Token-2022 Extensions on Solana
Introduction
Token-2022 is an enhanced version of Solana’s SPL token program that introduces modular extensions for advanced token functionality. It operates as a separate program with a different program ID from the classic SPL Token program, requiring applications to explicitly support it.
Token-2022 - Advanced Token Extensions on Solana
History and Motivation
Solana introduced Token-2022 to address limitations in the original SPL token program and provide developers with more flexible token designs. The upgrade enables:
✅ Compliance features for regulated financial applications
✅ Advanced DeFi mechanics like transfer fees and hooks
✅ Modular architecture allowing developers to select only needed features
✅ Enhanced metadata and identity capabilities
Technical Architecture
Token-2022 operates at a different program ID than the classic SPL Token program. This separation means:
- Applications must explicitly support Token-2022 to interact with these tokens
- Classic SPL wallets can interact with Token-2022 tokens if no incompatible extensions are used
- Extensions are modular and can be combined as needed
Token Extensions
Extensions are add-on features that can be attached to token mints at creation. Some extensions can be adjusted later by authorities, while others are permanently fixed once set.
Extension Overview Table
| Extension | Purpose | Authority | Permanence | Use Cases |
|---|---|---|---|---|
| Transfer Fee | Deducts percentage on transfers | Mint authority | Adjustable | Project funding, revenue sharing |
| Non-Transferable | Prevents token transfers | Mint authority | Permanent | Soulbound tokens, identity proofs |
| Default Frozen | Starts accounts frozen | Freeze authority | Adjustable | Compliance, permissioned assets |
| Permanent Delegate | Grants permanent rights | Mint authority | Permanent | Custodial recovery, services |
| Transfer Hook | Custom transfer logic | Developers | Adjustable | Compliance, allowlists, logging |
| Metadata Pointer | Enhanced metadata storage | Update authority | Adjustable | Branding, identity, off-chain data |
1. Transfer Fee Extension
- Function: Deducts a percentage of each transfer and routes it to a designated fee account
- Example: 2% fee means sending 100 tokens delivers 98 to recipient, with 2 going to the collector
- Authority: Mint authority
- Use cases: Project funding, donations, revenue sharing
- Considerations: May cause negative user experience; some exchanges refuse to list fee-bearing tokens
2. Non-Transferable Extension
- Function: Prevents tokens from being transferred once received
- Use cases: Soulbound tokens, identity proofs, KYC verification
- Considerations: Tokens become permanently locked if applied incorrectly
- Support: Broad but not universal across all wallets
3. Default Frozen Extension
- Function: New token accounts start in a frozen state until explicitly unfrozen
- Authority: Freeze authority
- Use cases: Compliance onboarding, permissioned assets
- Considerations: Users may be confused by frozen accounts
4. Permanent Delegate Extension
- Function: Grants permanent rights to a designated address to operate on tokens
- Use cases: Custodial recovery, service providers
- Considerations: Cannot be revoked once set; poses security risks if keys are compromised
5. Transfer Hook Extension
- Function: Executes custom logic during transfers (e.g., compliance checks, allowlists, logging)
- Authority: Developers/mint authority
- Use cases: Advanced DeFi, regulated assets
- Considerations: Adds computational cost; transfers can fail if hooks fail
6. Metadata Pointer Extension
- Function: Stores or references additional metadata directly on the mint (e.g., branding, off-chain JSON links)
- Authority: Update authority
- Use cases: Richer metadata, identity, branding
- Considerations: Off-chain links can become invalid over time
Authority Roles
Token-2022 maintains the same authority structure as classic SPL tokens:
| Authority | Control Level | Risk Level | Common Use Cases |
|---|---|---|---|
| Mint Authority | Token creation/destruction | High | Project creators, initial distribution |
| Freeze Authority | Account freezing/unfreezing | Medium | Compliance, security measures |
| Update Authority | Metadata and extensions | Low | Branding updates, corrections |
| Delegate | Temporary transfer rights | Low | Trading, service providers |
Compatibility and Wallet Support
Extension Support Levels
| Extension | Wallet Support | Exchange Support | Risk Level |
|---|---|---|---|
| Transfer Fee | Well supported | Variable (many refuse fee tokens) | Medium |
| Non-Transferable | Broad support | Generally supported | Low |
| Default Frozen | Moderate support | Limited support | Medium |
| Permanent Delegate | Limited support | Limited support | High |
| Transfer Hooks | Limited support | Limited support | High |
Compatibility Notes
- SPL-compatible wallets can interact with Token-2022 tokens if no incompatible extensions are used
- Exchanges may refuse to list tokens with certain extensions (particularly transfer fees)
- dApps must explicitly support Token-2022 to utilize extension features
Creating Token-2022 Mints
Token-2022 mints can be created using:
✅ Solana CLI tools with the spl-token program
✅ Anchor framework for programmatic creation
✅ Third-party tools like Solana Playground
Comparison: SPL vs Token-2022 vs NFTs
| Feature | SPL Tokens | Token-2022 | NFTs |
|---|---|---|---|
| Program ID | SPL Token | Token-2022 | SPL Token or Token-2022 |
| Extensions | None | Modular extensions | Metadata extensions only |
| Complexity | Low | Medium to High | Low to Medium |
| Use Cases | General-purpose tokens | Specialized tokens | Unique digital assets |
| Compatibility | Universal | Variable | Universal |
| Development Time | Fast | Medium to Slow | Fast to Medium |
Real-World Examples
| Extension Type | Real-World Use | Example Projects |
|---|---|---|
| Transfer Fee | Gaming projects charging fees to fund development | Gaming tokens, revenue-sharing tokens |
| Non-Transferable | Achievement badges that cannot be resold | Gaming achievements, identity verification |
| Default Frozen | Financial assets requiring KYC before transfer | Regulated tokens, compliance tokens |
| Permanent Delegate | Custodians with recovery capabilities | Institutional custody, service providers |
| Transfer Hook | DeFi protocols enforcing compliance rules | Regulated DeFi, compliance platforms |
Risks and Best Practices
Common Risks
| Risk Category | Description | Impact Level |
|---|---|---|
| User Experience | Unexpected transfer fees, frozen accounts, non-transferable restrictions | Medium |
| Compatibility | Wallets or exchanges may not support certain extensions | High |
| Security | Permanent delegate abuse, failed transfer hooks, misapplied restrictions | High |
Best Practices
✅ Document token policies clearly for users
✅ Test thoroughly on devnet before mainnet deployment
✅ Revoke unnecessary authorities when possible
✅ Start with minimal extensions and add complexity gradually
❌ Avoid overcomplicating token designs
❌ Do not hide transfer fees from users
❌ Do not assume universal wallet support for all extensions
📝 Conclusion
Token-2022 extends Solana’s SPL token program with modular extensions for advanced functionality.
It provides powerful features for specialized tokens but introduces complexity and compatibility considerations.
Key Decision Points
- Use SPL tokens when simplicity and maximum compatibility are priorities
- Use Token-2022 when advanced features like transfer fees, compliance, or custom logic are required
Final Recommendations
✅ Always balance functionality vs user experience
✅ Conduct thorough testing before production deployment
✅ Start simple and add complexity gradually
✅ Document all token policies clearly for users
The key is to choose the right tool for your specific use case while maintaining excellent user experience and broad compatibility.
❓ FAQ
Q: Can I convert an SPL token to Token-2022?
A: No, Token-2022 is a separate program. You must create a new mint. Existing SPL tokens continue to function normally.
Q: Do transfer fees increase Solana network fees?
A: No, Solana network fees remain unchanged. Transfer fees are deducted from the token amount itself.
Q: Will Token-2022 tokens work on all exchanges?
A: Not necessarily — many exchanges refuse to list tokens with transfer fees or restrictive extensions.
Q: Are Token-2022 tokens more expensive to use?
A: Base transaction costs remain the same. Extensions like transfer fees add additional costs to users.
Q: Can SPL wallets send/receive Token-2022 tokens?
A: Yes, as long as no incompatible extensions are used. However, extension features won’t be available.