Developer Knowledge Hub

xERC20

The xERC20 token standard introduces crosschain native tokens. Let’s have a look at the new standard.

The xERC20 Token Standard

Introduction to xERC20

xERC20 is an open token standard for crosschain native tokens. The standard seeks to provide a solution to the different security, liquidity, and fungibility challenges bridged ERC20 tokens face.

Why is xERC20 Needed?

The ERC20 token standard has played a key role in introducing a standard for fungible tokens. However, it is not designed for crosschain functionality and therefore falls short on powering secure and fungible tokens that are crosschain native.

To make your ERC20 tokens available on multiple blockchains, you’ll either have to:

  • Provide a significant amount of liquidity to bridges on each chain (often requiring users to be confronted with slippage when transferring tokens across chains); or
  • Allow the bridge to mint a new representation of your token, locking your users into a particular bridge and its security model.

This is further highlighted by the following shortfalls of the ERC20 token standard.

The Shortfalls of ERC20

ERC20 tokens are not designed with crosschain functionalities in mind. This results in the following challenges when owners seek to take make their ERC20 tokens crosschain-ready:

Fungibility Issues

Bridging a token requires the creation of multiple versions of it for each chain

Liquidity Demands

Lack of liquidity on supported chains causes frictions for users and token issuers

Loss of Sovereignty

Bridges mint their versions of a token, making token issuers lose control over the token contract
Your ERC20 Token vs. Your xERC20 Token

Have a look below to compare your ERC20 token with the xERC20 token standard.

ERC20xERC20
Advantages of xERC20 Tokens

The advantages of the xERC20 token standard allow token owners to seamlessly provide their tokens with crosschain functionalities.

Zero Slippage

Perfect Fungibility

Granular Risk Settings

The xERC20 token standard solves the security, fungibility, and liquidity challenges that ERC20 tokens face when being deployed on multiple chains.

xERC20 tokens introduce:

  • Fungibility. Bridges can mint and burn a xERC20 token across chains without having to create multiple versions of the token.
  • Security. Token owners can flexibly select the bridges they trust and are able to define the exposure to each bridge.
  • Ownership. Creators maintain full control over their token contracts across all chain.

xERC20 tokens are natively crosschain ready. This allows you to:

  • Transfer across chains without slippage
  • Maintain full control over your token.
  • Fully secure bridging transactions by Ethereum L1 (when using Everclear).
  • Ensure fungibility against token representations minted by canonical bridges.

How Does xERC20 Work?

The xERC20 uses an immutable contract (i.e. a “Lockbox”) that is used for wrapping ERC20 tokens 1:1 for xERC20. In the next step, the token issuer defines minting limits for bridges (based on the issuers trust in the bridge’s security and other factors). The tokens are then transferrable across blockchains with no slippage.

Comparison of xERC20 With Other Token Standards

The following table provides a comparison of the xERC20 token standard with the Omnichain Fungible Token (OFT) token standard by LayerZero and the Anytoken standard by Multichain.

xERC20 Omnichain Fungible Token Anytoken
Multi-bridge support? ✅ Yes ❌ No (only LayerZero) ❌ No (only Multichain)
Token issuer sovereignty? ✅ Yes ❌ No (locked with LayerZero) ❌ No (locked with Multichain)
Granular security control? ✅ Yes via minting limits ❌ No, hackers could mint unlimited tokens ❌ No, hackers could mint unlimited tokens
Fungible minted tokens? ✅ Yes ❌ No compatibility with other bridges ❌ No compatibility with other bridges
Burn-and-mint support? ✅ Yes ✅ Yes ✅ Yes
Lock-and-mint support? ✅ Yes ✅ Yes ✅ Yes
Bridge without slippage? ✅ Yes ✅ Yes ✅ Yes

Getting Started with xERC20

Deploying Crosschain Tokens

Are you ready to integrate xERC20? You can find a full guide on launching your token into the crosschain future on the official Docs of Everclear. If you need help with deploying or upgrading to the xERC20 token standard, please feel free to reach out to Everclear for support.

Steps for Setting up xERC20

Setting up xERC20 is a straightforward process and consists of the following steps:

  • 1
    Choose home chain of your tokens (for example the chain your token is deployed to)
  • 2
    Deploy token representations that can be minted/burned on the chains you wish to support
  • 3
    Define custom rate limits for bridges so they can support your token

If you wish to add Everclear as allowlisted bridge, you can do the following

  • 1
    Send token addresses to Everclear via Everclear Support
  • 2
    Allow Everclear to mint your tokens (via contract rights)
  • 3
    Work with Everclear routers so liquidity is supplied for your token (you can also run your own router to supply liquidity in Everclear)

For a detailed setup guide, please have a look at the official xERC20 setup guide.

xERC20 Resources

The advantages of the xERC20 token standard allow token owners to seamlessly provide their tokens with crosschain functionalities.