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ParallelChain Request For Comments (PRFC): #1 Setting the Standard for Fungible Tokens
27 February 2023
A quick glance at token tracking platforms like CoinMarketCap shows there are approximately over 22,500 different digital currencies to date, and the number is still growing on a daily basis. Yet this does not mean that there are over 22,500 different types of unique blockchain networks out there.
Instead, a majority of these are digital tokens created or minted on a blockchain infrastructure protocol, and they enable the functionality of other Web3 protocols and related blockchain applications within the ecosystem. But if each token is unique, how do they stay interoperable within the same network? That is where fungible token standards come in. But first, what is the difference between digital tokens and coins?
Are Digital Tokens The Same As Digital Coins?
Well, not exactly. A digital coin is a standalone currency that operates on its own blockchain, with its own unique set of rules and protocols. For example, the XPLL asset which supports the ParallelChain Mainnet is a digital coin. On the other hand, a digital token is a programmed asset that is created and managed on top of an existing blockchain. Tokens are built using smart contracts and typically follow a standardised protocol within the network.
Let’s take the upcoming ParallelChain Mainnet as an excellent case. The public blockchain is a high-performance network that adopts the ParallelChain Request for Comments (PRFC) standard as a clear guide for the creation of new tokens on the blockchain. This allows the tokens to be interchangeable with one another, and protocols building on ParallelChain Mainnet can benefit from the ease of exchange and high throughput while still retaining their token's distinct characteristics.
What Is the PRFC-1 Standard?
PRFC-1, is the first token standard interface proposed by ParallelChain Lab for fungible tokens implemented as ParallelChain F smart contracts, and tokens created according to the standard are interchangeable with one another on ParallelChain Mainnet.
This allows for more streamlined interoperability between projects that are building on top of ParallelChain Mainnet, and their community of users can use or exchange the tokens on other protocols without any technical issue.
For example, Protocol A launches its project with its own $A tokens on ParallelChain Mainnet, and Protocol B launches its project with its $B tokens as well on the same network. While the value of the tokens may differ, such as 1 $A is equivalent to 2 $B tokens, they can be swapped freely on ParallelChain Mainnet.
The standard allows different tokens on ParallelChain Mainnet to interact efficiently, which in turn leads to the rapid development of decentralised applications (dApps) on the blockchain that caters to DeFi blockchain use cases.
Types Of Digital Tokens Supported By The PRFC-1 Standard
Payment Tokens
Such digital currencies are mainly created to facilitate payments for goods and services with Bitcoin being a popular example. Teams that aim to create payment projects can tap on the benefits that ParallelChain Mainnet offers and utilise the high transaction speed of the network to encrypt, regulate and verify transactions between parties or merchants.
Utility Tokens
Digital currencies designed for utility are another type of fungible token that can be launched on ParallelChain Mainnet. Such tokens are designed for a designated purpose within a decentralised ecosystem, and they enable users to run actions or function on the blockchain.
These actions could involve participating in a protocol’s governance and voting for a proposal, redeeming tokens for physical or digital goods and services, or using the tokens to access off-chain data within the ParallelChain ecosystem.
Security Tokens
Despite its namesake, security tokens are not involved in the security of other digital assets or network security of the blockchain. Instead, these tokens derive their name from securities which are tradable certificates or financial instruments that have monetary value. Some popular examples of securities are stocks, bonds, and exchange traded funds (ETFs) to name a few.
To tokenise real-world assets, development teams can piggyback on the infrastructure of ParallelChain Mainnet to build their asset tokenisation solutions. Thanks to the interoperability that PRFC-1 offers, the team can engage with oracles on the same blockchain to obtain off-chain data that back their token value in real-time. This also facilitates easier trading and settlement of assets that are traditionally more illiquid in the markets.
DeFi Tokens
Decentralised Finance, or DeFi, is an emerging movement to conduct financial transactions on the blockchain and allow unrestricted access to more services that would have been restricted to higher net-worth individuals in the traditional financial system. With ParallelChain Mainnet’s high throughput capability, DeFi protocols that build on the blockchain will be able to handle large transaction volumes without a hitch.
This allows the DeFi sector to spearhead the utility of ParallelChain Mainnet as they bring unfettered financial access to anyone on the public blockchain and removes any middlemen that is present in traditional markets to reduce the cost of financial services. The XPLL token will play a crucial role as the underlying network asset that facilitates exchange between DeFi protocols and their assets on the chain.
Furthermore, DeFi tokens created on ParallelChain Mainnet have the added function of allowing anyone holding them to access multiple financial services such as lending, borrowing, staking, and yield farming which are automated through ParallelChain smart contracts.
Stablecoins
Stablecoins are a special class of tokens that are deemed stable due to their low volatility. That is because these assets are often backed 1:1 to a fiat currency value, with the US dollar being the most common fiat of choice. Stablecoin projects are also a key component to a thriving decentralised finance ecosystem as well; since each token equates to a dollar, they are often the ‘de facto’ dollar on a native ecosystem such as ParallelChain Mainnet to facilitate fiat-based DeFi activities.
Transferring PRFC-1 Tokens Natively With Inter-ParallelChain Communication
As the development of ParallelChain Mainnet progresses according to its roadmap, the PRFC standards will also form the basic foundation for moving assets natively between the public ParallelChain Mainnet and permissioned ParallelChain Enterprise through the novel Inter-ParallelChain Communication (IPC).
The IPC protocol allows the aforementioned chains to interoperate natively, which plays a vital role in expanding the utility of digital assets on the ecosystem. It is expected to propel the volume of activity on ParallelChain Mainnet as more enterprise networks engage protocols on the public blockchain via IPC to expand their business services, which in turn translates to greater volume of transactions on public dApps in the ParallelChain ecosystem.
Such blockchain applications and use cases for corporate businesses could see the expansion of loyalty rewards for retail customers by adopting reward initiatives on the public chain, or it could be a boon for traditional finance institutions looking to access DeFi solutions and unlock more liquidity while offering customised finance solutions for their customer base.
In the next article, we will explore the defined ParallelChain RFC standards for non-fungible tokens (NFT) under PRFC-2, and its crucial role in creating a vibrant NFT ecosystem on ParallelChain Mainnet. Meanwhile, if ParallelChain sounds like the perfect candidate to build your new innovative Web3 protocol, reach out to us here to get started today!
Telegram community chat: https://t.me/parallelchainofficial
Telegram announcement channel: https://t.me/parallelchain_news
Twitter: https://twitter.com/ParallelChainLB
Discord: https://discord.gg/parallelchain
GitHub: https://github.com/parallelchainlab
LinkedIn: https://www.linkedin.com/company/parallelchain-lab/
A quick glance at token tracking platforms like CoinMarketCap shows there are approximately over 22,500 different digital currencies to date, and the number is still growing on a daily basis. Yet this does not mean that there are over 22,500 different types of unique blockchain networks out there.
Instead, a majority of these are digital tokens created or minted on a blockchain infrastructure protocol, and they enable the functionality of other Web3 protocols and related blockchain applications within the ecosystem. But if each token is unique, how do they stay interoperable within the same network? That is where fungible token standards come in. But first, what is the difference between digital tokens and coins?
Are Digital Tokens The Same As Digital Coins?
Well, not exactly. A digital coin is a standalone currency that operates on its own blockchain, with its own unique set of rules and protocols. For example, the XPLL asset which supports the ParallelChain Mainnet is a digital coin. On the other hand, a digital token is a programmed asset that is created and managed on top of an existing blockchain. Tokens are built using smart contracts and typically follow a standardised protocol within the network.
Let’s take the upcoming ParallelChain Mainnet as an excellent case. The public blockchain is a high-performance network that adopts the ParallelChain Request for Comments (PRFC) standard as a clear guide for the creation of new tokens on the blockchain. This allows the tokens to be interchangeable with one another, and protocols building on ParallelChain Mainnet can benefit from the ease of exchange and high throughput while still retaining their token's distinct characteristics.
What Is the PRFC-1 Standard?
PRFC-1, is the first token standard interface proposed by ParallelChain Lab for fungible tokens implemented as ParallelChain F smart contracts, and tokens created according to the standard are interchangeable with one another on ParallelChain Mainnet.
This allows for more streamlined interoperability between projects that are building on top of ParallelChain Mainnet, and their community of users can use or exchange the tokens on other protocols without any technical issue.
For example, Protocol A launches its project with its own $A tokens on ParallelChain Mainnet, and Protocol B launches its project with its $B tokens as well on the same network. While the value of the tokens may differ, such as 1 $A is equivalent to 2 $B tokens, they can be swapped freely on ParallelChain Mainnet.
The standard allows different tokens on ParallelChain Mainnet to interact efficiently, which in turn leads to the rapid development of decentralised applications (dApps) on the blockchain that caters to DeFi blockchain use cases.
Types Of Digital Tokens Supported By The PRFC-1 Standard
Payment Tokens
Such digital currencies are mainly created to facilitate payments for goods and services with Bitcoin being a popular example. Teams that aim to create payment projects can tap on the benefits that ParallelChain Mainnet offers and utilise the high transaction speed of the network to encrypt, regulate and verify transactions between parties or merchants.
Utility Tokens
Digital currencies designed for utility are another type of fungible token that can be launched on ParallelChain Mainnet. Such tokens are designed for a designated purpose within a decentralised ecosystem, and they enable users to run actions or function on the blockchain.
These actions could involve participating in a protocol’s governance and voting for a proposal, redeeming tokens for physical or digital goods and services, or using the tokens to access off-chain data within the ParallelChain ecosystem.
Security Tokens
Despite its namesake, security tokens are not involved in the security of other digital assets or network security of the blockchain. Instead, these tokens derive their name from securities which are tradable certificates or financial instruments that have monetary value. Some popular examples of securities are stocks, bonds, and exchange traded funds (ETFs) to name a few.
To tokenise real-world assets, development teams can piggyback on the infrastructure of ParallelChain Mainnet to build their asset tokenisation solutions. Thanks to the interoperability that PRFC-1 offers, the team can engage with oracles on the same blockchain to obtain off-chain data that back their token value in real-time. This also facilitates easier trading and settlement of assets that are traditionally more illiquid in the markets.
DeFi Tokens
Decentralised Finance, or DeFi, is an emerging movement to conduct financial transactions on the blockchain and allow unrestricted access to more services that would have been restricted to higher net-worth individuals in the traditional financial system. With ParallelChain Mainnet’s high throughput capability, DeFi protocols that build on the blockchain will be able to handle large transaction volumes without a hitch.
This allows the DeFi sector to spearhead the utility of ParallelChain Mainnet as they bring unfettered financial access to anyone on the public blockchain and removes any middlemen that is present in traditional markets to reduce the cost of financial services. The XPLL token will play a crucial role as the underlying network asset that facilitates exchange between DeFi protocols and their assets on the chain.
Furthermore, DeFi tokens created on ParallelChain Mainnet have the added function of allowing anyone holding them to access multiple financial services such as lending, borrowing, staking, and yield farming which are automated through ParallelChain smart contracts.
Stablecoins
Stablecoins are a special class of tokens that are deemed stable due to their low volatility. That is because these assets are often backed 1:1 to a fiat currency value, with the US dollar being the most common fiat of choice. Stablecoin projects are also a key component to a thriving decentralised finance ecosystem as well; since each token equates to a dollar, they are often the ‘de facto’ dollar on a native ecosystem such as ParallelChain Mainnet to facilitate fiat-based DeFi activities.
Transferring PRFC-1 Tokens Natively With Inter-ParallelChain Communication
As the development of ParallelChain Mainnet progresses according to its roadmap, the PRFC standards will also form the basic foundation for moving assets natively between the public ParallelChain Mainnet and permissioned ParallelChain Enterprise through the novel Inter-ParallelChain Communication (IPC).
The IPC protocol allows the aforementioned chains to interoperate natively, which plays a vital role in expanding the utility of digital assets on the ecosystem. It is expected to propel the volume of activity on ParallelChain Mainnet as more enterprise networks engage protocols on the public blockchain via IPC to expand their business services, which in turn translates to greater volume of transactions on public dApps in the ParallelChain ecosystem.
Such blockchain applications and use cases for corporate businesses could see the expansion of loyalty rewards for retail customers by adopting reward initiatives on the public chain, or it could be a boon for traditional finance institutions looking to access DeFi solutions and unlock more liquidity while offering customised finance solutions for their customer base.
In the next article, we will explore the defined ParallelChain RFC standards for non-fungible tokens (NFT) under PRFC-2, and its crucial role in creating a vibrant NFT ecosystem on ParallelChain Mainnet. Meanwhile, if ParallelChain sounds like the perfect candidate to build your new innovative Web3 protocol, reach out to us here to get started today!
Telegram community chat: https://t.me/parallelchainofficial
Telegram announcement channel: https://t.me/parallelchain_news
Twitter: https://twitter.com/ParallelChainLB
Discord: https://discord.gg/parallelchain
GitHub: https://github.com/parallelchainlab
LinkedIn: https://www.linkedin.com/company/parallelchain-lab/
