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themacexpert committed Feb 4, 2025
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Expand Up @@ -34,4 +34,4 @@ The relay address is how the Polkadot or Kusama relay chain references the sover

## Learn More {: #learn-more }

Sovereign accounts form the backbone of reserve-backed transfers, enabling safe custody of assets for minting wrapped tokens across Polkadot’s ecosystem. By combining sovereign accounts with the XCM framework, parachains can interoperate seamlessly—locking and unlocking assets in a transparent, trust-minimized way. For more information about how sovereign accounts facilitate cross-chain transfers with XCM, be sure to check out the [Send XC-20s section](/builders/interoperability/xcm/xc20/send-xc20s/overview/){target=_blank}.
Sovereign accounts form the backbone of reserve-backed transfers, enabling safe custody of assets for minting wrapped tokens across Polkadot’s ecosystem. By combining sovereign accounts with the XCM framework, parachains can interoperate seamlessly—locking and unlocking assets in a transparent, trust-minimized way. For more information about how sovereign accounts facilitate cross-chain transfers with XCM, be sure to check out the [Send XC-20s section](/builders/interoperability/xcm/xc20/send-xc20s/overview/){target=\_blank}.
2 changes: 1 addition & 1 deletion builders/interoperability/xcm/xc20/overview.md
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Expand Up @@ -23,7 +23,7 @@ There are two types of XC-20s: local and external.

### What are Local XC-20s? {: #local-xc-20s }

Local XC-20s are all ERC-20s that exist on the EVM, and that can be transferred cross-chain through XCM. For local XC-20s to be transferred to another parachain, the asset must be registered on that chain. When transferring local XC-20s, the underlying tokens reside in the destination chain's Sovereign account on Moonbeam. A sovereign account is a keyless account governed by a blockchain runtime—rather than an individual—that can hold assets and interact with other chains. Local XC-20s must follow [the ERC-20 interface outlined in this guide](/builders/interoperability/xcm/xc20/interact/#the-erc20-interface){target=\_blank}. They must implement the standard ERC-20 function signatures, including the correct function selector of the `transfer` function as described in [EIP-20](https://eips.ethereum.org/EIPS/eip-20){target=\_blank}. However, additional functionality can still be added as long as it doesn’t break the base methods.
Local XC-20s are all ERC-20s that exist on the EVM, and that can be transferred cross-chain through XCM. For local XC-20s to be transferred to another parachain, the asset must be registered on that chain. When transferring local XC-20s, the underlying tokens reside in the destination chain's Sovereign account on Moonbeam. A [sovereign account](/builders/interoperability/xcm/core-concepts/sovereign-accounts/){target=\_blank} is a keyless account governed by a blockchain runtime—rather than an individual—that can hold assets and interact with other chains. Local XC-20s must follow [the ERC-20 interface outlined in this guide](/builders/interoperability/xcm/xc20/interact/#the-erc20-interface){target=\_blank}. They must implement the standard ERC-20 function signatures, including the correct function selector of the `transfer` function as described in [EIP-20](https://eips.ethereum.org/EIPS/eip-20){target=\_blank}. However, additional functionality can still be added as long as it doesn’t break the base methods.

Note that, post-RT2301, creating a local XC-20 is equivalent to simply deploying a standard ERC-20 and enabling cross-chain features.

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