Token extensions in Solana (aka Token-2022) are designed to provide additional functionalities and security measures for digital tokens. The extensions enable features such as minting and burning tokens, freezing token transfers, and handling token account closures. Wen New Standard (WNS), and Paxos USDP stablecoin are some web3 platforms that use token extensions.

This article aims to provide clear, detailed steps and best practices for token creation on Solana. Understanding this will help you securely and effectively manage digital assets whether you are a developer or web3 enthusiast.

Watch this video to learn more about Solana token extensions

Creating and Minting Tokens with Token Extensions

Let's look at an example of creating and minting tokens with token extensions, using the Solana tool suite and the spl-token library.

Prerequisites

Solana Anchor CLI installed and configured
Node.js and npm
Local development environment or connection to Solana devnet/mainnet-beta
spl-token library

Step 1: Create a New Token

Run this command to create a new token:

spl-token create-token --enable-mint-close-authority --enable-interest-rate 5

This creates a new token with the Mint Close Authority and Interest-Bearing Token extensions enabled. Safely store the token public key.

Step 2: Create a Token Account

spl-token create-account <TOKEN_PUBLIC_KEY>

This command outputs the public key of the newly created token account.

Step 3: Mint Tokens

spl-token mint <TOKEN_PUBLIC_KEY> <TOKEN_ACCOUNT_PUBLIC_KEY> <AMOUNT>

Replace <AMOUNT> with the desired number of tokens to mint.

And that's it! You have successfully created and minted tokens with token extensions on Solana.

Modifying Token Settings

With Token extensions, you can also modify the token settings, such as changing authorities, enabling confidential transfers, and adding transfer hooks.

Here are commands you can run in the terminal to modify the token settings:

1. Enabling Confidential Transfers

spl-token authorize <TOKEN_PUBLIC_KEY> confidential-transfer-mint --enable

This command enables the Confidential Transfer extension, allowing for encrypted token balances and transfer amounts using zero-knowledge proofs.

2. Adding Transfer Hooks

spl-token authorize <TOKEN_PUBLIC_KEY> transfer-hook --program-id <HOOK_PROGRAM_ID>

Replace <HOOK_PROGRAM_ID> with the public key.

3. Changing Token Authorities

To change the mint authority, run this command:

spl-token authorize <TOKEN_PUBLIC_KEY> mint --new-mint-authority <NEW_MINT_AUTHORITY_PUBLIC_KEY>

Replace <NEW_MINT_AUTHORITY_PUBLIC_KEY> with the new mint authority's public key. This process can be used to change other authorities by specifying the appropriate authority type.

Removing Authorities

To fully secure a token, you can remove all authorities, making the token immutable and unchangeable. Here are the commands to run in your terminal:

Remove Mint Authority:

spl-token authorize <TOKEN_MINT_ADDRESS> mint --disable

Remove Freeze Authority:

spl-token authorize <TOKEN_MINT_ADDRESS> freeze --disable

Remove Account Authority:

spl-token authorize <TOKEN_MINT_ADDRESS> owner --disable

Best Practices for Token Creation

To ensure the security and efficiency of your tokens, follow these best practices:

Security First: Always make your tokens immutable once they are configured.
Clear Documentation: Maintain clear records of all token configurations and settings.
Regular Audits: Conduct regular audits to verify the security and integrity of your tokens.
Community Engagement: Engage with the community to share best practices and gather feedback.

Creating and managing tokens in the Solana ecosystem involves careful planning and execution to ensure security and efficiency.

Following this guide, you can create, mint, and configure tokens with best practices, making them immutable and removing all authorities to safeguard your assets.

Resources to learn more about Solana Token extensions

- A beginner's guide to Solana token extensions

- Solana Announces ‘Token Extensions’— What Are They? How Do They Work?

- Token Extensions on Solana: A Comprehensive Guide

Cover image by Solana