One of Nexa’s unique feature is its Native Tokenisation.

It solves the many limitations other Layer-1s experience, such as Ethereum.

Let’s unravel this gem of a feature.

Nexa native tokenisation brings immense value to the ecosystem.

What we will be discussing:

• What is a Token
• Difference between tokens on Nexa and Ethereum
• Implications of these Differences
• Cost of Transactions
• Authority on Tokens
• Safer Token Environment
• Token Group and Subgroups
• Fencing

Background: What is a token?

A token is a representation of an asset on a native cryptocurrency blockchain that has been given certain semantics or usage cases, whether trivial or of high substance. Their usage cases are broad in the world of cryptocurrency and can be utilized for various means such as stable coins (such as USDT and USDC), NFTs, ticketing, and as native currencies of dApps and other DeFi ecosystems

What is the difference between Tokens on Nexa and on Ethereum?

Nexa tokens are “native” tokens meaning the fundamental properties of their token semantics and rules is enforced by the blockchain. Whereas Ethereum is a massively distributed computer which has had finance implemented on top of it, with tokens enforced by unique smart contracts specific for each token. From a technical standpoint, Nexa tokens get included as an additional tag that gets included on an output of a transaction that is enforced by miners.

Implications of these Differences:

Efficiency:

The code semantics of Native tokens reside on the blockchain, they do not have unique smart contracts. The lack of having individual smart contracts for each token provides more safety for users, as the specific code of each token’s smart contract does not need to be reviewed to ensure the token semantics and rules are being enforced as advertised.

Cost of Transactions:

The cost of Ethereum token transactions on the smart contract layer are ~5x (500%) the cost of the cost of typical Ethereum transaction on their native blockchain.

With Nexa native tokens the cost increase is in the magnitude of ~15% (Nexa native tokens add roughly 32 bytes of data to each transaction, with an average Nexa transaction ~200 bytes with the native Nexa currency, the addition of 32 bytes= 232 bytes).

Authority on Tokens:

When you create a token type, you have a specialty tagged utxo that allows you to manage script and permissions. It can be also be transferred to others as you would spend a normal transaction. This powerful ability to send authority has implications that can be used in business whereas developers can send authority to businesses. Fundamental rules and authorities that were originally created when the token was launched, can be directly seen on the blockchain without having to review any lengthy smart contracts.

In practical examples, it would be easy for common investors with no code skills, to be able to see if tokens have the ability to mint more, or change the fundamental rules of the token.

Safer Token Environment:

Many contracts on Ethereum have the ability to be changed after first deployment with no communication or decision of the holders. On Nexa the original rules, semantics, and scripts of the token are hardwired into the blockchain. To change the scripts on Nexa tokens, the holders themselves have to agree to upgrade to the new scripted token.

Token Group and Subgroups:

Tokens can have subgroups added to each token group that is created. This allows token creators to add unique proprieties to many subgroups within each group. In a practical usage examples with NFTs, these subgroups allows the holder of an NFT to directly download the NFT data.

This is in contrast to an Ethereum NFT in which the NFT is linked to the smart contract via a URL (that potentially could be broken). With NFTs on Nexa, it would be impossible for NFT data to be changed, as its already on the blockchain.

Fencing:

Being able to enforce rules and constraints of tokens onto the native Nexa Coin. Thereby allowing developers to put forth certain rules and semantics on the Nexa native coin, without requiring full consensus change of the overall Nexa blockchain.

Meaning, if you create a group token, without creating a token, the grouped native Nexa coin becomes the token, and can be subject to certain rules. A practical usage example of this would be if developers want to back tokens with on-chain native nexa currency.

For example, you could take some Nexa native currency and put it in a “fence” and you could apply rules such as “you can only take this Nexa out of the fence, unless you burn/melt a certain token”. And every time you want to mint more tokens, you would have to put Nexa coin into the “fence”. With the end result, having a fully “backed token” with Nexa native currency behind it.

Learn more of the Power of Tokens on Nexa:

Incredible AMA Discussion between Andrew Stone and Paul Church as seen on Nexa YouTube.

In conclusion, Nexa unique feature for Tokenisation will bring substantial value to the Nexa ecosystem. It’s solves the many limitations Layer-1s experience such as Ethereum. Lead Developer Andrew Stone is the mastermind behind this code. It is just one of the special features Nexa facilitates for developers and businesses.