Smart Contract Token

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Sovereign Assets • Layer 1s • Payment Networks

programmable token issued by smart contract

A smart contract token is a digital asset created and managed by a smart contract on top of an existing blockchain. These tokens are not built into the base protocol (unlike native assets), but instead rely on programmable logic deployed by developers. Smart contract tokens can represent anything—from DeFi utility tokens to stablecoins, governance tokens, or NFTs.

Use Case: Smart contract tokens allow developers to launch programmable assets for dApps, DAOs, or financial products without building a new blockchain.

Key Concepts:

ERC-20 — The most widely used smart contract token standard on Ethereum
XRPL Issued Asset — Custom assets on the XRP Ledger, governed by smart contract logic
Token Standards Index — Protocol rules for creating and managing smart contract tokens (ERC-20, SPL, BEP-20, etc.)
Fungibility — Whether tokens are interchangeable or unique
Custom Minting — Ability to programmatically issue or burn new tokens based on smart contract rules
Native Asset — Protocol-level tokens that smart contract tokens are built on top of
Smart Contracts — The programmable logic that creates and governs these tokens
dApps — Decentralized applications that utilize smart contract tokens
Tokenomics — Economic design of token supply, distribution, and utility

Summary: Smart contract tokens are programmable, flexible digital assets powered by blockchain logic. They enable a wide range of use cases, from DeFi and payments to governance and NFTs, and follow standards that make them interoperable across apps and networks.

Token	Type	Network
$USDC	Stablecoin	Ethereum, Solana, others
$XCN	Utility token (Chain)	Ethereum (ERC-20)
$BAD	Meme token	XRP Ledger
$VEE	Metadata-driven asset	Ethereum
$ACH	Payment token (Alchemy Pay)	Ethereum (ERC-20)

Aspect	Native Asset	Smart Contract Token
Origin	Built into base protocol	Deployed by users/projects
Examples	$ETH, $XRP, $BTC, $SOL	$USDC, $UNI, $LINK, $XCN
Standards	Protocol-defined	ERC-20, SPL, BEP-20, XLS-20
Gas/Fees	Used to pay network fees	Requires native asset for fees
Flexibility	Fixed by protocol rules	Programmable by developers

Token Standard Comparison

smart contract token standards across networks

ERC-20 (Ethereum)
Most widely adopted standard
Fungible tokens only
Simple transfer/approve functions
Used by USDC, LINK, UNI
Gas-intensive on mainnet

ERC-721 (Ethereum)
Non-fungible token standard
Each token is unique
Metadata for provenance
Used by NFT collections
Higher gas than ERC-20

XLS-20 (XRPL)
Native NFT standard on XRPL
Low fees, fast finality
Built-in royalty support
No smart contract needed
Used by XRPL NFT projects

SPL (Solana)
Solana Program Library tokens
High throughput, low fees
Fungible and non-fungible
Used by SOL ecosystem tokens
Requires Solana wallet

Interoperability Note: Different standards are not natively compatible. Bridges and wrapped tokens enable cross-chain movement, but introduce additional trust assumptions and risks.

Smart Contract Token Risk Assessment

what to verify before interacting with any token

Green Flags
Verified contract on explorer
Audited by reputable firm
Renounced or multisig ownership
Transparent tokenomics
Active development and community
Listed on major exchanges

Red Flags
Unverified contract code
No audit or unknown auditor
Single owner with full control
Hidden mint/pause functions
Honeypot mechanics (can’t sell)
Anonymous team, no track record

Contract Functions to Check
mint() — who can create tokens?
burn() — can supply be reduced?
pause() — can transfers be frozen?
blacklist() — can wallets be blocked?
owner() — who controls the contract?
renounceOwnership() — was it called?

Verification Tools
Etherscan / Polygonscan / BSCscan
TokenSniffer (scam detection)
De.Fi Scanner (audit database)
GoPlusLabs (security API)
Solscan (Solana tokens)
XRPL Explorer (XRP Ledger)

Golden Rule: If you can’t read the contract or verify its safety, assume it’s unsafe. Most rug pulls and scams exploit smart contract permissions that users don’t understand.

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