Today the Solana Foundation unveiled a set of token extensions that aim to add out-of-the-box blockchain functionality that would appeal to enterprises. Rather than having to write a custom smart contract for a token such as a bond, it’s possible to select modular token extensions to support functionality such as compliance, confidentiality and even interest on the public blockchain.
“The Solana network is the blockchain of choice for enterprise-grade companies looking to enter the web3 space,” said Sheraz Shere, Head of Payments at the Solana Foundation.
“Companies like Visa, Worldpay, Stripe, Google, and Shopify have already seen the performance advantages inherent to the Solana network and have launched solutions and applications that are only possible on Solana. With token extensions, we are expanding what is possible for enterprise adoption of blockchain by natively enabling features that matter to large regulated enterprises.”
Two stablecoin providers already using token extensions are Paxos and Japan’s GMO-Z. Both are New York-licensed trust companies. We previously reported the Paxos launch on Solana, and GMO-Z has issued its ZUSD and GYEN on the blockchain.
Solana token extensions
One of the Solana token extensions is a ‘transfer hook’, allowing the creator to add functionality at the point of transfer. For example, it might check that the token recipient is on a KYC-allow list. As mentioned there’s an interest bearing extension to attach a rate of interest to the token.
One of the more curious extensions was the one for confidentiality. It uses zero-knowledge proofs to hide the transfer amount but not the other details. One of the use cases mentioned is for payroll, and it would certainly help enterprise applications. However, we can think of quite a few applications where you might also want identities to be hidden. Consider a supply chain where a supplier may not want their up-chain suppliers to be visible. Otherwise, their customers can see who they work with.
Solana is the latest to target enterprises, though its approach is different from others. Public blockchains popular with enterprises include Ethereum, Polygon, Avalanche, Provenance, Hedera, Polkadot, Ripple and Algorand. Polygon, Avalanche and Polkadot essentially support private blockchains that can be linked to the public networks.