Token Exchange

Cryptocurrency and Blockchain Technology

Introduction

Token Exchange Types of Tokens

Tokens Token Exchange Protocols

● units of value that blockchain-based
organizations or projects develop on
top of existing blockchain networks
 Cryptocurrency vs Tokens
● A digital or virtual form of currency that ● A digital asset that represents ownership
uses cryptography for secure or access to a particular asset or service.
transactions.
● Usually built on top of an existing
● Uses cryptographic signatures blockchain platform and follows its rules.

● Typically operates on its own blockchain ● Can represent a wide range of assets,
network, independent of other including real estate, digital art, and
platforms. voting rights.
● Digital assets that represent ownership
● Cryptocurrencies are standalone digital or access to something else.
currencies
● Examples: ERC-20 tokens (used on the
● Examples: Bitcoin (BTC), Ethereum (ETH), Ethereum blockchain), Non-Fungible
Litecoin (LTC). Tokens (NFTs).
 Token Exchange
In the context of blockchain technology, Token exchange is typically facilitated through
token exchange refers to the process of smart contracts., which are self executing
exchanging digital tokens on a blockchain contracts with the terms written into code.
network.
Smart contracts on blockchain networks can
These tokens can represent assets, such as automate the process of token exchange,
cryptocurrencies, or other forms of value, allowing parties to exchange without the need
such as loyalty points or access rights. for intermediaries.
Token Exchange Protocols
Token exchange protocols refer to the set of rules and procedures that enable the exchange of digital
tokens between different parties. These protocols enable the interoperability of different tokenized
ecosystems. Some TEP are:

1. Atomic Swaps: This protocol allows for the peer-to-peer exchange of tokens between different
blockchain networks without the need for intermediaries.

2. Bridge Protocol: Bridge protocols are designed to enable the interoperability of different blockchain
networks by creating a bridge between them.

3. Decentralized Exchanges: DEXs are platforms that enable users to exchange digital tokens in a
decentralized manner. These exchanges are built on blockchain technology and allow users to trade
without the need for intermediaries.

4. Tokenization: Sets of rules and guidelines that define how digital assets, such as tokens, are created,
issued, and managed on blockchains. These standards provide a common framework for
interoperability, allowing different tokens to be compatible with various blockchain ecosystems
 Types of Tokens
There are two main types of tokens:

Utility Tokens Security Tokens

Utility tokens are designed to provide access to a
product or service within a blockchain ecosystem. Security tokens are digital tokens that represent an
ownership or investment interest in a company or
They are often used in Initial Coin Offerings (ICOs) project.
as a way to raise funds for a project or company.
Security tokens are designed to be compliant with
Holders of utility tokens can use them to access the securities regulations, and often represent an
features and services offered by the issuing equity share, debt, or other financial instrument.
company or project.
Security tokens provide holders with the same
Utility tokens do not represent ownership in the rights as traditional securities, such as voting
company or project, nor do they provide dividends rights, dividends, and profit sharing.
or profit sharing.
 Tokenization in:
Bitcoin vs Ethereum
Bitcoin Ethereum
Bitcoin primarily supports the creation of simple Ethereum has built-in support for creating and
tokens called "colored coins," which are essentially managing tokens through its ERC-20, ERC-721, and
small amounts of Bitcoin that are "colored" to ERC-1155 token standards, which are widely used
represent a specific asset. for various tokenization use cases.
Bitcoin does not have native support for smart Ethereum is known for its smart contract
contracts, and tokenization on Bitcoin often
functionality, which allows for the creation of
requires additional layers or protocols to be
implemented on top of the base Bitcoin decentralized applications (dApps) and custom
blockchain. tokens

Bitcoin has seen limited adoption for tokenization Ethereum has been the platform of choice for
due to its more limited capabilities and focus on its many tokenization use cases, and the majority of
use case as a digital currency.B the token economy
 Literature Work
1. Tokenization: Open Asset Protocol on Blockchain;
Xuefeng Li Zhong, Xiaochuan Wu, Zhuojun Yao, Xin Pei (2019)

In order to achieve asset tokenization, we propose a new kind of token in this paper, the
asset-backed token, which is used for the proposed blockchain based Open Asset Protocol
(OAP)

2. Decentralized Exchanges;
Alfred Lehar, Christine A. Parlour (2021)

Uniswap is a system of smart contracts on the Ethereum blockchain and is one of the largest
decentralized exchanges.

3. Founding Cryptography on Tamper-Proof Hardware Tokens;

Vipul Goyal, Yuval Ishai, Amit Sahai, Ramarathnam Venkatesan, and Akshay Wadia

We show that by exchanging simple stateful hardware tokens, any functionality can be realized
with unconditional security against malicious parties.
 Problem
Even after a few years of developing, we still have not witnessed implementations that make blockchain or
its derivatives deployed in heavyweight decentralized application(DApp) or decentralized autonomous
organization (DAO). We address three reasons for this:

Technology Problem Blockchain Scenario Token Problem

➔ Blockchain is still developing. ➔ Token represents the right to do some

➔ After few years of exploration we did
operation in computing, such as access
➔ Some initial issues such as scalability, not find a very suitable scenario for
public blockchain. token, session token, etc.
storage, privacy, etc. are still not well
➔ Nonetheless, it also brings some problems
solved.
➔ Bitcoin is the most influential such as lack of supervision, low investment
➔ Once it comes to privacy, the application of blockchain. threshold and frauds
permissionless blockchain is hard to ➔ Many teams use ICO only for speculation and
➔ It is because the potential of blockchain
solve, because the data of do not consider its usefulness for Blockchain,
is fully developed according to real
permissionless blockchain is leading to someone advocating that
requirements, such as trust and
transparency and each node have a copy Blockchain does not require token.
transparency.
of the ledger.
Approach ➔ Different from the baseless blockchains , we link
each token with a thing in reality so that the
value of the tokens will vary with the things.
Token represents the right to perform an
operation in software. They endow the items of ➔ For example, a contract, an insurance policy, a
token more value in the real world. car, any object that we could touch and see can
be the backed thing mapping to a token on the
➔ In order to achieve asset tokenization, we blockchain.
propose a new kind of token, the asset
backed token, which is used for the ➔ Thus, the assets of an individual can be
proposed blockchain based OAP. described in tokens, which can be searchable by
an identified blockchain address and computed
➔ We use the Open Asset Protocol (OAP), and under the owner’ s authentication.
utilize the blockchain technique to promote
the liquidity of assets. ➔ The OAP provides a new method for secure data
utilization and promotes the assets liquidity in
➔ Using OAP, we show how to convert both of policy, finance and healthcare(PHR) fields by
real and virtual objects to asset based means of tokenization.
tokens on blockchain.
 NFT (Non-Fungible Token) and Open Asset Protocol are related concepts, but they are not the same thing. Here's
how they differ:

NFT OAP
1. NFTs are typically used to prove ownership, 1. Specific protocol for issuing, transferring, and
authenticity, and scarcity of a digital asset on a managing digital assets on the Bitcoin blockchain.
blockchain. Allows for the creation and transfer of digital assets
2. Each NFT is unique. Each NFT represents using the blockchain as a ledger.
ownership of a specific digital asset and cannot be 2. The digital assets created using this protocol are
replaced with another NFT of equal value. interchangeable on a one-to-one basis, similar to
3. Often used for digital art, collectibles, and virtual how cryptocurrencies are fungible.
real estate, can be traded on various online 3. primarily designed for creating and managing
platforms. NFTs can also include additional data, digital assets that are used within specific
like artist’s name, creation date etc, which can be applications or platforms, such as in-game items,
stored on the blockchain. reward points, or digital coupons.
4. NFTs are typically governed by the rules and 4. Being an open-source protocol, does not have a
regulations of the platform or marketplace on central governing authority, and its development is
which they are bought, sold, or traded. typically driven by the community.
 Conclusion

In the traditional economic system, only things, which can be recorded in the
ledger, can be traded and have liquidity value. However, in real world most things
can’t be quantified, tokenization solves this problem.
Open asset protocol can be applied various fields and we first applied OAP in
insurance and instanced Policy-backed token. OAP provide methods of how to
quantify, map and authenticate real or virtual asset. Trading and exchanging of
Asset-backed token is still open question.
 Presented by:

Mannan Jain 112015080

Mansi Kunjam 112015081
Shreyas Suryawanshi 112015133
Tushar Sharma 112015157
Janvi Palli 112016021

Thank You