Solana Upgrades SPL Token Standard with Multiple New Features

Solana Foundation has announced a new development for the SPL token standard, equivalent to Ethereum's ERC-20, with the introduction of "Token Extension" to enhance the capabilities of this standard across the Solana network.

Solana upgrades SPL token standard with multiple new features

On the evening of January 24, 2024, Solana Foundation unveiled a significant upgrade for the SPL token standard - akin to Ethereum's ERC-20 - by introducing "Token Extension" to enrich this standard on the Solana network.

In their announcement, Solana stated that "Token Extension" will enable broader token interaction, provide customizable token swap fees, facilitate anonymous transactions using zero-knowledge proofs (ZKP), and much more.

Unlike Ethereum's ERC standard, which has separate standards for different types of tokens like ERC-20 and ERC-721 (NFTs), the SPL token standard applies uniformly across all token types on Solana, with differentiation occurring during the initialization stage.

A representative from Solana declared that "Token Extension" is not just an upgrade but a feature-rich addition aimed at serving developers across various domains including stablecoins, Real World Assets (RWA), payments, and efficiently supporting enterprise movements on-chain within the Solana network:

Advanced token interactions: Allowing token issuers to control the interaction mechanics between tokens and users, empowering developers to build complex token interaction models.

Custom transaction fees: Each token swap can incur a separate fee, offering a sustainable revenue model for any token built using Token Extension.

Anonymous transactions: While still sharing source, destination, and token type details, using zero-knowledge proofs (ZKP) to encrypt the transferred amount while still providing token issuers with necessary verification rights for compliance.

Permanent delegation: Allowing token issuers absolute rights over their issued tokens, particularly those tokens requiring reclaim capabilities, such as licenses or certificates.

Non-Transferability: Permitting token issuers only to transfer tokens to designated wallets. This feature can be used for identity verification and certificate issuance.

Previously, another pioneering company that adopted Solana's "Token Extension" was a brokerage and issuer of the stablecoin Paxos, issuing the USDP stablecoin on the Solana network. Additionally, GMO Trust, issuer of the GYEN stablecoin pegged to the Japanese Yen and ZUSD pegged to the US Dollar, also utilized these new features for their stablecoins.

Late 2023 marked an impressive developmental phase for the Solana ecosystem. SOL, starting from USD 38 at the time of the Solana Breakpoint 2023 in early November, has since seen continuous growth, reaching a yearly high of USD 126, marking an increase of over 220% in just over two months. Summarizing 2023, the Solana Developer Ecosystem reported a 500% increase in developer onboarding, with retention rates rising by 30 - 50%.

At the time of writing, SOL was trading around USD 85, up nearly 5% from 24 hours earlier.

4H chart of SOL/USDT trading pair on Binance. Image captured at 10:10 PM on January 24, 2024.