Ethereum x Hathor: comparing token platforms

The token revolution started with Ethereum, but using it is still too complex for most users

Ethereum was launched in 2015 and its smart contracts capabilities reshaped the market. Developers and entrepreneurs now had a distributed Turing-complete machine where they could deploy custom software. People are still experimenting with all the possibilities that are available, but one big market has already emerged: tokenization.

It became wildly popular in 2017 with the ICO (Initial Coin Offering) boom. Several cryptocurrency projects managed to raise capital before launch by issuing tokens that represented future ownership of said crypto.

In essence, a token is a virtual currency issued on top of a blockchain that represents an asset or utility. It may be used to represent gold, loyalty points, real state 🏠, company stock, digital cats 😺 and even traditional currencies 💰 (check this guide for a simple explanation of crypto tokens).

We believe the token market is very promising and has useful applications in the real world. That’s why we designed native support for tokens in Hathor Network. Our goal is to deliver an easy-to-use solution, one that non-tech people can use.

(Before moving further, one distinction needs to be clear. Token creator is the person/entity issuing the token, while token users are the end users, who just trade the tokens. If an airline issues tokens to represent loyalty points, the airline is the token creator, while its customers are the token users.)

Tokens in Ethereum

In Ethereum, a token is basically a smart contract that keeps track of who owns how much of that token, and some functions so that users can send their tokens to other users. It defines all attributes of a token, such as name and symbol , and all operations that are supported by it, like balanceOf() or transfer() . By making use of smart contracts, users get a lot of flexibility when creating the tokens. This comes, however, with some downsides.

For token creators, it means they’ll need to actually write code and deploy a smart contract when creating a token. Even though the community has created some token standards (ERC-20, ERC-721, etc), by no means this is an easy task. Any software can have bugs, which in this case will lead to the loss of funds. Even the ERC-20 standard suffers critical problems that has caused the loss of millions of dollars.

A snippet of an ERC-20 token contract. The full code (including comments) has more than 300 lines.

Token users also end up affected by this complexity. While they don’t have to code anything, this design directly impacts transaction fees. Each operation in a smart contract has an associated cost. When a token is transferred, a couple of operations are executed by the token’s smart contract, so transferring any token is more expensive than transferring ether, Ehereum’s native token (source).

While it’s interesting that people are able to have highly customized tokens in Ethereum, that doesn’t happen in practice. Most people just use one of the existing standards (and even so they have to code, compile and deploy their smart contract).

In fact, there are more than 250,000 ERC-20 tokens (https://etherscan.io/tokens), by far the most common token type created. Users don’t want the risk of coding a new smart contract from scratch and ERC-20 tokens meet most of their needs.

The Hathor Way

For Hathor, we decided to have a different design. Instead of giving users too much flexibility — and the downsides that come with it — we selected the most used token features and had them built in our protocol. In the end, any token on Hathor Network is very similar to our native token (HTR).

With this approach, token creators don’t need to write any code, just select a few parameters: token name, symbol and initial supply. Managing your token is straightforward and can be done directly on the Hathor desktop wallet. For token users, the main benefits are fast and free transactions, just like transferring HTR.

Tokens on Hathor Network have all the capabilities as ERC-20 tokens (and some extra ones), so there’s already a huge market out there. By making it easy to create a token, our goal is to enable more people to experiment in the tokenization market and come up with new use cases.

We are committed to improving our token capabilities continually, keeping them up-to-date with market demands. For the near future, it’s in our plans to add new features following the ERC-721 standard, which has some interesting use cases. As with our original design, we’ll make all changes aiming to deliver an easy-to-use experience for both token creators and users.

Watch our videos and see how easy it is to create a token on Hathor desktop wallet and mobile app. For more technical details about how tokens work on Hathor Network, refer to RFCs #4 and #11.