Updated on Nov 16, 2021

Minting Policies

Minting is the action in which units of a custom token can be created or destroyed based on validation rules defined in a monetary policy. A blockchain with native asset support such as Cardano defines minting policies as a base-layer primitive, permitting anyone holding its principal token (i.e. ADA) to mint any number of custom tokens grouped under a policyID policy identifier and a specified asset name. This greatly reduces the learning curve for users wanting to issue custom tokens on Cardano as no smart contract experience is required.

Fungible vs Non-Fungible

The combination of policyID, asset name, metadata from the minting Tx, and details from the official Token Registry provide all the information for a custom token regardless of whether it is Fungible or Non-Fungible. The main difference is that Non Fungible Tokens (NFTs) provide a guarantee of uniqueness which can be defined using Multisig or Plutus Script policies to ensure that only one token exists under the policyID and asset name combination.

Multisig Policies

Introduction to Multisig

Multisignature (multisig) validation scripts allow us to define basic rules before an action is permitted. These rules cover the scenarios where signatures from N or M keys are required, and optionally before (or after) a specified time has elapsed. Multisig scripts are simply JSON files such as the following example two-owner-time-locked.script.

{
    "scripts": [
        {
            "keyHash": "e09d36c79dec9bd1b3d9e152247701cd0bb860b5ebfd1de8abb6735a",
            "type": "sig"
        },
        {
            "keyHash": "a687dcc24e00dd3caafbeb5e68f97ca8ef269cb6fe971345eb951756",
            "type": "sig"
        },
        {
            "slot": 41217687,
            "type": "before"
        }
    ],
    "type": "all"
}

The multisig script file above can be interpreted as requiring signatures from two keys, their hashes defined under the scripts array and a time-locked boundary before slot 41217687. You can then derive the corresponding multisig payment address using:

cardano-cli shelley address build-script
  --script-file two-owner-time-locked.script \
  --testnet-magic 1097911063 \
  --out-file two-owner-time-locked.addr \

That address can now be used as a payment address to receive ADA and custom tokens. However in order to spend these values in the UTxOs, the Tx must pass the validation rules defined in the multisig script, i.e. require signatures from both keys and only before slot 41217687.

Generating a Multisig Minting Policy

These same validation scripts can also be used to define a minting policy for a native asset. From the script file you can generate the policyId using

cardano-cli transaction policyid \
  --script-file two-owner-time-locked.script

Plutus Script Policies

Multisig policies define simple validation rules based on a set of keys and a time-locked boundary, but with Plutus Script based policies you can define a much more comprehensive set of minting rules such as enforcing a fixed supply or specifying monetary expansion.

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Mint your own Token

Learn how to mint your first fungible token at Fungible Token Minting Guide ➡️

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