Finally, we propose a heuristic approach to assess the type of token contracts-security versus non-security-and evaluate it qualitatively against decisions of the US Securities and Exchange Commission (SEC). Moreover, we evaluate these indicators systematically on a carefully selected ground truth of tokens and non-tokens. Furthermore, we give an account of the utilization of the standards and depict their usage over time.īased on our exploration of contract interfaces and activities, we derive indicators for detecting token contracts that do not comply with any of the standards considered. Like other authors, we discuss tokens complying with the most prevalent ERC-20 standard , but we include other token standards as well. In contrast, we view tokens as a particular group of smart contracts that includes all contracts, from unused to top tokens. Most work focuses on tokens with a high market cap and on the flow of Ether and tokens. The methods rely on reconstructing the interface of contracts from bytecode as well as on observing the actual behavior of contracts.Ĭontribution. Concerning methods, we discuss the automated identification and classification of token contracts. We address these questions by analyzing the transaction traces of Ethereum with regard to the deployed bytecodes (static data) as well as the calls to token contracts (dynamic data). How can the type of a token be automatically inferred? How can token contracts be identified in transaction data? Which standards for token contracts are in use? Which types of tokens can be distinguished? More specifically, we investigate the following regulatory and technological aspects of tokens: With the proliferation of tokens, one may ask what people intend to achieve by using tokens and how they attempt to achieve it.Īs Ethereum is the major platform for tokens, we search for a clarification on the actual usage of tokens in its public data. At the same time, they sparked the interest of regulatory bodies. Tokens gained in importance, the more value was attached to them. Moreover, they can serve as means of fundraising, pre-order or investment, as well as means for building an ecosystem or a community. In addition to these use cases (exchange of value, part of an application), tokens may be linked to off-chain assets. Governance of and access to DApps are often controlled by application-specific tokens, but tokens can also act as the local currency of a DApp. Decentralization can be achieved by implementing critical components on a blockchain. DApps are applications on a P2P network that are not controlled by a single entity. In this respect, tokens are part of an application, often a decentralized application (DApp). Secondly, tokens are programmable and can be used beyond the mere exchange of value. As a medium of exchange, tokens can act as a currency themselves. Rather, they are a digital asset on top of a cryptocurrency or blockchain, representing the right to something. First, they do not have a blockchain or distributed ledger of their own. Tokens (more specifically crypto tokens) are similar to the coins of a cryptocurrency, with two main differences. Finally, we present first steps toward an automated classification of tokens regarding their purpose. More specifically, we propose indicators for tokens and evaluate them on a large set of token and non-token contracts. Thus, we discuss various heuristics for token identification in combination with possible definitions of a token. Then, we not only check the compliance of a smart contract with an established interface standard for tokens, but also aim at identifying tokens that are not fully compliant. In our approach, we evaluate the publicly available transaction data by first reconstructing interfaces in the low-level code of the smart contracts. The programs on Ethereum are called smart contracts, which-for the sake of interoperability-may provide standardized interfaces. In this work, we discuss the identification of tokens on Ethereum, the most widely used token platform. In most jurisdictions, security tokens are regulated, and hence, the distinction is of relevance. A high-level categorization of tokens differentiates between payment, security, and utility tokens. Tokens can be used as investment, as a local currency in a decentralized application, or as a tool for building an ecosystem or a community. Being programmable makes them versatile and an innovative means for various purposes. Tokens are digital assets implemented as small programs on a blockchain. Next to cryptocurrencies, tokens are a widespread application area of blockchains.
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