Token standards on ICP

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Article 1: High-level overview of essential IC Token / Token standard news

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Emerging Internet Computer Token Standards January, 2023

If you’re involved in using or creating internet services, you probably know that many internet services now run on commercial cloud services like Amazon Web Services (AWS), Google Cloud Platform, Microsoft’s Azure, and the like. The Internet Computer is a decentralized alternative to such cloud providers so that almost any protocol, platform or service now deployed on public and hybrid clouds could be rendered to execute on the Internet Computer (IC); and thereby, open up the unique benefits of its cryptographic substrates and blockchain-enabled trust assurances, enabling token systems of all kinds - including those used in governing the policies, operations and economics of both this “World Computer” and the variety of services deployed there.

With more than $100M USD in venture funding secured by 2018, Dominic Williams and the early DFINITY team-members assembled a world-class roster of cryptography researchers, blockchain architects and software engineers. And, over the next two and a half years, this “NASA for decentralized computing” realized their vision for a fully decentralized, globally distributed cloud computing network called the Internet Computer (IC). The “Genesis Launch Event” in May of 2021 saw the release of previously locked Internet Computer Protocol (ICP) governance tokens – thus handing the future evolution of the Internet Computer over to a decentralized global network of node operators, application developers and networked multi-party service communities.

The Internet Computer is quite different from earlier public clouds because you’re running more than code, you’re also discovering, developing, growing and running communities along the way. Internet Computer services are equipped to enfranchise their users and other stakeholders in deciding:

Community standards, codes of conduct and the how to respond to conflicting demands in disparate regulatory regimes across diverse jurisdictions, globally

Policies and operations surrounding data privacy, ownership and ongoing access and usage.

The ways automated decision-making is employed as well as the policies for training, deploying and maintaining efficacy of algorithms that increasingly influence the form and function of our digital experience and interaction

The Internet Computer imagines a world where creators and users of decentralized networks and services have a voice in consequential policies, standards and operations. DSCVR, a decentralized alternative to Reddit available on the Internet Computer (at

https://dscvr.one⁠

) is one of the earliest entries into this new generation of decentralized digital service. Other examples include distrikt, “the world's first professional social media platform built entirely on blockchain” and available at

https://distrikt.app/⁠

); and,

OpenChat (oc.app)⁠

- “a decentralized chat app governed by the people for the people”.

Contrast this with Web2 platforms and communities which are subjected to decisions taken “behind the scenes” in processes opaque and inaccessible to those affected. In the tradition of these earlier platforms, it doesn’t matter that you don’t have a voice in these decisions. It doesn’t even matter whether or not you’re aware that your choice is being taken away from you under the claim that they’re being made made for you but without you. For how this approach unfolds, we need only look to Twitter, now making news around the world for precisely these reasons (TL;DR - for a better experience it’s helpful if you’re a nation state or a billionaire). This kind of “platform risk” is significant for developers of new services and digital experiences that extend or compose existing platforms. Many of us will remember the decimation of the early social gaming innovator, Zygna - when Facebook decided to change the rules.

Numerous groundbreaking innovation accomplishments are wrapped up in the events of those years - and the pace of innovation only continues to accelerate. Cultivated by the DFINITY Foundation, the Internet Computer ecosystem has created an unparalleled developer experience with unparalleled functional scope and capability for rapidly deploying fully decentralized “Web3” applications (Dapps) that require no other cloud infrastructure or services. Central among these accomplishments – and emblematic of blockchain technology’s promise – is the distribution of “tokens” for broadly decentralizing the governance of this powerful innovation infrastructure – an unstoppable, cryptographically secured, open and permissionless, censorship-resistant, cloud computing network.

As the IC ecosystem accumulates experience and insight regarding the wide and growing variety of “tokens” “tokenization” and “tokenomics” use-cases and design patterns, a process of standardization in token system design has naturally emerged. In April, 2022, the Ledger and Tokenization Working Group was launched to lend basic collaboration and decision-making regularity to this still immature standardization process. In consideration of this early stage of standardization and, acknowledging accepted norms for how technical standards are composed, this report often uses the term “token system” or “design” and reserves the attribution of “standard” for the expectations and results normally associated with explicit standardization efforts.

As highlighted in the preceding, a popular way to give a product’s community the necessary rights for precluding centralized platform risks is to distribute a token that is earned by participating on the service or community and may be used to purchase associated resources or for representation in voting on governance proposals. The report authors are participating in such community token economics design efforts; one of these being a market for “epistemic commitments” called, Option {Connor - you have a preferred hyperlink?} {Briefly introduce Option as impetus for this IC Token standards research and learning}

Without delving into great technical detail, for now, let’s look at the kinds of tokens available on Internet Computer and how these tokens are developing and being standardized as the Internet Computer ecosystem grows and matures.

Mature standardization regimes typically embody a few essential features and capabilities, such as [1]:

Identifying the need for the standard and reviewing the existing standards landscape

Notifying and engaging affected stakeholders and the public when standardization is being considered, is underway or is subsequently published or monitored for compliance and enforcement.

Sustained participation of technical experts qualified to develop understanding, prioritize objectives, negotiate trade-offs and decide the precise details of the standard.

Consulting widely on the proposed standard, subjecting it to public scrutiny and developing consensus among a balanced committee of stakeholders affected by standardization.

Publishing and making standards readily available in languages and formats accessible to the affected stakeholders.

Ensuring that standards are consistent with (or incorporate) existing international and pertinent foreign standards and are not acting as a barrier to trade or interoperability.

Maintenance of standards through periodic review or as changes are needed

In order to convene collaboration across organizational boundaries and among diverse commercial, government, non-profit and civil-society sectors, standards development organizations (SDOs) must also address legal and regulatory matters such as, intellectual property agreements and anti-trust laws.

Standardization efforts can significantly aid industry innovation, growth and market expansion. Such benefits can be greatly amplified for goods and services subject to, “network effects.” The emergence of standardization and standards development activity within an industrial ecosystem also creates valuable opportunities for professional learning and development and for collaboration and socializing among diverse stakeholders. This process is only just beginning for the Internet Computer but this is relatively true for the larger blockchain industry everywhere, as compared with well-established industries and disciplines.

The IC Ledger & Tokenization Working Group was announced in Q1 of 2022 and, in the months following, brought together some of the early token system innovators to develop the basic ICRC-1 standard which was formally accepted by NNS vote on August 14th, 2022 (

Proposal: 74740 - IC Dashboard (internetcomputer.org)⁠

⁠

The ICRC-1 standard specifies a token and ledger combination supporting essential transactions for fungibility and designates a minting account, unique for being able to create new tokens and act as the receiver of burnt tokens. An ICRC-2 standard proposal is in draft that would extend the basic operations of ICRC-21 to enable account owners to delegate token transfers to a third party on the owner's behalf (

https://github.com/dfinity/ICRC-1⁠

A major token system development and standardization milestone was achieved in 2022 with the deployment of Service Nervous System (SNS). The SNS serves open infrastructure supporting near-turnkey minting and issuance of tokens for governing the deployment, operation and maintenance of decentralized services deployed on the Internet Computer. In the spirit of experimentation the SNS infrastructure was employed short thereafter to launch the SNS-1 service and corresponding SNS1 governance governance token. Launch of the token sale was initiated by

NNS proposal 93763⁠

. The experiment tested the limits of the Internet Computer and proved valuable in early identification of fixes and adjustment of default configuration parameters. A retrospective report of this groundbreaking event is found at:

https://forum.dfinity.org/t/degraded-performance-during-sns-1-decentralization-sale-incident-retrospective-tuesday-november-29-2022/17005⁠

⁠

As such, SNS-1 is the first SNS DAO to be created on the Internet Computer. Initially, the SNS-1 DAO controls only a blank canvas - consisting of a quote and a letter - awaiting a shared vision for something more:

https://sqbzf-5aaaa-aaaam-aavya-cai.ic0.app/⁠

. On November 29th, 2022, all 3'141.00 of the available SNS1 tokens sold out in the first few hours. It will be up to the SNS1 token holders what happens next.

Many people like to reflexively point to the examples of the Ethereum network, which documents its own emerging standardization process here:

https://eips.ethereum.org/⁠

and here

https://eips.ethereum.org/EIPS/eip-1⁠

. The Ethereum network has, in turn, drawn on examples like the Internet Engineering Task Force’s, Request for Comments (RFC) process [2] and acknowledges basing the Ethereum Improvement Process on the Bitcoin Improvement Proposals (BIPs) process, which itself is based on the Python Enhancement Proposals (PEPs) process.

Notable IC token system designs emerging from the Internet Computer community so far, include:

ICP (Ledger standard - “NNS ledger token standard”): The native utility token of the Internet Computer network facilitating network governance and convertible to the “cycles” required for running services on the network. While it pre-exists any IC token standard it’s nevertheless represents a central reference-point for IC token system creators by virtue of its critical role within the network.

https://internetcomputer.org/docs/current/tokenomics/nns/nns-intro#icp-tokens⁠

DIP20: {complete description}

DIP20/spec.md at main · Psychedelic/DIP20 · GitHub⁠

DFT: A fungible token standard: {complete description}

https://github.com/Deland-Labs/fungible-token-standard⁠

⁠

DIP721: Implemented by Psychedelic and referencing the Ethereum’s naming convention, furnishes a non-fungible token (NFT) standard mirroring its Ethereum counterpart (ERC721) and adapting it to the Internet Computer, maintaining the same interface. By conforming with the Ethereum precursor, the DIP721 designers hope to make it easier to port Ethereum contracts onto the IC – presumably accelerating IC token innovation and jump-starting IC-Etherum integration experimentation with the advent of

https://github.com/Psychedelic/DIP721⁠

⁠

EXT: Developed byToniq-Labs, this system renders a multi-token extending an ERC20-inspired fungible token implementation pattern with non-fungible capabilities – capable of mirroring Ethereum’s ERC1155 token capabilities and supporting entirely novel extensions form that foundation. Complexity introduced by its extensibility may warrant a slightly longer learning on-ramp.

https://github.com/Toniq-Labs/extendable-token⁠

⁠

IS20 : Proposed by Infinity Swap (

https://infinityswap.one/⁠

) - one of the first projects to reference the ICRC token standard produced by the Internet Computer community’s early ledger and token standards development efforts.

https://github.com/infinity-swap/IS20/blob/main/spec/IS20.md⁠

As an indication of overall NFT production and market activity, at 2022-11-24, there were 128,717 holders totaling 1,078,047 NFTs across 344 collections enjoying 24 Hour market volume of 1,616.0427 ICP on total market value of 1,262,038 ICP. Peak activity occurred most recently prior, on February 9th 2022, seeing almost 5000 transactions totaling almost 50,000 ICP. Up-to-date, on-chain records of overall NFT Market activity on the Internet Computer can be browsed at:

https://icscan.io/nft⁠

These and other early token implementations and standards emerging on the Internet Computer are listed for comparison in the accompanying Token Standards Database (

IC Token Standards Database⁠

)

{Connor bio Picture} Connor McCormick is co-founder of Supersynchronous (

https://supsync.com/⁠

), a rapid prototyping and no-code development guild serving the strategic and operational needs of venture capital and other industry leaders who want to move fast. He has been learning about the Internet Computer ecosystem since, 2019 and is interested in applying token systems and tokenomics in the design of novel epistemic claims-markets and mechanism designs that incentivize reliable signaling of epistemic commitments where it helps resolve adaptive policy choices and externality prices and contributed to prioritizing and financing research for falsifying claims.

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