Smart Layer (SLN): Scaling Token Functionality from Assets to Services

Smart contracts have ushered in a new era in the blockchain industry since their inception in 2015 on Ethereum (ETH). They elevated blockchain from a simple medium for asset transfers and storage to a complex ecosystem of decentralized applications (DApps) in areas like finance, social media, gaming, identity management and beyond.

Despite their revolutionary impact, smart contracts struggle with some inherent limitations. First, they operate within the confines of their hosting blockchains, offering limited utility for interaction with Web 2.0 platforms. Secondly, interoperability between blockchains with different smart contract formats remains a challenge. Additionally, smart contracts are less efficient at supporting self-contained dynamic assets, such as dynamic NFTs.

In essence, while smart contracts add programmable logic to blockchain operations, their functionality primarily caters to traditional crypto asset operations, such as swaps, transfers and mints. A newer blockchain technology, smart tokens, effectively addresses many limitations of smart contracts. These tokens feature embedded programming logic and scripts, transforming them from conventional blockchain-based assets into executable services.

At the forefront of powering the new smart token technology is Smart Layer (SLN), a distributed network that serves as a connecting layer between blockchains and web applications leveraging smart tokens.

Key Takeaways:

• Smart Layer (SLN) is a distributed network of nodes that serves as a platform to facilitate use of smart tokens by a variety of Web 2.0 and web3 applications.

• The application of smart tokens — crypto assets with embedded executable scripts — is powered by the critical components of the Smart Layer ecosystem, which includes the main network of nodes, the TokenScript front-end development framework and the ERC-5169 token standard.

• Smart Layer isn’t a blockchain but rather a smart token–enabling layer that connects EVM-compatible chains and external applications, typically from Web 2.0 environments.

What Is Smart Layer?

Smart Layer (SLN) is a distributed network of nodes designed to facilitate the use of smart tokens — crypto assets with executable programming logic embedded in them. It isn’t a blockchain in itself. Instead, Smart Layer connects blockchain networks and external environments, such as Web 2.0 applications and websites that utilize the services provided by executable smart tokens. The nodes within the Smart Layer ecosystem oversee and process smart token transactions between an underlying blockchain and external applications.

Smart Layer is compatible with any Ethereum virtual machine (EVM) blockchain, such as Ethereum, Polygon (POL) and Avalanche (AVAX). In addition to its distributed network, the platform features a solution to launch customized smart tokens — the Smart Layer Launchpad.

Introduced by Smart Token Labs, an Australian blockchain startup established in 2017, Smart Layer is a crucial element within the overall ecosystem of smart token technologies. The platform’s testnet was launched in January 2024, with its native token, SLN, launched a month later. Currently in its testnet phase, the project plans to launch its mainnet in 2025.

Smart Tokens

The Smart Layer network can be described as a container that provides a runtime environment for programmable smart tokens. Unlike conventional crypto tokens, smart tokens contain embedded scripts capable of executing programmed actions.

For example, a smart token used as a flight ticketing app can automate price adjustments based on demand, manage in-flight seat arrangement, and process refunds and changes in case of flight disruptions. To carry out these functions, it might query data from a variety of flight databases and identity management solutions. In short, it can execute functions that a typical flight ticketing web app is capable of.

TokenScript

TokenScript is a blockchain-agnostic (i.e., interoperable with different blockchains) scripting framework that facilitates the development of front-end connectivity between smart tokens and external apps. While the Smart Layer network is a runtime engine container for smart tokens, TokenScript is a set of scripting tools used to develop the front-end functions used by the external apps. With TokenScript, even developers without a deep understanding of blockchain and smart contracts can easily integrate the full range of smart token functionality.

ERC-5169

ERC-5169 is an Ethereum token standard for the development of smart tokens. Along with the Smart Layer network and TokenScript framework, it’s a key component powering the entire ecosystem of smart tokens. ERC-5169 specifies an additional function, scriptURI(), that all smart tokens must implement in addition to the standard functions used by Ethereum’s ERC-20 tokens. This function includes a reference to an executable script that the smart token can call.

The ERC-5169 standard was developed and proposed by Smart Token Labs in 2022 and officially adopted by Ethereum in 2023.

How Does Smart Layer Work?

Smart Layer is a network of specialized nodes operating on top of the core blockchain and its native set of validators. There are two types of nodes on Smart Layer — service nodes and anchoring nodes.

Service nodes enable smart token integration by processing the interaction between smart tokens and external apps utilizing them. This includes all of the common interaction calls, from data requests to the execution of scripts.

Anchoring nodes are responsible for monitoring service nodes’ operations and integrity. They do so by maintaining a dynamic database, the Distributed Hash Table (DHT), that tracks which service node handles which smart token. Anchoring nodes also manage the reward and penalty system applicable to service nodes by ensuring that the latter maintains the requisite Service Level Agreements (SLAs) — requirements related to technical properties such as availability, bandwidth and performance. 

By maintaining service standards and monitoring the job of service nodes, anchoring nodes ensure the stability and security of the overall Smart Layer mechanism.

Anchoring nodes typically are well-recognized institutional blockchain services providers. They’re elected by an on-platform decentralized autonomous organization (DAO) to participate in the Smart Layer network.

What Is Smart Layer Token (SLN)?

Smart Layer’s native cryptocurrency, SLN, serves as a utility token that’s used to incentivize both node types, service nodes and anchoring nodes, for their work on the platform. It’s also used to pay for access to Smart Layer services provided to external apps.

Additionally, SLN serves as a governance token. Holders of the token become part of the platform’s DAO, and can vote on important matters concerning changes and improvements to the Smart Layer ecosystem.

SLN is a deflationary token with a maximum supply of 100 million. Its distribution shares and applicable vesting periods are as follows:

• Seed Investors — 6.8125%, vesting unlock over 18 months

• Other Investors — 19.6364%, vesting unlock over 12 months

• Team and Equity Investors — 22.96%, vesting unlock over 36 months

• Node Rewards — 20%

• Ecosystem Fund — 18.4%, vesting unlock over 48 months

• Treasury/ Reserve — 4%

• Community Incentive Pool — 4%

• Marketing & Collaborators — 2.1911%

• Airdrop — 2%

The SLN token was launched in late February 2024, and the 2% allocated to the token generation event (TGE) airdrop will have been distributed by Mar 23, 2024. The airdrop is designed to reward active users of the platform’s services. SLN holders can check their eligibility for the airdrop at a dedicated portal set up by the project.

Is Smart Layer a Good Investment?

You might consider investing in the SLN token based on the following key factors:

• Smart Layer provides an exceptionally useful and high-potential service — namely, connectivity between EVM blockchains and external apps, particularly Web 2.0 applications and websites. Despite the excellent security and tokenization advantages of the web3 ecosystem, the bulk of digital activity still occurs on traditional Web 2.0 platforms. Smart Layer serves as a vital link between blockchains and Web 2.0, bringing decentralization, privacy and cryptographic security to the broader internet. Its potential impact is significant, given the vast number of Web 2.0 users worldwide. For instance, smart layer tokens can replicate the functions of flight booking apps, health monitoring solutions and virtually any other web application that’s currently dependent upon Web 2.0 technologies.

• SLN is a deflationary token, with no more than 100 million ever to be minted. In addition to the supply limitation — which, in itself, is always a great feature from a crypto investor’s perspective — the token’s total supply of just 100 million is notably lower than the many billions of units used in most other cryptocurrencies’ tokenomics. This unit scarcity can also play in favor of SLN’s future price movement.

Closing Thoughts

The convergence of Web 2.0 and web3 is rapidly approaching, creating opportunities for projects that facilitate this integration. Among these projects, Smart Layer is a distinct player with a unique concept. Instead of establishing its own blockchain network, Smart Layer employs a much more innovative approach, offering a flexible and efficient connecting medium that capitalizes on the vast ecosystem of EVM chains.

This is still a young project. Smart Layer launched its testnet just two months ago, with plans for the mainnet slated for 2025. This deliberate pace demonstrates the team's commitment to meticulous development. When the mainnet is up and running, Smart Layer will have the opportunity to become not just one of the platforms linking blockchain and the internet, but the primary bridge between the two digital worlds.

With scarcity and deflationary characteristics built into it, the SLN token has emerged as a promising asset from an investor’s perspective, even before the project's mainnet launch. Envision the possibilities when Smart Layer makes its debut on the industry's main stage!

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