Ethereum Token Standards: Understanding ERC Protocols

Take a deep dive into the world of Ethereum token standards, exploring the key protocols like ERC-20, ERC-721, and beyond that define the backbone of the Ethereum ecosystem.

Ethereum token standards are protocols that define how tokens can be created and exchanged within the Ethereum ecosystem. These standards ensure compatibility between the different tokens and Ethereum-based services, LIKE wallets and decentralized exchanges. The most common Ethereum token standard is ERC-20, which outlines the rules for creating fungible tokens that are interchangeable with one another, such as individual units of currencies, voting rights, or staking tokens.

Another significant standard is ERC-721, a framework for non-fungible tokens (NFTs) that represent unique assets like digital artwork, collectibles, or other one-of-a-kind items. Additionally, ERC-777 is a more advanced token standard introducing hooks that allow smart contracts to react to token transactions, offering enhanced functionality over the ERC-20 standard. Both standards play a vital role in the diverse applications of Ethereum tokens, ranging from gaming to finance and the arts.

The existence of these standardized interfaces has fueled innovation and interoperability in the Ethereum blockchain. By providing a clear set of guidelines for token implementation, Ethereum token standards help maintain a robust and dynamic network, simplifying the development process for new tokens and ensuring a smooth user experience across decentralized applications (dApps).

Overview of Ethereum Tokens

Ethereum tokens are digital assets built on the Ethereum blockchain. They utilize smart contracts and have distinct characteristics and functions, generally categorized as fungible or non-fungible.

  • Fungible Tokens (ERC-20): These tokens are interchangeable and have identical value per unit, making them ideal for use as currencies, in voting systems, or as staking tokens. An ERC-20 token's standardization allows for frictionless exchange across the Ethereum ecosystem.
  • Non-Fungible Tokens (ERC-721): Each token is unique and not mutually interchangeable. Examples include collectibles and digital ownership certificates for items like art or real estate. They can embody a deed for digital or physical assets.
  • ERC-777: This standard builds upon ERC-20 by introducing hooks to allow more complex interactions when tokens are sent and received. These enhancements favor increased transaction efficiency and security.
  • ERC-1155: Offers a multi-token standard, enabling a single contract to contain both fungible and non-fungible tokens. This is ideal for games or applications needing various token types.

The adoption of these standards fosters compatibility and functionality, greatly simplifying token integration and management for developers and users. They ensure consistent behavior of tokens across various applications and exchanges, providing a stable foundation for the Ethereum token ecosystem.

ERC-20 Standard

The ERC-20 Standard is a widely-adopted interface for Ethereum tokens, specifying how they should be implemented to ensure compatibility across the network. It includes a set of rules that all Ethereum-based tokens must follow, which allow seamless interaction with other smart contracts and decentralized applications.

ERC-20 Token Functions

Transfer: This function allows tokens to be transferred from one account to another.

  • function transfer(address _to, uint256 _value) returns (bool success)

TransferFrom: This enables a contract to transfer tokens on behalf of an account, with the account's approval.

  • function transferFrom(address _from, address _to, uint256 _value) returns (bool success)

Approve: This authorizes a smart contract to spend a certain amount of tokens on behalf of the owner.

  • function approve(address _spender, uint256 _value) returns (bool success)

Allowance: This function provides the number of tokens that an approved spender can transfer on behalf of a token owner.

  • function allowance(address _owner, address _spender) returns (uint256 remaining)

BalanceOf: Returns the number of tokens that a specific address has in its account.

  • function balanceOf(address _owner) returns (uint256 balance)

TotalSupply: Gives the total token supply.

  • function totalSupply() returns (uint256 totalSupply)

ERC-20 Token Events

Transfer Event: This event is emitted when tokens are transferred, including zero value transfers.

  • event Transfer(address indexed _from, address indexed _to, uint256 _value)

Approval Event: Fired when an owner approves a spender to utilize a specific amount of tokens.

  • event Approval(address indexed _owner, address indexed _spender, uint256 _value)

ERC-721 Standard

The ERC-721 standard is integral to the Ethereum blockchain, providing a blueprint for creating non-fungible tokens (NFTs) that are each unique and distinguishable.

Unique Tokens and NFTs

Each token generated under the ERC-721 standard is distinguishable and has its own characteristics that set it apart from others. Unlike fungible tokens like ERC-20 tokens, which are identical and interchangeable, ERC-721 tokens are unique. They can represent ownership over digital or physical assets, underlining the diversity and richness of the NFT ecosystem.

ERC-721 Functions

The standard outlines a set of functions that are essential for the interaction with non-fungible tokens. These include:

  • Transferability: It allows tokens to be transferred from one account to another, ensuring the movement of assets within the Ethereum ecosystem.
  • Ownership Details: It provides functions to query the owner of a specific token.
  • Balance Information: Users can obtain the number of tokens held by a specific account.
  • Total Supply: It offers visibility into the total number of tokens available within a contract.

This structure facilitates the identification and exchange of NFTs, which are integral to applications like digital collectibles and virtual real estate.

ERC-1155 Standard

The ERC-1155 standard is a significant evolution in Ethereum's token standards by facilitating the management of multiple token types within a single contract. This efficiency becomes vital for developers and users dealing with diverse digital assets.

Multi-Token Standard

ERC-1155, often referred to as the Multi-Token Standard, can define and manage both fungible tokens, akin to ERC-20, and non-fungible tokens (NFTs), similar to ERC-721, under a unified smart contract. This unique feature:

  • Reduces the complexity of managing different types of tokens.
  • Consolidates transactions involving various token types, thus saving on transaction fees and enhancing efficiency on the Ethereum blockchain.

ERC-1155 Functions

Functions within the ERC-1155 standard are designed to handle various token interactions securely and efficiently. Key functions include:

  • Batch Transfers: Allows the transfer of multiple token types in a single transaction.
  • Balance Tracking: Events emitted by the contract ensure an accurate and up-to-date record of token balances, which can be leveraged by external entities like wallets and exchanges.
  • Approval Mechanism: Users can authorize operators to manage their tokens, which is particularly useful for complex applications like gaming or decentralized finance (DeFi).

By incorporating these functions, ERC-1155 enhances the utility of Ethereum's smart contract capabilities for developers creating sophisticated digital asset ecosystems.

ERC-777 Standard

The ERC-777 standard is an advanced form of Ethereum token that enables more complex interactions, including token reception notifications and operator delegation.

Advanced Token Features

ERC-777 offers distinct functionalities that enhance token interaction, particularly hooks. These hooks are functions that provide tokens with the intelligence to react to receiving or being sent. They permit the token's smart contract to react to transactions, for example, by rejecting tokens from blacklisted addresses. A key feature is the ability to send tokens to a contract and notify the contract in a single transaction, a process which requires two transactions (an approve followed by a transferFrom) in ERC-20.

Operator Functions

With ERC-777, operators can be authorized to send tokens on behalf of token holders. This feature lends itself to a variety of use cases, such as automatic recurring payments or on-chain subscription models. Operators act as trusted entities with permissions granted by the token holder to operate their tokens, which introduces new possibilities for managing and utilizing tokens on the blockchain. Operators can be both external addresses or contracts that have been allowed by the token holder to move and use tokens, expanding the functionality compared to ERC-20.

Send tokens on behalf of others:

  • Token holders grant permissions to operators.
  • Operators manage tokens, triggering hooks when relevant.

Revoke permissions:

  • Token holders retain control to revoke permissions at any time.

The mechanisms of ERC-777 regarding hooks and operators aim to provide a more versatile and interactive approach to token standards on the Ethereum blockchain.

ERC-223 Standard

The ERC-223 standard is an Ethereum token standard that seeks to address issues present in the older ERC-20 token standard, specifically improving the way token transfers are handled and reducing the risk of lost tokens.

Token Transfer Improvements

ERC-223 introduces a significant update to the method of token transfers. When transferring tokens, ERC-223 allows for the execution of code in the receiving contract. This feature ensures that the tokens can only be transferred to addresses that are explicitly prepared to handle them, thus preventing accidental losses – a problem with ERC-20 when tokens are sent to non-token handling contracts.

Unlike ERC-20, which has separate functions for transferring tokens to a contract and to a regular address, ERC-223 merges these interactions into a single, unified function. This streamlining of the transfer process also eliminates the double transaction scenario that occurs in ERC-20, where a user must first approve a contract to interact with their tokens and then also trigger the contract to carry out the token transfer.

Furthermore, ERC-223 transfers are designed to be backwards compatible with the ERC-20 standard. However, they are distinguishable from ordinary transactions through a tokenFallback function implemented in the recipient smart contract, which gets called when tokens are sent. If the recipient does not contain this function, the transaction is prevented, which effectively safeguards against accidental losses.

ERC-621 Standard

The ERC-621 standard is an extension to the well-known ERC-20 token standard on the Ethereum blockchain, allowing for the dynamic adjustment of the total token supply.

Supply Adjustment Functions

ERC-621 introduces specific functions that enable the increase or decrease of a token's total supply, giving token issuers the flexibility to manage their tokens in circulation. The core functions that distinguish this standard are:

  • increaseSupply(uint256 value): This method allows the contract owner to increase the total token supply by a specified value.
  • decreaseSupply(uint256 value): Conversely, it allows the reduction of the total token supply by a specified value, effectively "burning" tokens.

These functions must be executed with proper security measures to prevent unauthorized manipulation of the token supply, ensuring that only designated parties have the capability to make such adjustments.

ERC-827 Standard

The ERC-827 standard proposes enhancements over its predecessors by incorporating additional data in transactions and enabling third-party token transfers.

Extended Functionality

ERC-827 is an augmentation of the well-known ERC-20 token standard. It aims to overcome certain limitations by allowing tokens to carry additional data during transfers. Significantly, this standard permits a token holder to approve a third-party entity to spend tokens on their behalf. This functionality enriches the Ethereum ecosystem by enabling more complex and dynamic smart contract interactions, which is critical especially for decentralized applications that require multi-step transactions.

Other Token Standards

While ERC-20 and ERC-721 are the most widely recognized Ethereum token standards, the Ethereum ecosystem has continued to innovate, creating a diversity of token standards for specialized use cases. They offer advanced features and functionalities, tailored to fit the needs of various decentralized applications.


ERC-884 is a token standard specific to Delaware-based companies aiming to issue shares on the blockchain. This standard is remarkable because it ensures compliance with the Delaware General Corporation Law by verifying and recording stockholders' identities. Here are the key attributes of ERC-884 tokens:

  • Uniqueness: Each token represents a unique share and is tied to a verified stockholder's identity.
  • Compliance: Implements methods for traditional corporate actions like issuing, transferring, and redeeming shares.


ERC-998 introduces the concept of composable non-fungible tokens (NFTs), which allows for multiple NFTs or a combination of NFTs and fungible tokens to be bundled together under a single token ID. The key features of the ERC-998 standard include:

  • Extensibility: Enables the creation of complex assets by nesting multiple ERC-721 tokens or ERC-20 tokens within a single ERC-998 token.
  • Atomicity: The ability to transfer an entire bundle of assets in a single transaction, enhancing transaction efficiency and usability in various applications such as gaming or collectibles.

Token Standard Adoption

Ethereum's success as a blockchain platform is largely due to the adoption of token standards. ERC-20 has gained immense popularity, becoming the de facto standard for fungible tokens, such as cryptocurrencies and loyalty points. Its widespread adoption is attributed to its simplicity and interoperability which provides a consistent framework for tokens to operate within the Ethereum ecosystem.

In contrast, ERC-721 introduced the concept of non-fungible tokens (NFTs), allowing for the representation of unique, indivisible digital assets. This standard unlocked the potential for artists, game developers, and content creators to tokenize their work, resulting in a booming NFT marketplace.

ERC-777 has built upon ERC-20 by offering more advanced features, including hooks for smarter token transactions, although it’s less prevalent due to the increased complexity and security considerations.

An emerging standard, ERC-1155, combines the benefits of ERC-20 and ERC-721, facilitating a multi-token standard where a single contract can manage multiple token types.

The adoption levels of different token standards can be summarized as follows:

  • ERC-20: Extensively adopted for fungible tokens.
  • ERC-721: Highly popular for NFTs.
  • ERC-777: Moderately adopted with advanced features.
  • ERC-1155: Growing adoption for its versatility.

These standards have contributed significantly to Ethereum’s utility and have influenced other blockchain protocols to develop similar frameworks, thereby shaping the broader cryptocurrency market. The wide acceptance and implementation of these standards reflect their utility and the community's agreement on a common set of rules for tokenization on the Ethereum blockchain.

Smart Contract Security

In the context of Ethereum token standards, smart contract security holds paramount importance. The integrity and reliability of tokens—be it ERC-20 for fungible or ERC-721 for non-fungible assets—are dependent on robust smart contract security measures.

Key Principles:

  • Immutable Once Deployed: Smart contracts are immutable post-deployment. Therefore, an in-depth audit prior to deployment is crucial to detect vulnerabilities.
  • Auditing Standards: Established guidelines drive the auditing process. Organizations adopt best practices for systematic evaluations.

Audit Criteria:

  • Code Reviews: Methodical examination of the contract's source code.
  • Formal Verification: Mathematical approaches to validate contract adherence to specifications.
  • Test Coverage: Comprehensive tests to simulate a wide range of operational scenarios.

Developers and security experts often employ static and dynamic analysis tools to uncover potential security gaps. It is essential that every smart contract undergoes a rigorous audit process to ensure the safety and security of its operations within the Ethereum ecosystem.

Given that the blockchain is a transparent ledger, any breach or exploit could lead to irreversible loss of assets or compromise of sensitive data. As Ethereum continues to evolve, so does the complexity of smart contracts. This necessitates an ever-increasing sophistication in security protocols and vigorous adherence to the emerging standards of smart contract audits that aim to fortify the network's defenses against both known threats and unforeseen vulnerabilities.

Frequently Asked Questions

What is the difference between ERC-20, ERC-721, and ERC-1155 token standards?

ERC-20 is a standard for creating fungible tokens, each identical and divisible, commonly used for cryptocurrencies and utility tokens. ERC-721 introduces non-fungible tokens (NFTs), each unique and indivisible, ideal for representing ownership of unique items. ERC-1155 allows for both fungible and non-fungible tokens, facilitating batch transfers and reducing transaction costs.

How do ERC-777 tokens differ from ERC-20 tokens?

ERC-777 tokens are an improvement over ERC-20 tokens, offering advanced features like hooks for smart contracts, which allow tokens to be received and processed more efficiently. This standard also provides better handling of transactions, mitigating common issues with ERC-20 tokens.

What are non-fungible tokens (NFTs) and which Ethereum token standard is used for them?

Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be exchanged or traded at equivalency. The Ethereum token standard used for NFTs is primarily ERC-721, although ERC-1155 also supports NFTs.

Could you explain the purpose of the ERC-1155 token standard?

The ERC-1155 token standard serves to enable a more efficient management of multiple token types within a single contract. It supports fungible, semi-fungible, and non-fungible tokens, which allows for the mass transfer of assorted tokens, streamlining the process and potentially reducing transaction costs.