Cardano has released an update about its native tokens. The update covered different areas of how native tokens are handled on the platform, including Cardano’s approach towards native tokenization. It also discussed how native tokens are used on Cardano and the necessity of native tokens on the platform.
It has introduced an strategy whereby tokens are being handled natively. This implies that the logic is according to the Cardano ledger instead of smart contracts. Through this method, the tokenization process is superior to the standards of ERC-20 and ERC-721.
The fungible ERC-20 and non-fungible ERC-721 tokens on the ETH chain are non-native, despite being user-defined tokens. This also implies that the underlying ledger doesn’t provide support directly to these tokens. This is due to the fact that ERC-20 and ERC-721 tokens differ from Ether, which is the native cryptocurrency on Ethereum.
Native Tokens Available on Cardano
On Ethereum, user-defined tokens need to have a custom code before being supported on the chain. This leads to several complexities and greater costs as the code execution needs gas fees. Inefficiency may also surface because those token codes have to be adapted and replicated, instead of being an integral part of the system. This circumstance is a weakness in the Ethereum chain because human errors are likely to happen.
In Cardano, support is given to ERC-20 and ERC-721 tokens natively. This can be done through the native token’s framework, without any custom code. With the native tokens, an accounting system is established whereby these tokens become part of the crypto ledger. Hence, such tokens can undergo different transactions such as tracking, sending, and receiving.
The use of custom code and expensive smart contracts are eliminated in this way. With native tokens, the unnecessary issues of complexities and inefficiency existed in the Ethereum chain can be avoided.
Why Native Assets Are Necessary for Cardano
As a distributed ledger, Cardano needs native assets. The normal design of a distributed ledger needs it to track just a single asset type like its own cryptocurrency. As decentralization sets in, the ledger evolves to where there is now a need and possibility for more assets to be tracked.
With the native token functionality, the structure of the ledger model is now redefined to accept transactions that make use of different types of assets at the same time. In this way, the native tokens on Cardano surpass the user-defined ERC-20 and ERC-721 tokens in regard to security and efficiency.
As of the time of publication, Cardano (ADA) was trading at $0.167164 with a 24-hour trading volume of $875,503,523. ADA price also surged by 9.8% over the last 24 hours. ADA has a circulating supply of 31.1 billion coins and a max supply of 45 billion. ZBG is the current most active market trading ADA.