

Ethereum Hub is larger than Tron and EOS, its volume is divided between categories: exchange (39.75%), finance (28.01%) and casino (31.33%).

Conversely, Tron and EOS DApps are mostly gambling related, with 80% of their respective DApp volumes on the network coming from services such as online casino services, etc.

 For Ethereum, this trend has shifted towards more financial use cases, as discussed in our previous DeFi report. 

Table 5 - Average daily volumes on DApps (for July 2019)

blockchain

* Adjusted based on the closing price of July 31, 2019 (UTC)

** Binance Chain includes volume on Binance DEX.

*** Abnormal volumes, such as clear evidence of flushing.

Sources: DApp Review, Binance DEX

All three of the largest blockchains have begun diversification: financial use cases for Ethereum, while Tron and EOS are mainly used for gambling.

From Table 5, the most commonly used blockchains are Ethereum, Binance Chain, EOS, Tron and NEO with an average daily volume exceeding $ 1 million.

It's also worth noting that there have been reports of evidence of data manipulation from some DApps, especially on IOST and EOS.

In addition to this, other elements such as “DApp contests” can potentially stimulate action in a decentralized application. Indeed, some DApp owners have incentives to manipulate online activities in order to earn prizes and financial rewards.

Despite the choice to use stablecoins, many of these decentralized applications use their own tokens in their application. One possible reason is the ability to reach a wider user base without stablecoins. In fact, the aggregate market cap of all stablecoins (across all blockchains) remains below $ 5 billion, which is almost four times lower than the market cap of Ethereum alone. It remains to be seen whether or when this trend will return.

3. Blockchain differentiation criteria

This section discusses how blockchains compete to attract developers and resources to build token savings on their respective blockchains.

Specifically, this section addresses these issues from the perspective of investors, token holders, developers, and projects seeking to develop a token.

3.1 Transactions and scalability

Transaction count and scalability are key factors to assess if the time it takes to create, issue and develop a token on the blockchain is worth it. Generally, the faster a blockchain is, the more attractive it looks. However, transaction speed can actually be interpreted from two opposing perspectives:

  • A blockchain with fast processing and confirmation times is attractive, so it appears to be more scalable at first.
  • In some cases, longer transaction times also indicate that the blockchain is widely used, as was the case in some of Ethereum's past periods of congestion, which then illustrates the wider use of blockchain.


In addition, the number of transactions within the network also reflects the popularity and current distribution of the network. From a developer's point of view, transactions indicate the health of the blockchain. Hence, the widely used blockchain can attract a large audience to interact with the new token. Other metrics such as the number of individual addresses or new active addresses also reflect the overall popularity of the blockchain.

From the point of view of third-party developers and projects seeking to issue a token, they should aim to issue new tokens and/or develop third-party on widely used blockchains, hence blockchains with a lot of transactions.

3.2 Blockchain Fees

Blockchain fees are a key element for attracting users, projects and developers. The lower the fee for issuing a token and a token, the higher the incentives for interaction within the ecosystem within the network.

Blockchain fees refer to fees within the network, such as the cost of issuing a new asset or transaction/gas fees, along with the uncertainty about fees over time.

The cost of issuing a token on the blockchain can also be interpreted in two conflicting lenses:

  • If the cost of deploying a new smart contract is nearly zero (e.g. Ethereum with gas only fees), many useless tokens can be generated that represent spam on the network.
  • From the point of view of projects seeking to issue their own token, too high a cost could potentially hinder the growth of the token economy within the network. As a result, the blockchain will require some bootstrap to incentivize new contributors to create their utility tokens if the issuance cost is high.

In short, there is a “sweet spot” between cheap tokens that can be issued, which could potentially lead to the creation of many useless tokens (along with scams designed to scam users, like similar names, etc.), AND tokens that are expensive to issue, which may prevent projects from issuing tokens on-chain.

Transaction and gas fees are also a key element in determining the attractiveness of each blockchain. Some gasoline fees in Ethereum often exceed 30 US cents per transaction, which can prevent an increase in participation in the network, that is, prevent the admission of new members.

In addition, other factors, such as the need to pay for gas over the air (ETH), can potentially create problems for members. For example, a user on the Ethereum blockchain wishing to make a transaction in USDC (or other stablecoins) cannot send funds to another wallet without owning Ether. Some competing blockchains like TomoChain (TRC-21) or Binance Chain (natively) allow you to pay these fees with any valuable asset.

However, the growing development of tier 2 solutions such as Matic should provide greater scalability for legacy blockchains (e.g. Ethereum) while reducing on-network fees, i.e. allowing users to transact with virtually zero fees .

After all, some EIPs (like EIP-865) were designed to offer similar functionality on Ethereum, which could result in gas charges being paid in units other than Ether.

3.3 DApps Availability and Use Cases

DApps availability and use cases refer to the number of existing and potential applications that run on the blockchain. The more use cases on the blockchain, the higher the value proposition.

Some of the key elements for defining use cases:

  • Having at least one stablecoin on the blockchain.
  • DApps diversity: the diversity of decentralized applications built on the blockchain.
  • Third party developers working on platforms (centralized or decentralized), including resources working on the blockchain. On the other hand, blockchain interoperability functionality has the potential to help create positive network effects that lead to wider adoption of both chains.

Despite this, based on the results of the previous section (2.4), both the number of use cases and the number of individual users remain fairly low. As a result, the benefits of a first mover remain uncertain as critical mass has yet to be reached. As compatibility and composability evolved more and more between dApps, we could see some cumulative network effects and growth for early adopter gaming. Recent examples such as Waterloo, Kyber Network's bridge between EOS and Ethereum, illustrate the ongoing development of cross-chain solutions.

3.4 Blockchain Security and Development

Blockchain security and development should be viewed from the perspective of projects and companies.

There are several factors to consider related to blockchain development:

  • Number of active developers: The total number of active developers can be analyzed by full-time and part-time breakdown. The number of active developers of face-to-face layer-1 measures health in the blockchain.
  • Number of commits: The frequency, quality, and absolute number of commits on GitHub often indicate whether development is healthy.
  • Number of third-party developers actively working on solutions to improve the blockchain, such as scalability and security fixes.

On the other hand, security remains a key aspect for blockchains:

  • Vector attacks. An in-depth analysis of vector attacks as well as potential risks associated with blockchain can reveal potential security outcomes
  • The presence of past attacks. The outcome of past attacks may reflect some interesting elements. Whether the attack is successful or not, the way the blockchain continues to patch, iterate, and evolve in response to previous exploits represents a critical assessment point for developers and stakeholders.
  • Public Safety Policies. For example, error protection programs represent the main key aspects of the importance of security from the point of view of the blockchain itself.

In general, blockchain development and security are closely intertwined. A blockchain with high development activity is likely to follow security best practices and respond quickly to fix any security bug. Likewise, there is incentive alignment between token holders, third-party developers, and Tier 1 developers to protect security, as an unsecured network will lead to lower value in the long run.

3.5 Ease of Build

Public blockchains compete to create the most engaging developer ecosystem that attracts and retains global developer communities who will build applications around these chains, thereby facilitating additional transaction flows, network growth, and coin/token use cases.

In particular, projects that provide the right tools, SDK/API and documentation, as well as open technical support that allows developers to quickly build up the learning curve and interact with the relevant blockchains, will have a competitive edge.

While there are many ways to build a thriving developer community and experience, some key elements stand out as essential ingredients:

  • Smart contract languages. The introduction of new languages can potentially be daunting for new users as it introduces a new learning curve that could potentially hurt blockchain adoption. The language could be a key component as the EVM-compliant Solidity language has become the de facto industry standard. For example, EVM-compliant blockchains potentially have a lower learning curve for onboard developers on Ethereum, at the cost of less flexibility to address specific existing and future challenges.
  • Detailed developer documentation on running node software, using the SDK, issuing tokens, writing smart contracts, etc. (For example, the Perlin Network)
  • Functional testnets where developers can directly interact with the chain and test functionality (such as Harmony Testnet and Block Explorer). Some projects additionally have multiple versions of testnets with different functions, so developers should not rely on only one testing platform. For example, Ethereum has four main ones: Kovan, Rinkeby, Ropsten, and Goerli. It's also easy to deploy an EVM-compliant private LAN (like Truffle/Ganache).
  • Community-centric social communities where developers can interact directly with project teams and with each other.
  • High quality open source code that can be easily viewed and verified. Once again, this is about the number of developers and the overall development process from core developers along with third-party developers.

3.6 (De) centralization

(De) centralization refers to the overall degree of centralization of the blockchain from a validator's point of view.

In general, blockchains whose validators, nodes, mining pools, and other participants are centralized may pose a greater risk of censorship.

Censorship risk has different components for different stakeholders:

  • For on-chain DEX trading: if traders execute on-chain trades, there may be an execution risk as the trader may be subject to any change in the price of the underlying assets specified in their strategies, or be prohibited from trading.
  • For transfers: there is a potential settlement risk as there may be censorship that prevents transfers between two wallets. Censorship at the validator level can impede the actual processing of transactions, rather than restrictions or restrictions imposed at the token level.


Moving up the decentralization spectrum is not easy, as chains starting at a specific location between fully centralized and fully decentralized will attract a specific initial audience - moving away from their original degree of centralization can alienate or reject new users that the chain would otherwise attract.

On the other hand, the decentralization parameter for blockchains cannot be viewed solely in a vacuum; generally, a higher degree of centralization can potentially increase the speed for reaching consensus on the blockchain, and hence this is reflected in faster finality (when the transaction can be safely considered completed) and potentially higher "effective TPS".

4. Output

Ethereum remains the go-to blockchain for token issuance. In particular, it has the largest number of tokens issued despite having a large amount of chain spam (useless tokens). Ethereum also has the largest pool of developers working on tier 1 core, tier 2 solutions, along with many active developers working on third party applications (DApps). In addition, many new token standards are also actively being developed on Ethereum, such as security token standards (such as ERC-1400) and other proposals such as ERC-998 or ERC-1155.

However, many competing blockchains are also offering attractive token issuance proposals that could challenge the existing Ethereum leadership for on-chain tokenization. Some of these blockchains allow token creation natively (like Binance Chain), while others rely on smart contract deployment following Ethereum's methods.

Regardless, the number of real use cases and individual users remains fairly low across the blockchain space, and despite Ethereum's current dominance, it is too early to rule out any potential competing blockchains that allow for token issuance.

In general, there are key elements that projects, stakeholders and developers must consider in order to decide which blockchain to consider and invest in the future:

  • DApp availability or growing use cases: the more applications on the blockchain, the higher the value proposition.
  • Transactions and Pace: The faster the blockchain, the more attractive it becomes. The frequency of transactions on the network also reflects the popularity of the network.
  • Blockchain fees: the lower the release fees along the chain and token, the higher the incentives for interaction within the ecosystem along the chain.
  • Ease of assembly: Elements such as testnet, EVM compatibility, and the number of smart contract languages supported play a key role in user engagement.
  • Blockchain Security and Development: The overall activity on the blockchain, as reflected by elements such as the number of improvement proposals and developers at level 1, is usually an accurate measure of the health of the blockchain. In addition, blockchain security remains essential as vector attacks and past attacks are key.
  • (De) centralization: The degree of centralization affects the value proposition of the chain, especially in terms of potential stakeholders.

In the end, a wide variety of programmable blockchains are likely to coexist if inter-chain communication solutions evolve and prove to be both safe and usable. The rise of blockchain agnosticism, coupled with the convergence of best practices and programming languages, could lead to a range of blockchain networks with different use cases and communities at different scales.

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