For the past week, I've done some research in other blockchains and how they handle token creation. I put my focus mainly on Solana and how they handle the token creation process. I've found some interesting things and I realized that tokens on Hive Engine have a serious flaw.
What is different?
At first sight the token creation is very similar on Hive Engine and Solana. You need to define a name, a symbol for the token, the maximum supply, the number of decimals and some meta data.
In both cases you need to pay some fees to create the token.
source: hive-engine
The big difference between the two alternatives is however what you can do on Solana and what you can't do on hive-engine. On Solana you have the option to revoke several authorities regarding token management. You can revoke the freeze authority, the mint authority and the update authority.
What does it mean to revoke authorities?
This simply means that as a token creator you can give up the capacity to freeze, to mint the token or to change the data of your token. But why would you do these things?
Whereas you don't have any freezing capacity on Hive engine, as token creator you can mint new tokens and change the meta information of the token at any time. This is good for the token creator but not so good for the investor...
Trust level for investors
Imagine you buy a token and you expect a certain supply. Now the creator decides to print 500'000 tokens because he needs some money for a new liquidity pool for example. This will dilute the supply of the token and have an impact on the price. Believe me, this happens over and over on hive-engine. For example, when diesel pools are created. The creator pairs the token with another token. Instead of buying the token, he simply mints it and puts it as liquidity in the pool. Often some rewards are added to the pool in the same token as well. The supply is inflated which will have an effect on the token price. You can see that for investors it is actually good when the mint authority is revoked and no new tokens can be created.
What about revoking the update ability? Well, it's maybe not as important as the mint ability but it can have an impact. Imagine you create a token and then you decide to change the white paper, the logo and stuff like that. This can be negative for the token. People don't find it anymore or they purchased something and get something different in the process. Again, as investor you would want to have this ability revoked.
There was a proposal by Splinterlands where they minted all the tokens at once. So they revoked their mint capacity for SPS. This seems to be necessary to be able to get accepted by exchanges and get audited.
Self managed tokens on Solana
When you take the mint ability and the update ability out of the picture, it means that such a token is totally autonomous. The token creator is simply another token holder and he can still do a lot of things like buying, selling or burning tokens but it's much fairer for token holders.
Trust is good but control through code is much better in my opinion. It would be great if it would be possible to revoke the mint capacity of tokens on hive. This would add a layer of security to token holders not to be diluted by newly minted tokens by the creator.
With @ph1102, I'm running the @liotes project.
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