Identification of token contracts on Ethereum: standard compliance and beyond

Abstract

Next to cryptocurrencies, tokens are a widespread application area of blockchains. Tokens are digital assets implemented as small programs on a blockchain. Being programmable makes them versatile and an innovative means for various purposes. Tokens can be used as investment, as a local currency in a decentralized application, or as a tool for building an ecosystem or a community. A high-level categorization of tokens differentiates between payment, security, and utility tokens. In most jurisdictions, security tokens are regulated, hence the distinction is of relevance. In this work, we discuss the identification of tokens on Ethereum, the most widely used token platform. The programs on Ethereum are called smart contracts, which - for the sake of interoperability - may provide standardized interfaces. In our approach, we evaluate the publicly available transaction data by first reconstructing interfaces in the low-level code of the smart contracts. Then, we not only check the compliance of a smart contract with an established interface standard for tokens, but also aim at identifying tokens that are not fully compliant. Thus, we discuss various heuristics for token identification in combination with possible definitions of a token. More specifically, we propose indicators for tokens, and evaluate them on a large set of token and non-token contracts. Finally, we present first steps towards an automated classification of tokens regarding their purpose.