SPL-20 (Solana Program Library-20) is a standard for creating and managing tokens on the Solana blockchain. Much like the ERC-20 standard on Ethereum, SPL-20 establishes a comprehensive framework comprising conventions and interfaces tailored for both fungible and non-fungible tokens (NFTs). Fungible tokens, akin to traditional currencies, are interchangeable and represent a quantifiable value, whereas non-fungible tokens are distinct and unique digital assets, each with its characteristics and value.^[1]

History

The SPL-20 token standard was introduced to streamline the creation and management of fungible tokens. Solana, founded in 2017 by Anatoly Yakovenko, launched in March 2020 to provide a highly scalable and efficient blockchain platform. As developers began building decentralized applications (dApps) that required fungible tokens, the Solana team created the Solana Program Library (SPL), which includes SPL-20.

Inspired by Ethereum's ERC-20 standard, SPL-20 was designed to offer a uniform set of rules and functions for token development, ensuring interoperability within the Solana ecosystem. This standard includes essential features like minting, burning, and transferring tokens, facilitating seamless integration with various dApps.

Since its introduction, SPL-20 has become foundational to Solana, powering diverse applications in decentralized finance (DeFi), digital currencies, and asset tokenization. Its adoption has been driven by Solana's high transaction speeds and low fees, making it a preferred choice for developers and users. As Solana continues to grow, the SPL-20 standard remains vital, supporting ongoing innovation and development within the blockchain space.^[2]

Overview

SPL-20 tokens are digital assets that function on the Solana blockchain. The SPL-20 standard establishes the rules for these tokens, ensuring they are compatible with Solana wallets and smart contracts. Unlike Solana’s native coin, which is integral to the blockchain’s core operations and consensus mechanism, SPL-20 tokens operate separately. They can be used like other cryptocurrencies but require transaction fees to be paid in Solana’s native coin.^[3]

Interestingly, Solana’s native coin is also considered an SPL token since it adheres to the SPL standards, but it is unique because it has been integral to the network since its inception.
The SPL-20 standard, akin to Ethereum’s ERC-20, provides guidelines for creating and managing both fungible and non-fungible tokens on the Solana blockchain. Fungible tokens are interchangeable and act like currency, whereas non-fungible tokens (NFTs) are unique digital assets.

SPL-20 inscriptions allow for on-chain storage of digital art, similar to Bitcoin’s BRC-20 standard. These unique Solana addresses can contain images stored directly on the blockchain, facilitating the creation of NFTs.^[4]

Designed for the Solana blockchain and compatible virtual machines, the SPL-20 standard outlines how to create, manage, and transfer tokens. This includes defining their operational parameters and ensuring their functionality within the network’s ecosystem. SPL-20 tokens are managed through Solana-specific wallets such as Phantom. While some wallets support multiple blockchains, those tailored for Ethereum or Solana exclusively do not support tokens from the opposite network. In essence, you cannot use a MetaMask wallet to transact Solana tokens (except via Solana wallet MetaMask Snap), and ERC-20 tokens cannot be stored in Solana wallets like Phantom.^[5]

Properties of the SPL-20

• Speed & Efficiency: SPL-20 tokens leverage Solana's high-speed blockchain, enabling quicker, scalable transactions with lower fees compared to many other networks.
• Broad Applications: From gaming to finance, SPL-20 tokens are versatile, fueling projects across various sectors. They're key to expanding NFTs, DeFi platforms, and more in the Solana ecosystem.
• The SPL standard outlines operational guidelines for both fungible and non-fungible tokens on the Solana blockchain. Unlike Ethereum, which has separate standards for different token types, Solana's SPL standard applies universally to both. The main differences between fungible and non-fungible tokens under SPL are determined during token creation, based on factors such as the number of tokens minted, their divisibility, and additional attributes.
• Composability:  The source code for an SPL token can be re-used to create another SPL token. This makes it easier for developers to create new tokens. Depending on the creator’s intent, a few features (like token name and supply statistics) could be changed at the point of creation, but the majority of the code base can be deployed without modification and still deliver the expected results.^[6]

How Are SPL-20 Tokens Created

SPL-20 tokens come into existence through a process called Minting, where creators interact with the Solana blockchain's smart contract functionality using code crafted in Rust, Solana's programming language.

To mint an SPL-20 token, creators can either write code from the ground up or tailor existing codebases for their needs. Alternatively, there are tools available that simplify the minting process, requiring minimal coding knowledge. During minting, the essential characteristics of the token are established. For example, to craft a non-fungible SPL-20 token, the supply is typically set to one, and the decimal function is omitted. Conversely, for fungible tokens, developers configure the decimal function to enable fractional token transfers. Additionally, supply data is adjusted based on the project's tokenomics strategy.

Once minted, these tokens operate similarly to other cryptocurrencies, unless specific behaviors are programmed by the creator during the minting process.^[7]

Use cases for SPL-20 tokens

SPL tokens serve various functions across different sectors:

1. ICOs and IEOs: These tokens can represent project valuation, akin to shares, allowing firms to raise funds for development. Token holders become shareholders with potential dividends and voting rights.
2. DAOs: Decentralized autonomous organizations tokenize governance using SPL tokens, enabling community involvement in decision-making through voting mechanisms proportional to token holdings.
3. Utility Tokens: SPL tokens can function as utility tokens within projects, providing privileges or access to project features. They are integrated into project operations and often serve as incentives.
4. MemeCoins: SPL tokens can be used in community-building and fun-based projects, known as memecoins. They can be customized at minting to suit memecoin tokenomics, such as high supply and specific features.
5. NFTs: Digital creators can mint unique SPL tokens representing digital assets like multimedia or gaming items. These tokens, with a supply set to one, serve as NFTs with customizable attributes and transfer arrangements.
6. RWAs: SPL tokens can represent Real-World Assets, with potential for future enhancements to cater better to RWA needs, such as escrow facilities and token freeze/nullification, through discussions on Solana Developer Forums.^[1][4]