Learn about native tokens¶
Native tokens is a feature that enables the transacting of multi-assets on Cardano. Users can transact with ada, and an unlimited number of user-defined (custom) tokens natively.
Native support offers distinct advantages for developers: there is no need to create smart contracts to handle custom tokens, for example, which removes a layer of added complexity and potential for manual errors since the ledger handles all token-related functionality.
The native tokens feature extends the existing accounting infrastructure defined in the ledger model (originally designed for processing ada-only transactions) to accommodate transactions using a range of assets. These assets include ada and a variety of user-defined custom token types.
Single asset ledgers¶
Cryptocurrency ledgers that track exactly one type of asset are called single-asset ledgers.
Multi-Asset (MA) support¶
A blockchain, ledger, or cryptocurrency is said to have multi-asset (MA) support when the network or ledger supports tracking transfer and ownership of different types of assets on its ledger. In the Cardano environment, this functionality is provided by the native tokens feature.
This feature extends the existing accounting infrastructure defined in the ledger model, which is designed for processing ada-only transactions, to accommodate transactions that simultaneously use a range of assets. These assets include ada and a variety of user-defined custom token types.
Native versus non-native MA support¶
Some cryptocurrency ledgers have built-in support to track ownership and transfer of more than one type of asset. This type of MA support is called native. Cardano’s MA functionality is native.
If a cryptocurrency platform has sufficiently powerful smart contract functionality, it is possible to track assets for which there is no ledger accounting support. This is done with a layer-2 solution built using smart contracts. This type of MA support is non-native.
Using ada for administrative operations¶
Assets on Cardano are all native, however, ada is Cardano’s principal asset. It means that ada is the only asset that, at this time, is accepted to pay fees, make deposits, and it is the only asset in which rewards are distributed. This property of ada (and no other type of asset) is due to the construction of the underlying consensus protocol. It is also essential to hold ada (besides other currencies) to transfer multi-asset tokens between addresses.