HIP-1010: Update Token Custom Fee Schedules via Smart Contracts

Author	Stanimir Stoyanov
Working Group	Nana Essilfie-Conduah, Luke Lee, David Bakin, Mustafa Uzun
Requested By	IOBuilders
Discussions-To	https://github.com/hashgraph/hedera-improvement-proposal/pull/1010
Status	Accepted ⓘ
Needs Council Approval	Yes ⓘ
Review period ends ⓘ	Wed, 14 Aug 2024 07:00:00 +0000
Type	Standards Track ⓘ
Category	Service ⓘ
Created	2024-07-11
Updated	2024-08-16
Requires	18, 206, 514

Abstract

HIP-514 introduced the ability for smart contracts to manage tokens. However, the ability to update or remove the Custom Fees for a token is not currently supported. This proposal aims to address this gap by introducing two new system contract functions in the Hedera Smart Contract Service (HSCS) logic that would expose the already defined in HIP-18 Hedera Token Service (HTS) logic.

Motivation

In many decentralized scenarios a contract may create a token with custom fees and at some point desire to update or remove said fees.

However, the current version of the Hedera Smart Contract Service (HSCS) does not provide us with a system contract function that is covering this use case.

Rationale

The HSCS already has the functionality that exposes HTS functions to smart contract calls (IHederaTokenService.sol), so naturally we would want to extend that with the addition of new functions, rather than creating new approach for this case only.

By adding updateFungibleTokenCustomFees and updateNonFungibleTokenCustomFees functions to the token proxy redirect facade contract, functionality that is already available to HTS tokens can be included to the available capabilities of token contracts.

We have proposed two separate functions to distinguish between fungible and non fungible tokens. One key difference between them is that the FT can set Fixed and Fractional custom fees, while the NFTs can have Fixed and Royalty.

User stories

1. As an EOA I would like to initiate a smart contract transaction that updates a fungible token’s custom fees and set a Fixed HBar fee.
2. As an EOA I would like to initiate a smart contract transaction that updates a fungible token’s custom fees and set a Fixed HTS token fee.
3. As an EOA I would like to initiate a smart contract transaction that updates a fungible token’s custom fees and set a Fractional fee.
4. As an EOA I would like to initiate a smart contract transaction that updates a fungible token’s custom fees and set a combination of Fixed and Fractional fees.
5. As an EOA I would like to initiate a smart contract transaction that updates a non-fungible token’s custom fees and set a Fixed HBar fee.
6. As an EOA I would like to initiate a smart contract transaction that updates a non-fungible token’s custom fees and set a Fixed HTS token fee.
7. As an EOA I would like to initiate a smart contract transaction that updates a non-fungible token’s custom fees and set a Royalty fee.
8. As an EOA I would like to initiate a smart contract transaction that updates a non-fungible token’s custom fees and set a combination of Fixed and Royalty fees.

Specification

The ledger HSCS will utilize the existing Hedera Token Service (HTS) HAPI transaction for TokenFeeScheduleUpdate within the System contract logic.

To achieve this the Hedera Token Service (HTS) system contract logic must be updated to expose the necessary custom fee features.

Hedera Token Service (HTS) system contract

New system contract functions must be added to the IHederaTokenService interface to support the updating the custom fees for fungible and non-fungible tokens.

Hash	Selector	Return	Descriptions
0xe780c5d3	function updateFungibleTokenCustomFees(address token, IHederaTokenService.FixedFee[] memory fixedFees, IHederaTokenService.FractionalFee[] memory fractionalFees) returns (int64 responseCode)	ResponseCode	The response code from the call
0x01f9eb7d	function updateNonFungibleTokenCustomFees(address token, IHederaTokenService.FixedFee[] memory fixedFees, IHederaTokenService.RoyaltyFee[] memory royaltyFees) returns (int64 responseCode)	ResponseCode	The response code from the call

Backwards Compatibility

Backwards compatibility is ensured as no existing features are modified. Similar to HTS system contract this HIP simply exposes HAPI entity functionality.

Security Implications

The newly added flows will adopt the HAPI authorization logic. In this way the transaction would be successful only if the given contract making the call is set as a feeScheduleKey to the token or a threshold key including the calling contract ID is set for the same. We will apply the TokenFeeScheduleUpdate throttle mechanism.

How to Teach This

Reference Implementation

Rejected Ideas

• updateTokenFeeSchedules - An unified smart contract function to update or reset token’s custom fees based on the existing HTS logic. This idea relied on creating a new structure in the IHederaTokenService interface to wrap the existing Fee structures into one CustomeFee and use it as an argument to the function. This was rejected as we provided а more clean solution differentiating between fungible and non fungible tokens.

References

• HIP-18
• HIP-206
• HIP-514

Copyright/license

This document is licensed under the Apache License, Version 2.0 – see LICENSE or (https://www.apache.org/licenses/LICENSE-2.0)

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