What Are Token Standards?
Token standards are sets of rules and functions that define how tokens operate on a blockchain. They ensure compatibility between different tokens and applications, making it possible for wallets, exchanges, and dApps to interact with any token that follows the standard.
Why Standards Matter
- • Interoperability: Tokens work across different platforms
- • Development efficiency: Developers don't reinvent the wheel
- • User experience: Consistent behavior across applications
- • Security: Battle-tested, audited implementations
Major Token Standards
ERC-20
Fungible Tokens
Standard for interchangeable tokens
Examples:
Use Cases:
- • Cryptocurrencies
- • Stablecoins
- • Governance tokens
- • Utility tokens
Key Features:
ERC-721
Non-Fungible Tokens (NFTs)
Standard for unique, non-interchangeable tokens
Examples:
Use Cases:
- • Digital art
- • Collectibles
- • Gaming items
- • Domain names
Key Features:
ERC-1155
Multi-Token Standard
Standard for both fungible and non-fungible tokens
Examples:
Use Cases:
- • Gaming ecosystems
- • Multi-asset platforms
- • Efficient batch transfers
Key Features:
Token Standards Comparison
| Feature | ERC-20 | ERC-721 | ERC-1155 |
|---|---|---|---|
| Fungibility | Fully fungible | Non-fungible | Both supported |
| Divisibility | Divisible | Non-divisible | Configurable |
| Gas Efficiency | Standard | Higher cost | Most efficient |
| Use Cases | Currencies, utilities | Art, collectibles | Gaming, multi-asset |
ERC-20: The Foundation of DeFi
ERC-20 is the most widely adopted token standard, powering most cryptocurrencies and DeFi protocols. It defines six mandatory functions and two optional ones:
Required Functions:
- •
totalSupply()- Returns total token supply - •
balanceOf(address)- Returns account balance - •
transfer(to, amount)- Transfers tokens - •
approve(spender, amount)- Approves spending - •
allowance(owner, spender)- Returns allowance - •
transferFrom(from, to, amount)- Transfers on behalf
ERC-721: Unique Digital Assets
ERC-721 introduced the concept of non-fungible tokens (NFTs), where each token has a unique identifier and can represent ownership of distinct digital or physical assets.
NFT Advantages
- • Provable ownership and authenticity
- • Programmable royalties for creators
- • Interoperable across platforms
- • Immutable ownership history
Considerations
- • Higher gas costs per transaction
- • Metadata often stored off-chain
- • Market volatility and speculation
- • Environmental concerns (on PoW chains)
ERC-1155: The Multi-Token Standard
ERC-1155 combines the best of both worlds, allowing a single contract to manage multiple token types. This is particularly useful for gaming applications where you might have both fungible (coins) and non-fungible (weapons, characters) items.
ERC-1155 Benefits:
- • Gas efficiency: Batch transfers reduce costs
- • Flexibility: One contract for multiple token types
- • Atomic swaps: Trade multiple tokens in one transaction
- • Reduced complexity: Simpler contract management
Other Notable Standards
ERC-777
Advanced fungible token with hooks and operators
ERC-4626
Tokenized vault standard for yield-bearing tokens
ERC-2981
NFT royalty standard for creator compensation
ERC-5192
Minimal soulbound NFTs (non-transferable)
Choosing the Right Standard
When creating tokens, consider your use case:
- Currency/Utility tokens: Use ERC-20
- Unique collectibles: Use ERC-721
- Gaming ecosystems: Consider ERC-1155
- DeFi vaults: Look at ERC-4626
- Certificates/Credentials: Consider soulbound tokens