What is a tokenless ledger, how does it operate, and what differentiates it from tokenized ledgers? If you want to know the answer, check our guide, in which we’ll talk about the role of tokenless ledgers in blockchain technology.

We’ll also discuss the main advantages and disadvantages of using tokenless ledgers. Here’s all you need to know.

What Is a Tokenless Ledger?

A tokenless ledger is a distributed ledger that operates without a native currency. It is also known as a pure or transaction-only blockchain. The goal of the tokenless ledger is to record and verify transactions on the blockchain without using native tokens to represent them.

This means that the tokenless ledger will simplify transaction tracking by eliminating the need for tokens. It will also offer a more efficient way to maintain the integrity of the blockchain. In short, the tokenless ledger serves as an alternative to token-based systems. It enables its users to store their data securely, track supply chains, and record ownership rights.

How Tokеnlеss Lеdgеrs Work

Tokenless ledgers use two consensus mechanisms to maintain integrity and verify transactions – PoS and PoA. The Pos (proof-of-stake) system selects validators by the number of their stake tokens. The task of PoS validators is to verify transactions and add them to the ledger. Those who successfully validate new transactions will be rewarded with a transaction fee percentage. Plus, they’ll get their invested coins back.

On the other hand, the PoA (proof-of-authority) system selects validators based on their reputation, trustworthiness, and credentials. The PoA consensus facilitates the validation of transactions by reducing the power required to run the network. Moreover, validators will not have to use specialized rigs to maintain the network.

Tokenless Ledger Example

Now that you know what is a tokenless ledger and which consensus algorithms it uses, here’s a list of crypto projects that use tokenless ledgers:

Stability

Stability is the first tokenless ledger whose goal is to solve the blockchain adoption problem. How? By making public blockchain technology globally available. I.e., by switching from permissioned to permissionless public networks. Its main features include public infrastructure, cryptographic security, and free transactions.

GammaSwap

GammaSwap is a tokenless DEX that doesn’t rely on tokens for liquidity. Instead, it enables traders to conduct transactions using their crypto wallets, so they won’t have to deposit their tokens in smart contracts. GammaSwap also uses Layer 2 solutions to reduce gas fees and speed up transactions.

EigenLayer

EigenLayer is a tokenless ledger that aims to improve blockchain interoperability and scalability. It doesn’t use tokens to facilitate cross-chain transactions but cryptographic proofs, and protocols used to assert the integrity of computations.

What Is the Difference Between Tokenless and Tokenized Blockchain?

Tokenized blockchains are distributed ledgers that use native tokens within their ecosystem. These tokens can be both utility and security tokens. The role of the tokens is to facilitate transactions. They also enable smart contracts to operate and are used to reward network participants for their contributions.

On the other hand, tokenless blockchains are distributed ledgers that don’t utilize native tokens within their ecosystem. They usually rely on centralized entities to maintain their network and validate transactions. Tokenless blockchains are used in industries that require privacy and confidentiality, such as finance and healthcare. Unlike tokenized blockchains, tokenless networks are more scalable. This makes them more suitable for enterprise apps.

Advantages of Tokenless Projects

The main advantages of tokenless projects include the following:

  • Reduced transaction fees. As mentioned before, tokenless ledgers do not utilize native tokens. This means that they’ll offer lower transaction fees.
  • Enhanced privacy. Tokenless projects prioritize data confidentiality and privacy. This makes them more secure than tokenized blockchains.
  • Greater efficiency and scalability. Tokenless projects can process transactions much faster than tokenized blockchains. This makes them more scalable and efficient.
  • Controlled governance. A tokenless ledger offers centralized governance. I.e., it uses centralized entities to maintain its network. This makes it suitable for enterprises and industries that require more privacy.
  • Wider accessibility. The lack of tokens in their ecosystems makes tokenless blockchains more accessible to investors.

Disadvantages of Tokenless Projects

Tokenless ledgers come with the following downsides:

  • Reduced decentralization. Tokenless projects use centralized entities for transaction verification, which could potentially reduce the blockchain’s decentralized nature.
  • Restricted participation. Not everyone can participate in a tokenless blockchain. This may limit certain network functions and hinder the adoption of blockchain technology.
  • Lack of rewards. Tokenless blockchains don’t have native tokens. This means that they may have a problem rewarding their validators for their contribution, which can have a big impact on the future of its ecosystem if the number of its users becomes limited due to a lack of incentives.

Conclusion

What is a tokenless ledger? A tokenless ledger is a blockchain that operates without a native token, making it more efficient and scalable than a tokenized blockchain. Tokenless ledgers use centralized entities to validate transactions and use PoS and PoA consensus mechanisms, making them suitable for industries that rely on privacy, such as healthcare and finance.

The main benefits of tokenless ledgers include reduced transaction fees and controlled governance. However, these ledgers are controlled by a centralized entity, which could reduce the blockchain’s decentralized nature.

FAQs

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