Fixed Denomination Tokens

ERC-20 tokens that move in fixed batches tied to NFT notes

The ERC-20 Fixed Denomination protocol creates fungible tokens where balances move in fixed batches (denominations) tied to NFT "notes."

Fixed Denomination Tokens are an AppChain-only feature. They require smart contract execution on the L2.

Overview

Unlike standard ERC-20 tokens where users can transfer arbitrary amounts, fixed denomination tokens:

• Move in fixed batches (the denomination)

• Are tied to NFT notes that represent the token amount

• Transfer automatically when the note transfers

This creates a unique hybrid between fungible and non-fungible tokens.

How It Differs from Standard ERC-20

Feature	Standard ERC-20	Fixed Denomination
Transfer amounts	Arbitrary	Fixed denomination only
Transfer method	transfer() function	Transfer the NFT note
Divisibility	Yes	No (whole notes only)
Balance tracking	Single balance	Balance = sum of owned notes

Deploy a Token

Create an ethscription with JSON content to deploy a new token:

{
  "p": "erc-20-fixed-denomination",
  "op": "deploy",
  "tick": "mytoken",
  "max": "1000000",
  "lim": "1000"
}

As a Data URI:

data:application/json,{"p":"erc-20-fixed-denomination","op":"deploy","tick":"mytoken","max":"1000000","lim":"1000"}

Deploy Parameters

Field	Description	Constraints
tick	Token symbol	Lowercase alphanumeric, max 28 chars
max	Maximum total supply	uint256, must be divisible by lim (max % lim == 0)
lim	Amount per mint note (denomination)	uint256, must divide evenly into max

Constraint: max must be evenly divisible by lim. For example, max=1000 and lim=100 is valid (10 notes), but max=1000 and lim=300 is invalid.

Mint Notes

After deployment, create notes by minting:

{
  "p": "erc-20-fixed-denomination",
  "op": "mint",
  "tick": "mytoken",
  "id": "1",
  "amt": "1000"
}

As a Data URI:

data:application/json,{"p":"erc-20-fixed-denomination","op":"mint","tick":"mytoken","id":"1","amt":"1000"}

Mint Parameters

Field	Description	Constraints
tick	Token symbol (must match deployed token)	Must be a deployed token
id	Unique note identifier within the token	Must be ≥ 1 (IDs start at 1, not 0)
amt	Token amount for this note	Must equal lim from deploy (amt == lim)

Constraints:

• id must be ≥ 1 (note IDs start at 1)

• amt must exactly equal the token's lim value

Each mint creates:

1. An ethscription (the mint inscription)

2. An NFT note representing the token amount

3. ERC-20 balance credited to the minter

Transfer Mechanics

Transferring tokens works differently than standard ERC-20:

Standard ERC-20 (disabled)

// This does NOT work for fixed denomination tokens
token.transfer(recipient, amount);

Fixed Denomination (how it works)

Transfer the ethscription (the mint inscription) to move tokens:

To: 0xRecipient
Value: 0 ETH
Data: 0x<mint-inscription-txhash>

When the ethscription transfers:

1. The inscription moves to the new owner

2. The NFT note automatically transfers

3. The ERC-20 balance automatically moves

All three are synchronized atomically.

Example Flow

1. Deploy Token

Alice deploys "mytoken" with max supply 10,000 and denomination 100:

{"p":"erc-20-fixed-denomination","op":"deploy","tick":"mytoken","max":"10000","lim":"100"}

2. Mint Notes

Alice mints note #1:

{"p":"erc-20-fixed-denomination","op":"mint","tick":"mytoken","id":"1","amt":"100"}

Alice now has:

• 1 mint inscription (ethscription)

• 1 NFT note (tokenId = 1)

• 100 "mytoken" ERC-20 balance

3. Transfer

Alice transfers the mint inscription to Bob:

To: Bob's address
Data: 0x<alice-mint-txhash>

Result:

• Mint inscription → Bob

• NFT note #1 → Bob

• 100 "mytoken" balance: Alice → Bob

Querying Balances

ERC-20 Balance

const balance = await tokenContract.balanceOf(address);

Note Ownership

const owner = await tokenContract.ownerOf(noteId);

Notes Owned

Each note's amount contributes to the holder's ERC-20 balance. The total balance equals the sum of all owned notes' amounts.

Use Cases

Collectible Tokens

Each note is a unique collectible that also carries fungible value.

Batch Transfers

Transfer multiple notes to move large amounts efficiently.

Marketplace Trading

Notes can be traded on NFT marketplaces while carrying their token value.

Fair Distribution

Fixed denominations ensure equal distribution - everyone gets the same sized "bills."

Technical Details

Contract Architecture

• ERC20FixedDenominationManager - Handles deploy/mint operations

• ERC20FixedDenomination - Individual token contract (ERC-20 + ERC-721 hybrid)

Storage

Each token stores:

• Token metadata (tick, max supply, denomination)

• Note registry (id → ethscription mapping)

• Balances (derived from note ownership)

Events

event TokenDeployed(string tick, uint256 maxSupply, uint256 denomination);
event NoteMinted(string tick, uint256 noteId, address owner, uint256 amount);
event NoteTransferred(string tick, uint256 noteId, address from, address to);

Limitations

• Cannot transfer partial amounts (only whole notes)

• Cannot combine notes

• Cannot split notes

• Direct ERC-20 transfers are disabled

Security Considerations

1. Atomic transfers - ERC-20 and NFT always move together

2. No double-spending - Note ownership enforced on-chain

3. Immutable denomination - Cannot change after deployment

4. Supply cap - Cannot exceed max supply