Token-as-a-Service on OpenDApps Cloud

July 24th, 2023

Exploring the concept of ERC-20 tokens and how they are used to create the Token-as-a-Service solution on OpenDApps Cloud.

Introduction
What are ERC-20 tokens?
Difference between ERC-20 tokens and native cryptocurrencies
Usecase for ERC-20 tokens for projects
Token-as-a-Service on OpenDApps Cloud5.1 Introduction5.2 Tokenomics5.3 Inflation5.4 Additional Services

Introduction

In this blog post, we will dive into the world of ERC-20 tokens and how they became the most deployed smart contract standard in the whole crypto industry.

We will overview their history, their use cases for projects, and how they differ from native cryptocurrencies. We will also explore the concept of tokens deployed as a software-as-a-service solution — Token-as-a-Service on OpenDApps Cloud.

We will also look into the possibilities for using OpenDApps services to build projects around tokens and how they can be extended by using some of the platforms’ other services like staking, dApp-as-a-Service, etc.

Let’s dive in.

What are ERC-20 tokens?

ERC-20 tokens are a type of digital asset that is built on the Ethereum blockchain. The ERC-20 introduces a standard for Fungible Tokens, in other words, they have a property that makes each Token exactly the same (in type and value). ERC-20 tokens have become one of the most widely used and adopted token standards in the blockchain ecosystem.

ERC-20 tokens are implemented as smart contracts on the Ethereum blockchain and later on, implemented on other EVM-compatible blockchains like BEP-20 on BSC. ERC-20-compatible smart contracts must implement a specific set of functions to be compliant with the standard. These functions include getting the total supply of tokens, checking an account’s balance, transferring tokens from one account to another, and approving spending allowances for other accounts.

ERC-20 tokens can be transferred and owned like any other cryptocurrency. They can be sent from one Ethereum address to another using Ethereum transactions.

The ERC-20 standard has played a significant role in the development of the decentralized finance (DeFi) ecosystem and the creation of various utility and governance tokens.

Difference between ERC-20 tokens and native cryptocurrencies

ERC-20 tokens are built on existing blockchain platforms as smart contracts within the blockchain, utilizing its infrastructure and security features while native cryptocurrencies are the primary currency of a specific blockchain platform, part of the blockchain’s protocol, and are not built on top of another platform.

ERC-20 tokens are created to serve various purposes and use cases, such as fundraising, utility within a specific platform, governance, or even representing real-world assets while native cryptocurrencies primarily serve as a medium of exchange within their blockchain and are used for paying transactions fees, incentivizing network participants (e.g., miners or validators), and as a store of value.

ERC-20 tokens adhere to a specific set of rules and standards that ensures interoperability among different tokens, meaning they can be easily integrated into various wallets, exchanges, and decentralized applications (dApps). Native cryptocurrencies have their unique protocols and rules specific to their blockchain and are generally not interchangeable with each other without additional layers of cross-chain technology.

In summary, ERC-20 tokens are tokens built on top of an existing blockchain platform (like Ethereum) and can have various use cases, while native cryptocurrencies are the primary digital assets of their respective blockchains and are used primarily for value transfer and network operations.

Usecase for ERC-20 tokens for projects

ERC-20 tokens are very useful and flexible, offering projects endless possibilities for development.

ERC-20 tokens have become the standard choice for fundraising. Startups and projects can create their own ERC-20 tokens and sell them to investors in exchange for native currency.

Many projects create ERC-20 tokens as utility tokens, which can be used within their platform or ecosystem to access services, products, or specific functionalities. These tokens act as digital assets providing incentives for users to participate in the platform.

ERC-20 tokens can be used as governance tokens, giving holders the right to vote on decisions within a decentralized platform or organization. These tokens enable community involvement in the project’s development.

ERC-20 tokens have become the backbone of the DeFi ecosystem. They are used as collateral, liquidity providers, lending assets, and governance tokens in various DeFi protocols and platforms.

Businesses can create ERC-20 tokens to reward users for their engagement, loyalty, or specific actions within their platforms. These tokens act as a digital representation of value that users can accumulate and redeem for various benefits.

Overall, ERC-20 tokens offer a versatile and efficient way for projects to raise funds, create utility, and engage with their communities, making them a popular choice for a wide range of use cases within the blockchain space.

Introduction

The purpose of OpenDApps Cloud is to offer developers and project owners the necessary resources for deploying and utilizing smart contracts on the blockchain without the need to manually write or deploy code.

Our concept for software-as-a-service on the blockchain is based on this approach, and OpenDApps Cloud offers a Token-as-a-Service deployer as one of its main solutions. This deployer allows clients to easily create, manage, and extend ERC-20-based tokens directly from the OpenDApps Cloud UI, without the need for coding or manually calling smart contracts.

When tokens are deployed through OpenDApps Cloud deployer, they can utilize fully dynamic tokenomics to manage taxes for both buying and selling on any DEX, as well as transfers between holders. For advanced tokens, inflation is also an option with a maximum supply minted over customized periods and distribute rewards in a fully customizable manner.

On top of the general management of tokens, OpenDApps Cloud offers extensions for deployed tokens in the form of services like staking, dApp-as-a-Service, baseline price insurance, and more.

Tokenomics

ERC-20 tokenomics involve the automatic distribution of collected taxes from transfers. Tokens typically have a 1–10% buy/sell tax for various utilities like marketing, development, automatic burn, or charity. Usually, tokenomics are static and allow for a % calibration but not utility distribution changes.

On OpenDApps Cloud, tokens can customize their tokenomics through the user interface. There are two levels of complexity available: basic and advanced tax tokenomics. The basic level enables tokens to have a single buy/sell tax ranging from 1% to 10% for all DEX listings. The advanced level offers individual configurations for buy, sell, and transfer taxes, each with its distributions.

No matter the level or tax configuration selected, there are various options for distributing any unused tax amounts from tokenomics. These include:

Automatic burn: Tokenomics can be set up to burn a percentage of collected taxes, which can reduce the total token supply. This can make a token deflationary if there is a high volume.
Add to DEX liquidity: Tokenomics can be configured to add a percentage of collected taxes to existing liquidity on a DEX. This is a great option for projects looking to strengthen their liquidity on a specific DEX.
Provide staking rewards: If the token has a staking service deployed on OpenDApps Cloud, tokenomics can be set up to provide a percentage of collected taxes to the staking rewards pool. This option is perfect for projects aiming to reward long-term holders.
Transfer to a wallet/contract: Any percentage of taxes collected through tokenomics can be transferred to a designated wallet or contract. This allows for funding development or marketing wallets, as well as providing tokens to any contract with custom functionality created by the project.

The great thing about OpenDApps Cloud is that you can change those tokenomics at any time allowing projects to evolve over time without the need for migrating to a new token and smart contract.

An in-depth overview and how-to-use tokenomics for tokens will be available in a separate post:

Inflation

In the blockchain space, inflation is a concept mostly known to exist in native cryptocurrencies and rarely in ERC-20 tokens. The reason for that might be that there is no standard or common practice when it comes to programmable inflation on top of ERC-20 tokens and if the inflation is long-term, bugs and issues might not arise until much later.

The Token-as-a-Service solutions from OpenDApps Cloud provide an option for projects to enable inflation for their tokens on deployment and later on fully customize rewards distribution. OpenDApps Cloud UI makes it easier to manage inflation without having to write complex minting algorithms and rewards distribution.

Rewards minting and distribution are fully automatic over a configured block distance with a max supply that cannot be changed once the token is deployed ensuring holders that no more tokens than expected will be minted.

Rewards distribution is fully customizable at any time and supports all the configurations available to tokenomics like auto-burn, staking rewards, and distribution to wallets and contracts.

An in-depth overview and how-to-use inflation for tokens will be available in a separate post:

Additional Services

OpenDApps Cloud aims to provide fully extendable and customizable products to our clients who can use additional services to shape and extend their projects based on ERC-20 tokens. Some of the additional services available include:

Staking-as-a-ServiceTokens deployed using OpenDApps Cloud have access to the staking service. After deployment staking can be configured for the token to provide rewards from different sources like tokenomics, inflation, revenue streams, or manual top-ups. Those rewards are then distributed to holders using the staking from the project dApp on configurable time periods and amounts.

More about staking service can be found in the dedicated post about Staking-as-a-Service: TBD

dApps-as-a-ServiceTokens deployed using OpenDApps Cloud can use our subscription-based service for providing a dApp for the token containing all the information available on-chain for the token as well as giving access to all the additional services available for the token like dex swaps, staking, asset backing, etc.

More about the dApp service can be found in the dedicated post about dApp-as-a-Service: TBD

Baseline price insuranceBaseline Price Insurance is a service designed to provide an asset-backed baseline price for a token independent of its market price. The asset-backing ensures that the baseline price can only increase and tokens can be exchanged for part of the asset-backing at any time.

More about the asset backing service can be found in the dedicated post:

In-depth guides on available services and other SaaS-related information resources are available in this blog and any related content will be linked here: