Cardano Native Tokens

A recent article by Emurgo reminded us that there is a massive strength that Cardano has that is somewhat unremarked on and under appreciated; Native Tokens.

Unlike all other Blockchains using Smart Contracts to create layer 2 tokens, such as Ethereum which uses the ERC-20 standard for fungible tokens, Cardano allows for Tokens to be carried natively on the main ledger in Layer 1.

This has a couple of significant benefits:

  • Firstly- sending Native tokens does not incur additional fees for smart contacts, they can be sent directly between wallets in the same way as ADA.
  • Secondly- the attack surface is dramatically reduced to the same as the underlying ledger, and there is no need to rely on the persistence and security of a smart contract which may have been poorly written and tested.

Soon we will see the release of stable coins that use Native Tokens such as USDA and Djed, and this benefit will move more clearly into focus. Of course you might argue that Hosky got there first and have already shown why native tokens matter…