# External Tokens

# External ERC20 tokens as Objects within Nayms

When an ERC20 token is transferred into Nayms, an internal token amount equal to the amount transferred is minted, the ID of which is derived from the address. The internal ledger then keeps track of ownership as long as the currency is in deposit. When the ERC20 is withdrawn from Nayms, the amount is burned and transferred out ouf the contract. All balances and transfers are then done on the internal ledger.

An external token is represented internally by a bytes32 object ID that is derived from the address of the ERC20 token. Once deposited, external tokens can be exchanged between users entities on the platform.

In other words, an external token is the internal representation of the underlying ERC20 token. I.E. if a user deposits 100 WETH, the user is credited 100 WETH on the internal ledger. Nayms external token IDs are derived from the respective ERC20 contract address.