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Blockchain Networks: Token Design and Management Overview

Published

Author(s)

Loic D. Lesavre, Priam C. Varin, Dylan J. Yaga

Abstract

Blockchain technology has enabled a new software paradigm for managing digital ownership in partial- or zero-trust environments. It uses tokens to conduct transactions, exchange verifiable data, and achieve coordination across organizations and on the web. Fundamental to this representation is that users can independently control token custody in digital wallets through public-key cryptography and interact with one another in a peer-to-peer manner. Blockchain networks provide secure transaction reconciliation, linkage, and storage in consolidated, integrity- protected distributed ledgers forming mutually operated record-keeping execution environments. Data models with varied capabilities and scopes have been defined to issue tokens, which additional protocols can help manage while enabling separation of concerns. Security and recovery mechanisms allow users to set up self-hosted, externally hosted, and hybrid account custody models. Scaling schemes have been developed to accommodate transactions off-chain with deferred on-chain settlement, as well as deposit contracts with built-in, self-enforceable conditions to exchange tokens without intermediaries, transaction submission rules to fit in with different deployment scenarios, and privacy-enhancing techniques to protect user confidentiality. Software design patterns and infrastructure tools can also make it easier to integrate blockchain networks, wallets, and external resources in user interfaces. This document provides a high-level technical overview and conceptual framework of token designs and management methods. It is built around five views: the token view, wallet view, transaction view, user interface view, and protocol view. The purpose is to lower the barriers to study, prototype, and integrate token-related standards and protocols by helping readers understand the building blocks involved both on-chain and off-chain.
Citation
NIST Interagency/Internal Report (NISTIR) - 8301
Report Number
8301

Keywords

blockchain, cryptoasset, cryptocurrency, data portability, decentralized governance, digital asset, digital token, distributed ledger, fintech, off-chain scaling, self-hosting, smart contract, state channel, tokenization, transaction confidentiality, verifiable data, wallet, zero-knowledge proof.

Citation

Lesavre, L. , Varin, P. and Yaga, D. (2021), Blockchain Networks: Token Design and Management Overview, NIST Interagency/Internal Report (NISTIR), National Institute of Standards and Technology, Gaithersburg, MD, [online], https://doi.org/10.6028/NIST.IR.8301 (Accessed September 17, 2021)
Created February 8, 2021, Updated March 1, 2021