Tracking the Growth of Omnichain Fungible Tokens (OFTs)

Key Insights

• Omnichain Fungible Tokens (OFTs) are gaining traction as a multichain standard for fungible tokens.
• The unique 1:1 mint and burn properties of OFTs mitigate honeypot attack vectors while reducing resource requirements for liquidity and transfer fees.
• OFTs are positioned to bring multichain capabilities to the long-tail of application-native assets.

Token standards are specifications that define how a token should be designed and function on a specific blockchain network. These blueprints ensure that tokens are interoperable with other tokens (i.e., they can be swapped) and can be easily integrated into various dApps. Common examples include fungible token standards such as Ethereum’s ERC-20 or BNB Chain’s BEP-20 and non-fungible token standards like ERC-721.

The Omnichain Fungible Token (OFT) standard was created by LayerZero Labs to serve as a multichain standard for fungible tokens. An OFT was designed to be a catch-all fungible token standard that is compatible with the various established fungible token types across chains. An OFT is interoperable with ERC-20s, BEP-20s, fungible tokens on Aptos, and more. Almost a year after the first OFT was created with the launch of Stargate Finance’s governance token, STG, OFTs are now beginning to gain material traction across the crypto economy.

Understanding OFTs