The blockchain industry is a vast world. So there’s every likelihood that you might have heard of some terms but don’t understand what they’re all about. For example, not every user understands some token standards’ different functions and use cases. Nonetheless, this article will shed some light on some popular token standards.
Our previous article addressed ERC-20, BEP-2, CW20, and Omni token standards. However, this article will focus on ERC-721, ERC-1155, TRC-20, and BEP-20. Everyone in the crypto world works with one token standard or the other. First, let’s understand what a token is.
What are the Token Standards?
Tokens are digitally transferable assets between two people in a decentralized ecosystem. Furthermore, tokens can be created and hosted on an existing blockchain using a smart contract. Stablecoins are another form of token and they follow the value of fiat currencies such as the USD. NFTs are also another form of token, which represent collectibles or works of art.
A token standard is an interface. It is also a set of rules that a smart contract must follow. Following these rules makes the token standard compliant with common standards. So, token standards are important in the crypto space.
They also determine how to maintain a consistent record of those transfers. Standards see to it that smart contracts stay compliant. This aids new tokens from projects in finding compatibility with existing wallets and decentralized exchanges.
For example, Ethereum is currently the most widely used blockchain for building smart contracts. As a result, it has a variety of standards to support the various types of smart contracts. However, other blockchains have their token standard. For this article, we’ll stick to:
- ERC-721- NFT token standard
- ERC-1155- Standard for contracts that support multiple token types.
- TRC-20 – Standard for implementing tokens with the TRON Virtual Machine (TVM)
- BEP-20.- Standard for the BNB Chain.
Let’s take a look at each concept closely:
What is the ERC-721?
ERC stands for “Ethereum Request for Comments.” It’s similar to technical manuals that designate the strategies that developers apply to use the Ethereum platform. Unlike the ERC-20 token standard, the ERC-721 is a token standard for non-fungible tokens (NFTs) on the Ethereum blockchain. The ERC-721 token standard specifies a minimum interface that a smart contract must implement to own or trade crypto collectibles.
Dieter Shirley, the founder and CTO of Cryptokitties, proposed creating a new token type to support NFTs. He got his wish in 2018. The token standard specializes in NFTs. This implies that a token created in conformance with ERC-721 rules can symbolize the value of any Ethereum-based digital asset. Moreover, ERC-721 can depict the following:
- cartoon characters
- Social media posts
- In-game assets
This unique token type opens up incredible opportunities for businesses that use NFTs.
What is the ERC-1155?
ERC-1155 is a contract management standard that allows the management of multiple token types at once. This saves the users money on transaction fees. In addition, users can trade tokens that eliminate the need to approve single token contracts separately. It is also simpler to define and combine multiple fungible or non-fungible token types in a single contract.
Also, ERC-1155 enhances the general capabilities of preceding ERC token standards. As a result, the Ethereum ecosystem is more effective and scalable. The ERC-1155 standard is frequently used in online gaming, and most gaming platforms have fungible features such as energy bars to depict a player’s life.
They also have NFT-like gaming characters, and use fungible native currencies for exchanges. Here are a few things to note about the ERC-1155 standard:
- It can perform the functions of both the ERC-20 and the ERC-720, and even both at the same time.
- ERC-1155 can be used to create NFTs, spendable shopping vouchers, and ICOs, among other things.
What is the TRC-20 Token Standard?
TRC-20 is a token standard used to create and manage tokens on the TRON blockchain. Furthermore, the TRC-20 standard specifies the rules that all tokens in the network must adhere to. This covers the issuing process for new tokens and includes token approval for transfers.
Therefore, since Tron is a public blockchain, anybody can create and distribute tokens by the TRC-20 standard. Also, TRC-20 tokens can communicate with other TRON-based apps and tokens.
What is the BEP-20 Standard?
The BEP-20 token standard caters to the BNB Chain, which is responsible for dApps. Furthermore, BEP-20 tokens are compatible with the Ethereum Virtual Machine (EVM). BEP-20 tokens adhere to the ERC-20 token standard. Also, all BEP-2 and ERC-20 tokens are compatible with the BEP-20 token. This makes it capable of bridging with other blockchain technologies.
However, it is important to note that BEP-20 transfers are subject to a fee in BNB. This incentivizes validators to process transactions. They are compensated with BNB for their efforts in adding transactions to the blockchain.
Since all three networks use the same solidity language, they are often compatible. This means tokens created on one platform are accessible to others. Excluding fees and user experience, these networks have an almost identical process of deploying tokens. However, BNB is a cheaper option than the rest.