xUDTs: The Next Stage of UDTs

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xUDTs: The Next Stage of UDTs

After the successful launch of sUDTs — which are tokens that can be easily created by users to tokenize assets while being secured on Nervos’ CKB Layer One blockchain — Nervos is excited to introduce xUDTs.

While sUDT ensures the most basic requirements for tokens; allowing users to hold tokens, issuers can mint and govern, they also provide a foundation for a world of interoperable extensions on top of it.

xUDT (or Extensible User defined Tokens) allows for definition of more functionality and rules that a user-defined token may need. In other words, xUDT is an extension on sUDTs for defining more behaviors a UDT might need.

“It’s like token pieces, explains Jan Xie, Chief Architect of Nervos. “xUDTs are more fine grained building blocks (for 10 yo+) compared to the more coarse grained  ‘DeFi Legos’ (for 2 yo+).”

While simple UDT provides a minimal core for issuing UDTs on Nervos CKB, extensible UDT builds on top of simple UDT for more potential needs, such as regulations.

More Complexity Means More Possibility

xUDTs, by their nature offer far more complex possibilities and deviate away from the simple framework of the sUDT. But, with this complexity there is a new world of possibilities as they  allow for definition of more functionality and rules that a user-defined token may need.

But, in order to utilize the full potential of these tokens without letting the complexity get in the way, there is a strong focus on usability. Currently, a layer is being designed that can have a set of APIs that can pull the balance of xUDT via just a single CKB address, or make a transfer with minimal amount of data.

These additional tools will help users/developers manage tokens issued as xUDTs to make the experience similar to sUDT. With more and more developers building on xUDT, more extensions will be created and packaged, which will provide more lego pieces to later developers and make it easier to develop new xUDTs.

Regulation Matters

To put xUDTs into a use case scenario, one such extension in the works is the Regulation Compliance Extension (RCE). This is a xUDT 2 extension that enhances UDT with regulation compliance capabilities. It provides features such as transfer whitelists and black lists, emergency Halts and PKI Style Regulation Agency Support.

What is so useful about this extension is that the RCE extension can fulfill all the requirements of STOs, but more than that, it could be used as a solution towards mass adoption that is hitting the usual regulatory hurdles. 

Regulation compliance is a critical problem for the mass adoption of tokens and the ecosystem built on top of it. RCE is an attempt to solve the problem, it’s the result of many conversations with related people. 

This example of the RCE also starts to open doors  in other popular arenas, such as NFTs and DeFi. Presently, there are some prototyping for NFTs implemented via xUDTs which further highlights how these tokens can be utilized.

In DeFi, developers always introduce new behaviors to DeFi tokens other than standard issue and transfer. Those new behaviors can be packaged as a xUDT extension easily, too.

An Appealing Offering

Nervos is committed to making not only the developer journey a seamless one, but also the user experience. Because of the flexible and powerful Layer One CKB blockchain. xUDTs can provide much desired  reusability. When best practices are found, they can be packaged into reusable extensions and shared by the whole community. Taking complex extensions and making them simple to apply and reuse takes advantage of decentralized community building and the mass proliferation of well designed tokens.

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