What Is Set Protocol?
Set protocol is a new specification for a decentralized basket of ERC20 compliant tokens. It is designed to facilitate the exchange and creation of ERC 20 standard tokens in a trustless and affordable way on the Ethereum blockchain. Set can be used to process and store files in a distributed way or in making investments a single Set representing a basket of tokens.
How Set Protocol Collateralized Crypto Basket Tool Exchange Works
Set Protocol will apply the concepts of abstraction to the tokens with the aim of achieving decentralization in the world by creating tools that enable investors and developers to conveniently create, issue, redeem and exchange the Sets. Abstraction will help solve decentralization problems by hiding irrelevant details about the problem at hand and highlight the most important information.
Set seeks to eliminate the complexity of dealing with the numerous tokens, arising from ICOs and the digitization of assets. It will also provide users with a way of bundling up their multiple tokens and operating them as a single token identified as a Set. This therefore means that they can send multiple tokens at once without undertaking multiple transactions.
A Set is a trustless smart contract that independently holds the tokens as collateral. The Sets enable users to create or exchange financial instruments such as market indices, index funds, or ETF. With the assistance of application, developers who develop higher-level abstractions, users will also save on Gas and trading fees incurred from transacting with the tokens. The Set will also help government institutions, healthcare institutions, and business enterprises in the efficient mass distribution of goods and services to their users.
Set Protocol Token Details
Apart from the ERC20 token standards, Sets have a thin protocol layer integrated with issue and redemption functions. Therefore, they are tradable for the underlying tokens they represent. The Sets are programmed in such a way that they can also build other Sets.
To issue the tokens within the Set smart contract, a user will have to perform an atomic transfer between their multiple tokens and the new Set token. Once the transfer is completed, the new Set ERC20 token is created. The token is tradable or exchangeable on cryptocurrency exchange platforms like any other token. The value of the new Set token is determined by the value of all the tokens it represents.
Set Protocol Benefits
Lower Transaction Fees
Through Set, users can acquire and transfer multiple tokens in one transaction. Previously, tokens holders had to pay gas and transactions fees for every single transaction carried out in multiple transactions. However, by enabling a single transaction for multiple tokens, users will not have to pay the transaction fees for every single token.
Set offers tools that allow application developers to provide end users of their applications with only-important information, which relives users of the burden of having to analyze and understand complex details therefore making the applications will be user friendly and intuitive.
Fulfillment Of Obligations
The independent Set smart contracts hold the underlying tokens as security in order to ensure that all parties partaking to the transaction fulfill all their obligations in the contract.