SPL tokens are fungible tokens on the Solana Blockchain. These tokens are based on the Solana Program Library (SPL). SPL tokens can be stored in Solana compatible wallets such as the Solana SPL token wallet sollet.io.
Fungible tokens were first introduced and made popular by the Ethereum ERC-20 token standard for fungible tokens. Fungible tokens are a set of tokens which have all identical properties. You can imagine it like a US Dollar bill. Every dollar bill is worth the same and can be used for exactly the same purpose.
Why do SPL tokens matter?
For every smart contract platform ecosystem to flourish it is necessary to support a set of tokens on top. These tokens can be digital in nature and represent the economic value of a protocol which they govern. Alternatively these tokens can also be derivatives of real world assets which are ported on the blockchain so that they can be used in decentralized protocols.
The SPL token standard is the requirement that a decentralized finance (DeFi) ecosystem on Solana can be created and blossom. And in fact DeFi is currently experiencing a boom cycle on Solana. This is turning Solana into a leading blockchain ecosystem.
How to use SPL tokens?
Solana users will most likely be interested in SPL tokens for investment purposes. You can acquire the SPL token of a project on Solana if you believe in the value proposition of this project.
Transferring SPL tokens to your Solana Wallet
In order to create a new wallet follow the steps explained below:
- Visit https://www.sollet.io/ and an interface as shown below should open up
- Write down the Seed Words and make sure to store them safely
- Confirm that you wrote down the words and continue
- Sollet.io will ask you to re-enter the Seed Words to prove you wrote them down correctly. Re-enter the Seed Words and continue.
That’s it – you just created a wallet that is able to store SPL tokens and interact with a Solana DEX. You can inspect your token balances at any time on https://explorer.solana.com/ – which is the equivalent of etherscan.io for the Solana ecosystem.
At this point you can fund your wallet with $SOL by clicking “Receive” and sending $SOL to the deposit address. If you wish to add alternative SPL tokens such as SRM you can click the + Symbol. For that purpose you need to mint a new SPL token deposit address on which you can then transfer funds.
In case you do not have enough $SOL you can fund your SPL wallet with $ETH which can be converted to $SOL through the converter function. However, in order for the conversion to work out you already need to have some $SOL on your wallet.
Putting your SPL Wallet to work
Once you have created and funded your SPL token wallet you can start using the decentralized protocols which are available on the Solana blockchain. Since we want to keep it easy in this tutorial we will take a look at using the Project Serum DEX with your newly created wallet.
The Serum DEX can be used to exchange tokens on the Solana Blockchain. In order to use it follow the steps described below:
- Visit https://dex.projectserum.com/
- Make sure your connection is safe and you entered the correct URL
- On the upper right corner click the “Connect” button in order to connect your wallet to the DEX
- A dialogue window will open which looks like the screenshot below. Click “Connect”
- You can now select the token pair (market) which you would like to trade
- Make sure you have the token balances available for the markets you wish to trade
- You can now place your orders just as in any other centralized exchange
It’s important you understand the principles such as SPL tokens and wallets before you set out to explore the Solana Blockchain. Once you’ve gone through that it might be a bit tricky to start onboarding a new blockchain. However, after you have taken the initial hurdle you will get familiar with the tools and the blockchain very fast. And since Solana might be here to stay it can definitely make sense learning the basics earlier than later.