How hashport Works: Locking, Minting, Burning Tokens

hashport aims to provide fast, secure, and cost-effective interoperability of digital assets to the platform’s users, with the goal to empower users to take full control of their digital assets location in order to capitalise on opportunities as they arise. In addition to regularly updating the service in the form of new networks, tokens, wallets, and features, the team at hashport continually works to educate our users in regards to the platform’s technology and service functions. In particular, there are three critical processes utilised by hashport to provide cross-chain interoperability; locking, minting, and burning of tokens. These functions allow value to be represented on foreign networks without double-spending or artificially adjusting the supply of a given token. In this article, we will review the locking, minting, and burning processes individually and then finally discuss how the three functions create secure interoperability between DLT networks.

Locking Tokens:

The first action that takes place in porting assets between networks is the locking of origin network tokens onto hashport. These tokens are sent to a smart contract (or multi-signatured account in the case of HBAR). The purpose of this locking action is to safekeep the originating network’s tokens and prevent them from being utilised in any way while there is a representative form of the same tokens readily available on a foreign network.

Minting Tokens:

In order to create the representative tokens on the destination network, the smart contract endpoint residing on this destination network “mints” these tokens. Minting is a more common term in the blockchain/DLT space, as it is involved in creating any token on the blockchain or other type of distributed ledger. Tokens are minted to represent an asset on a blockchain, and depending on its use within the decentralised economy, it is given a specific functional value. This value is derived based on some form of pre-determined parameters and then distributed or actively procured by those who wish to hold it and believe in its value. Whether or not new tokens can be minted and the timing of those mints is specific to the token and the project backing it. These rules are typically determined and laid out in the “tokenomics” section of most platforms’ whitepapers (typically a short document outlining a project’s vision). The parameters of a platform’s tokenomics are coded into their smart contract to automatically and immutably carry out the appropriate minting process at the correct time.

In an interoperability solution, the minting of tokens runs through the platforms’ smart contract endpoints on each attached network respectively. After native tokens arrive at the portal’s smart contract, the contract then mints the equivalent value onto the destination chain in a token standard supported by the destination protocol. So now that you have your representative tokens minted on your foreign destination network in-hand, what happens when you want to go back to the origin network? This introduces the final step process known as burning.

Burning Tokens:

The process of burning tokens only occurs with representative tokens and is triggered when a user decides to move from the foreign network to either of another foreign network or back to the originating network from which the representative tokens were generated from. As a result of the burning process the representative tokens are permanently removed from circulation. When the user submits the transfer request to hashport, the representative tokens are initially locked onto the platform and subsequently burnt upon obtaining a supermajority of transaction signatures from hashport’s validators. Upon successful burning of the representative tokens, hashport releases/unlocks the user’s original tokens back to their originating wallet. The amount of original tokens a user receives will be equal to the equivalent amount of the burnt representative tokens, less transfer fees collected by hashport. Representative tokens are burnt by sending them to a “frozen” or “burn” address to which no person or entity has access to the keys; typically an account zero. Confirmed transactions on DLT networks are immutable, meaning they cannot be altered once confirmed. Hence, sending tokens to an unavailable wallet essentially removes those tokens from existence.

Conclusion:

Now that we have a better understanding of the process of locking, minting, and burning tokens, let’s quickly put it altogether and take a look at how these processes are utilised on hashport. The infographic below explains each step to help illustrate what is happening during transactions. This walkthrough will not include a description of each stage but will highlight the parts of a transaction that include the topics and processes we have talked about so far:

The very first step of a transaction on hashport involves a user visiting app.hashport.network and submitting a porting request. You can see in step one (top left corner of the diagram) that once a user submits a request for a transaction, the portal locks the original tokens onto the platform. The following two steps involve the transaction being picked up and verified by hashport’s validator swarm. Once the transaction is immutably logged via the Hedera Consensus Service (HCS), the associated smart contract on the destination network mints the equivalent amount of representative tokens onto the user’s destination network.

Working in the opposite direction in step one (bottom right corner of the diagram) a user sends the representative tokens on the destination network back to hashport’s smart contract endpoint. At this point the validator swarm again picks up the porting request and verifies the transaction via supermajority signature. In step four, once the transaction has been logged via HCS, the destination network smart contract signals to burn the representative tokens and subsequently unlock the original tokens, releasing them back to the user’s originating network wallet.

Locking, minting, and burning tokens are essential processes to interoperability. hashport utilises each to bring users fast, secure, and cost-effective interoperability transfers. To explore worlds of possibilities today, port your assets with hashport at app.hashport.network.

About hashport

hashport is the enterprise-grade public utility that facilitates the movement of digital assets between distributed networks, extending their functionality in a quick, secure, and cost-effective way. In order to remain platform-neutral, hashport functions without the use of a proprietary token. The network is built on a robust and performant architecture, secured and operated by a group of industry-leading validator partners from around the world. hashport has passed a rigorous security audit and follows industry best practices; regularly performing comprehensive network tests to ensure the integrity of the network.

Website | Twitter | Reddit | Telegram | LinkedIn | Github

--

--

--

Worlds of Possibility. ✨hashport is a public utility that enables fast and secure cross-network transfer of digital assets. $HBAR $ETH $MATIC Stay tuned.

Love podcasts or audiobooks? Learn on the go with our new app.

Recommended from Medium

What is EOS? | The Ultimate Beginner’s Guide

Iran Confiscates 7,000 BTC Mining Machines

Masternode Hosting Service

Crypto Banking 101

THE COMING COLLAPSE OF THE CRYPTO WORLD . . . AND RISE OF THE BITCOIN STANDARD

You Have to Be in It to Win It. Will Europe Beat America to the Digital Currency Post?

🔥 Burning Bridges 🔥 (Notes on the Wormhole Hack)

Bitso will participate in the XRP snapshot for the distribution of Spark.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
hashport

hashport

Worlds of Possibility. ✨hashport is a public utility that enables fast and secure cross-network transfer of digital assets. $HBAR $ETH $MATIC Stay tuned.

More from Medium

The Tangent Governance Token aka TANG is born

All Changed — Changed Utterly — A Terrible Beauty is Born

How not to get REKT: Terra Wallets

hashport Monthly Review: February 2022