A native token is a digital asset minted directly on a blockchain protocol. Early usage limited the label to the first asset that powered a chain. Over time the label expanded to cover every asset issued by the protocol itself, regardless of function.
Bitcoin, ether along with the dollar pegged USDC illustrate the range. Bitcoin originates on the Bitcoin chain. Ether originates on Ethereum. USDC originates on multiple chains – including Ethereum, Solana, Avalanche in addition to Base. Each chain issues its own version of the stablecoin through its own smart contract suite.
Native tokens are issued by the protocol. Examples include ether, bitcoin, stellar lumens next to solana. Non-native tokens are issued by contracts that ride on top of a chain. Examples include UNI, USDT, SHIB on Ethereum.
Developers design a chain to solve a specific problem. Satoshi Nakamoto released Bitcoin as a peer-to-peer payment network. Miners receive newly minted bitcoin for sealing blocks. Vitalik Buterin released Ethereum as a programmable settlement layer. Validators receive ether for executing and storing computation. For years the community treated only these reward assets as native.
Research and iteration changed the taxonomy. Today the community calls any asset native if the protocol itself mints it. Governance rights, or collateral status play no role in the classification. An asset is non native when it is minted by a contract that sits on top of a chain. Uniswap Labs deployed the UNI contract on Ethereum. The contract mints UNI. Therefore UNI is non native to Ethereum.
Native Tokens and Forks
A fork splits a chain into two histories. Nodes that accept the rule change follow the new history. Nodes that reject the change continue the old history. Each history has its own genesis state and its own token supply schedule.
The new chain mints a token under a new name. Bitcoin Cash, Bitcoin SV along with Litecoin all descend from Bitcoin. Each fork minted its own token. Each token is native to its own chain even though the ledger starts as a replica.
USDC illustrates multi chain issuance. Circle mints USDC on Ethereum, Solana, Avalanche, Stellar, Base, Arbitrum, Optimism, Polygon, TRON in addition to Hedera. Each chain holds a segregated pool of dollars at BlackRock but also BNY Mellon. Each chain runs a distinct smart contract suite that issues and burns the token. Under the expanded definition, every instance counts as native to its respective chain.
Fast Fact
Wrapped bitcoin represents bitcoin on Ethereum. A custodian receives one bitcoin and locks it in a segregated address. The custodian’s smart contract mints one WBTC on Ethereum. The ratio remains one to one.
Users spend WBTC inside Ethereum applications. To redeem, the user sends WBTC to the contract. The contract burns the token and instructs the custodian to release the locked bitcoin. Circle uses the same burn-and-mint pattern to move USDC across chains.
Is ADA a Native Token?
Yes. ADA is the original token of the Cardano chain. Cardano introduced the first large scale proof-of-stake protocol. The protocol mints ADA to reward validators.
What Is a Crypto Native?
The industry now uses the term native token for any asset minted by a specific protocol.
What Is an Example of a Non-Native Token?
Any ERC-20 contract on Ethereum mints a non native token. USDT, USDC next to SHIB are all non native to Ethereum.
Native tokens are minted by a protocol or its layer two extensions; they serve as gas, reward, collateral, or governance instruments.
The commentary, opinion, analysis on the site serve informational purposes only. Consult the full disclaimer for details. At the time of writing the author held no cryptocurrency.
