What Is Solana's SPL-20 and Why Is It Trending?

Bittime - The name SPL-20 Solana has suddenly become a hot topic in the crypto community, especially after the inscription trend previously popular on Bitcoin began to spread to other networks.

Searches about what Solana's SPL-20 is have surged as many users notice new tokens popping up in the Solana ecosystem with unusual mechanisms.

SPL-20 refers to an inscription-based token scheme that leverages data structures on the Solana network.

Unlike Solana's conventional SPL token, which is created through standard programming, SPL-20 is more closely modeled after Bitcoin's BRC-20. It isn't managed by a traditional token smart contract, but instead relies on specific data recording on the blockchain.

This phenomenon has sparked both enthusiasm and confusion. On the one hand, SPL-20 is seen as opening up new opportunities for experimentation. On the other hand, many users still don't understand how this token works, what its functions are, and what the risks are.

Understanding the SPL-20 Concept on the Solana Network

To understand what Solana's SPL-20 is, it's important to consider its context. Solana has an official token standard called SPL, which is equivalent to Ethereum's ERC-20. This standard is widely used for utility tokens, stablecoins, and even NFTs.

SPL-20 is not part of the official SPL standard. It is a community convention that utilizes inscription, which is the recording of specific data directly into the Solana blockchain. This data is then read by an index or third-party application to determine token ownership and supply.

This means that SPL-20 doesn't rely on the logic of a traditional token smart contract. Token validity and interpretation are highly dependent on data reader tools. This is where the fundamental difference lies. SPL-20 is more experimental and doesn't yet have formal legitimacy as a protocol standard.

This approach makes the SPL-20 relatively easy to build, but also brings challenges from an interoperability and security perspective.

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Difference between SPL-20 and SPL Token Solana

The difference between Solana's SPL-20 and SPL tokens is often a source of misunderstanding. SPL tokens are the official standard fully supported by the Solana ecosystem. These tokens have a program, clear metadata, and broad compatibility with DeFi wallets and applications.

SPL-20, on the other hand, doesn't run on a standard token program. It simply represents data inscriptions interpreted as tokens. As a result, wallet and platform support is still limited and dependent on the index developers.

In terms of security, the SPL token has a more mature mechanism. SPL-20 is riskier because there's no universal guarantee that all platforms will read data the same way. This makes SPL-20 more suitable as a community experiment than a well-established financial instrument.

This distinction is important to understand so that users do not confuse SPL-20 with Solana's official SPL token.

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Why SPL-20 is Catching the Attention of the Crypto Community?

The appeal of SPL-20 lies in its simplicity and experimental nature. Many developers and collectors are attracted to Solana because its low transaction fees allow for large-scale inscription experimentation.

Furthermore, speculative trends also play a role. SPL-20 tokens are often traded with a narrative of scarcity and early adoption, similar to the early stages of BRC-20 in Bitcoin. This narrative drives a surge in interest despite the unclear utility.

However, this high level of interest doesn't always align with an understanding of the risks. Many new users jump in without realizing that SPL-20 doesn't have the same protection standards as official tokens. Therefore, enthusiasm for SPL-20 is often accompanied by warnings from the Solana developer community itself.

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Conclusion

Solana's SPL-20 is an inscription-based experimental phenomenon born from community creativity, not an official network standard. Understanding Solana's SPL-20 means recognizing its differences from the legitimate and established Solana token SPL.

For users, SPL-20 can be a space for technological exploration, but it also carries high risks. Without official standards and widespread support, SPL-20 should be treated as an experiment, not a primary investment instrument. Caution and technical understanding are key before engaging further.

FAQ

What is SPL-20 Solana in simple terms?

SPL-20 is an inscription-based token scheme on the Solana network that does not use the official SPL token standard.

Is SPL-20 the official Solana token?

No. SPL-20 is not an official standard and is not managed by the SPL token program.

Is SPL-20 safe to use?

The risk is higher than the official SPL token because it depends on the interpretation of data by a third party.

What is the difference between SPL-20 and SPL token Solana?

SPL token is the official standard with wide support, while SPL-20 is experimental and inscription-based.

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