The Ethereum Blockchain has been the core of Defi and NFTs with its multiple token standards called the ERC (Ethereum Request for Comments).
However, there is often confusion between different Ethereum Token Standards such as ERC-20, ERC-721, ERC-721A, and the new ERC-1155. To clear out the differences, let us understand a little about each of them.
- ERC-20 is the oldest smart contract-based token standard and only supports cryptocurrencies.
- ERC-721 is a common standard used for NFTs. These tokens are unique because they are non-divisible and non-interchangeable.
- ERC-721A is an experimental smart contract token standard for NFTs. It seeks to mine multiple tokens for the cost of a single token.
- ERC-777 is a token standard that lets you mint multiple NFTs for the fees of a single NFT.
- ERC-1155 is a Semi Fungible token standard that will support minting multiple tokens, some of which will be fungible,w and some will be non-fungible.
Are you feeling confused about what is Fungible and what is Non-Fungible?
Fungibility is the property by which we can easily exchange something with other things.
A currency note is fungible, meaning it has the same value as another currency note of the same denomination.
Cryptocurrencies are fungible because you would happily receive 10 ETH from Ethereum Blockchain in exchange for 10 ETH on Binance BNB Smart Chain.
The Ethereum Token Standards
Token standards in this list are not exhaustive. However, I have covered all the major standards of Ethereum. The list will be updated regularly as new standards come along.
The ERC-20 is the most common token standard for creating cryptocurrencies. Several popular cryptocurrencies, such as USDC, USDC, Shiba Inu, etc., are based on the ERC-20 standard. Ironically, Ethereum’s own coin ETH is not an ERC-20 token. Each token type has its own smart contract. Only one token type can be minted using ERC-20 per smart contract.
ERC-721 is the standard NFT token type on the Ethereum Blockchain. Each NFT has its own smart contract and is non-divisible. NFTs are popular for being unique; therefore, this token standard was developed to give you the uniqueness of your NFTs. As of now, there are more than 30,000 NFT sales in the last 2 months just on Etheruem. You can also create and sell your NFTs without any code with advanced features that even Opensea does not offer.
The ERC-777 is an Ethereum Token Standard that offers newer ways to interact with smart contracts and tokens. This standard facilitates complicated token interactions, such as it tells the smart contract that it is about to receive money through digital messengers called “hooks.” Further ERC-777 tokens are much less likely to get stuck in a smart contract.
It is fully compatible with ERC-20 Tokens. The token standard is also DeFi compatible so current DeFi technology can support this standard without much issue.
The ERC-1155 is an Ethereum Token Standard that can send batch tokens which means it would be very useful to send tokens to multiple people at once, which is lacking in the current cryptocurrency.
Further, this token standard has an upcoming feature called semi-fungibility. You would be able to create NFTs that have different values. Or even the same identical NFT that features one with a large value and others with smaller values.
This is similar to the replicas of the Mona Lisa painting sold at the Museum. There is only one Mona Lisa, but there are also replicas that people can buy to decorate their homes. Similarly, there is only a single NFT called Everydays by Beeple, which got sold for $69 Million. With ERC-1155, you can, too, own a legal copy of that NFT.