How Token Extensions Can Rebrand Traditional Finance Enterprises

Financial Enterprises can now unlock the true potential of blockchain with Token Extensions on Solana. The potential is vast, the time is now.

Ini Abasi Ekanem

10 min readFeb 28, 2024

In this article, I’ll show you how token extensions on Solana can rebrand traditional financial enterprises.

Table of Content

How blockchain failed enterprises.
What are Token Extensions?
How blockchain is NOT failing enterprises with Token Extensions on Solana.
Practical Applications of Token Extensions in Different Industries.
Benefits for enterprises.
Key takeaways.

It’s every enterprise’s dream to adopt and integrate blockchain into their businesses with ease. Here’s a question every enterprise owner would ask:

Can I integrate blockchain into my business the same way I can simply open a Gmail account for my business?

Before, the answer to this was No but today, Yes, you can simply integrate blockchain features into your business with Token Extensions on Solana.

Let’s see how enterprises previously struggled with blockchain adoption and integration.

How blockchain failed enterprises.

2017 was a bullish year for blockchains as the crypto market hit new highs and Bitcoin rallied from $500 to ~$19,500. During this period, many enterprises noticed the potential of Bitcoin to revolutionize global payments.

There was a massive rush by these enterprises to adopt Bitcoin without fully understanding the underlying blockchain and how it could transform business-to-business (B2B) transactions.

The most integral part of any blockchain is the tokens on that blockchain. Tokens allow information and value to be transferred, stored, and verified efficiently and securely.

Most enterprises failed to study the Bitcoin blockchain, its tokens, and how it works, leading to failed blockchain integration.

In 2018, IBM partnered with Moller-Maersk to bring blockchain into shipping by developing TradeLens, a blockchain-enabled global trading platform.

The TradeLens project failed and was shut down in 2023. Had the partnership worked, blockchain would have simplified shipping companies’ supply, tracking, and clearing processes, bringing more transparency and efficiency to the business.

Just like the IBM and Moller-Maersk partnership failed, many other enterprises’ adoption and integration of blockchain failed. Moller-Maersk, Walmart, Walgreens Boots, and ASX faced five similar challenges with adopting and integrating blockchain into their businesses.

Complex Development and Audit Requirements: The intricate nature of developing and auditing smart contracts for blockchain integration has been a significant barrier for enterprises.
Limited Token Functionality: Existing blockchains often lacked the flexibility to create tokens with advanced functionalities, hindering customization for specific business needs.
Scalability Concerns: Slow transaction speeds and scalability challenges on blockchains impeded their suitability for enterprise-level operations with high transaction volumes.
Inadequate Privacy Measures: Privacy concerns, especially in sectors handling sensitive data, posed a significant obstacle to widespread blockchain adoption.
Concerns about Network Security: Fears related to the security of blockchain networks, including potential vulnerabilities and susceptibility to attacks, have been a persistent challenge for adoption.

This proves that enterprises need better blockchain solutions tailored for their businesses. Rotem Hershko, head of business platforms at Maersk said,

Instead of abandoning their blockchain projects, enterprises should take three learnings from the closure of TradeLens: Confirm [that] blockchain is the right solution, be ready for [the] technology, and avoid biased central authority.

However, we have an innovation on Solana called Token Extensions that completely removes the challenges of adopting blockchain. Enterprises can now integrate blockchain in a plug-and-play manner with Token Extensions.

What are Token Extensions?

Remember that tokens allow information and value to be transferred, stored, and verified efficiently and securely on a blockchain. The Solana blockchain token system is the Solana Program Library (SPL) token standard.

The original Solana Program Library (SPL) token standard was basically for token minting, transfers, and freezes which were incompatible with enterprise needs.

Token Extensions also known as TOKEN 22, is a groundbreaking upgrade to the original Solana Program Library (SPL) token standard.

Token Extensions seamlessly incorporate new functionalities that ease integration with enterprises while ensuring backward compatibility with already existing applications on Solana.

With Token Extensions, enterprises can adopt blockchain features tailored to their needs on the fast, secure, and efficient Solana blockchain.

How blockchain is NOT failing enterprises with Token Extensions on Solana.

The primary goal of Token Extensions is to empower enterprises to integrate blockchain.

Token Extensions, launched on the Solana blockchain in January 2024, serves enterprises by introducing innovative features in two major categories:

Mint extensions.
Account extensions.

1. Mint Extensions: Enhancing Token Functionality for Enterprises

Transfer Fees: Enterprises can utilize this extension to introduce a structured fee system for token transfers especially beneficial for business models that involve transaction fees or taxes like banks, financial institutions, and hedge funds.
Confidential Transfers: This feature addresses privacy concerns, allowing enterprises to conduct token transfers privately like private hedge funds.
Closing Mint: The closing mint extension allows enterprises to terminate empty Mint accounts.
Interest-bearing Tokens: For enterprises looking to explore innovative financial models like ETFs, Bonds, Index funds, and Dividend stocks, the Interest-bearing Token Extensions enable the creation of tokens that accrue interest over time.
Non-transferable Tokens: This feature is for creating unique, soulbound tokens, ensuring their exclusivity, and preventing unauthorized transfers.
Permanent Delegates: Enterprises can leverage the permanent delegate extension to grant unlimited delegate privileges like the CEO of a company can have permanent delegate authority to make decisions.
Transfer Hook: The Transfer Hook extension enables enterprises to enforce specific actions like payment of royalties to creators on Spotify.
Metadata Pointer and Metadata: These extensions allow token issuers to provide additional information about the mint, such as name, symbol, and logo. Intellectual property owners can program ownership rights into their content.

2. Account Extensions: Customizing and Securing Token Accounts for Enterprises

Memo Required on Incoming Transfers: Enterprises can enforce the inclusion of a note with all incoming transfers like banks, ensuring traceability, compliance, and transparency.
Immutable Ownership: This prevents changes to the ownership of an account once, enhancing the security and integrity of ownership records and reducing the risk of unauthorized changes.
Default Account State: Enterprises can pre-set conditions that apply to accounts, ensuring that token accounts operate within defined parameters.
CPI Guard: This feature prohibits actions that are not approved, enhancing security and mitigating risks for enterprises.

Practical Applications of Token Extensions in Different Industries

Here are a few use cases of Token Extensions by Enterprises.

Token Extensions in Finance — The True Programmable Money

When talking about Token Extensions, the first thing that comes to mind is true programmable money like Central Bank Digital Currencies (for example: the e-rupee of India, the e-naira of Nigeria, and the Sand Dollar of the Bahamas)

Central Bank Digital Currencies and traditional financial enterprises can leverage Token Extensions for confidential transfers, interest-bearing functionalities, and programmed monetary policies.

Metadata can include all the details of a Central Bank Digital Currency or any valuable information.

Confidential transfers address privacy concerns associated with traditional digital currencies. This is especially crucial for central banks and financial institutions that require a secure and confidential means of transferring value.

A user’s public account can create confidential accounts with a confidential transfer extension. This allows the users to execute confidential transactions that are not visible to the public (except the sender, receivers, and a third-party verifier).

The balance is later sent to the public account that is visible to the public.

The ability to create interest-bearing tokens allows for the implementation of monetary policies that involve interest rates such as Treasury bills, bonds, notes, and mortgage-backed securities can be programmed into tokens.

Dividends and accrued interest are programmed into smart contracts that execute once conditions are met, using interest-bearing tokens and permanent delegates.

Individuals and entities holding these tokens could earn interest, providing a mechanism for central banks to influence economic behavior and financial operations, including lending, borrowing, and trading, with programmable conditions and outcomes.

Banks and financial institutions including remittance companies can program transfer fees and CPI Guard extensions into their operations, allowing them to charge transaction fees in a blockchain-enabled system.

Fintech companies can program transaction limits into their online payment systems with Transfer Hook Extensions and CPI Guard. Once a transaction is below the minimum limit or above the maximum limit, the transaction will fail or show an error.

Transfer hooks in Token Extensions can also be employed to enable escrow services. This ensures that funds are released only when predefined conditions are met, adding an extra layer of trust and security to financial transactions.

Token Extensions in Arts and Music Finance

Token Extensions enable confidential art transactions, allowing high-profile artists to keep sales details private with programmable royalty mechanisms, and permanent delegates art collections management.

Here are several ways in which Art and Music can benefit from Token Extensions:

Confidential Art Sales: Token Extensions enable confidential art transactions, allowing high-profile artists to keep sales details private using confidential transfer extensions.
Royalty for Musicians: Musicians can tokenize their music and include programmable royalty mechanisms using the transfer hook and CPI Guard.
Delegates for Art Collections: Token Extensions allow permanent delegates to manage and curate art collections.
Metadata for Art Descriptions: Metadata pointers and metadata extensions enable artists and creators to attach detailed information for their art or music.
Group Tokens for Art Collections: Tokens belonging to a group represent curated art collections or music playlists using Non-transferrable tokens and immutable ownership extensions.

Token Extensions in Ticketing Finance

Traditional event tickets can be tokenized with specific details encoded in their metadata, such as venue details, event timings, and any special instructions, reducing the risk of ticket fraud and counterfeiting.

Here are some features that ticketing enterprises could explore:

Non-Transferable VIP Access Tokens: Non-transferable tokens in Token Extensions can be used for VIP access or special privileges.
Confidential Ticket Transfers: Token Extensions can ensure the privacy of ticket holders by allowing them to transfer tickets privately.
Interest-Bearing Tickets: Token Extensions can introduce interest-bearing functionalities to incentivize early ticket purchases or loyalty.
Transfer Hooks for Secondary Market Control: Transfer hooks can enforce secondary market controls.
Group Tokens for Bulk Purchases: Group tokens can be used for bulk purchases of tickets to facilitate group bookings and special promotions.

Benefits for Enterprises

Branding and Packaging with Metadata.
Transparency and Reduced Risks.
Enterprise-Ready Integrations.
Innovative Financial Models.
Efficiency and Accessibility.
Reduced Development Time.
Privacy and Compliance.
Enhanced Functionality.
Flexibility.

Verifying Token Extensions in a Transaction

Visit http://solana.fm
Input the token hash.
Confirm the “Token Extension” marked as “true” in the token details.
Explore the “Extensions” section to view all associated extensions by clicking on it.

Key Takeaways

Past blockchain failures, like the IBM-Moller-Maersk project, highlight the need for less complex blockchain solutions for enterprises.
Solana’s Token Extensions offer a user-friendly blockchain solution for seamless enterprise integration.
Token Extensions address past blockchain issues, providing enterprises with a versatile and efficient solution.
Token Extensions’ benefits extend to various sectors, ensuring confidential transactions, royalties, business efficiency, and enhanced security.
Enterprises gain branding, transparency, quick integrations, and precise customization for tailored solutions with Token Extensions.

Conclusion

The transformative potential of blockchain technology has faced setbacks due to challenges encountered by enterprises during early adoption. The complexities of development, scalability concerns, and privacy issues contributed to the failures in implementing blockchain solutions.

However, the narrative has evolved with the emergence of Token Extensions on the Solana blockchain. This innovative solution addresses the shortcomings of traditional blockchain adoption, providing enterprises with a seamless and efficient way to integrate blockchain technology.