  We formally define the fungible token coloring problem of attributing
(coloring) fungible tokens to originating entities (minters), and present, to
our knowledge, the first practical onchain algorithm to solve it. Tracking
attribution of colored tokens losslessly using existing approaches such as the
Colored Coins protocol is computationally intractable due to the per-wallet
storage requirements growing in proportion to the number of minters. Our first
contribution is an elegant solution to the single-chain token coloring problem,
where colored tokens are atomically burned and minted to ensure each wallet
only contains tokens of a single color. Our second contribution is an extension
to this single-chain token coloring algorithm to allow safe and efficient
crosschain token transfers. We present ColorTrace, an onchain algorithm to
achieve globally consistent, economically feasible, fungible token coloring.
