I have asked a similar question before but this is the answer:
In older posts you often read about SMT'S and if I understand it correctly, they are 2nd Layer Tokens like Leo.
Are these tokens now realized by hive-engine and is it planned to continue working on this basis in the long run or is it expected that this topic will be included in the 1st Layer?
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SMTs are actually a base layer token. They were planned to operate the same as HIVE. Thus, all SMT transactions would enjoy the same decentralized nature of HIVE, i.e. they would operate on the witness nodes. The tokens would also be limited to exactly what HIVE is and perform the same functions. There would be no smart contracts so DeFi and NFTs are out. It would all follow the PoB reward system.
Hive-Engine uses smart contracts. However, the drawback there is that the layer 2 solution is not decentralized. That is what has some people nervous. All the data is located on one server (backed up I am sure but only one software set being run). I think what people are looking for is a decentralized smart contract system at the second layer. At least that is what Blocktrades is proposing.
We might end up seeing both, SMTs and the second layer smart contract and let developers decide what they want. Hive-engine might also come out with a decentralized platform that allows others to run nodes.
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