What is ERC-20: What you should know about ERC tokens

You should have heard of ERC-20 tokens, especially if you followed the crypto space during the ICO boom of 2017.

However, in addition to ERC-20, there are many other Ethereum token standards, such as ERC-721 and ERC-223, which provide more use cases for tokens.

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What does "ERC" mean?

ERC is an acronym for Ethereum Request for Comment, which is used to suggest improvements to tokens and the Ethereum ecosystem.

After submitting an ERC, the Ethereum community will evaluate it and decide whether to accept or reject the proposal.

Once given the green light, the ERC will be formalized as an Ethereum Improvement Proposal (EIP).

While ERCs are mostly initial and informal proposals, EIPs are always reviewed and evaluated by Ethereum core developers.

Speaking of which, the term "ERC" is widely known in the cryptocurrency community as the standard for tokens on the Ethereum network.

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ERC-20

Examples: Tether (USDT), Chainlink (LINK), AAX Token (AAB)

ERC-20 is the most popular token standard in the Ethereum ecosystem and the most popular token standard in the entire cryptocurrency industry.

ERC-20 was proposed by Ethereum co-founder Vitalik Buterin in June 2015. It is a simple interface that allows developers to create their tokens on top of the Ethereum blockchain and share them with third parties. Application (such as wallet and exchange) integration.

In addition to allowing creators to use simple functions, such as limiting the total supply of their coins, there is also direct interaction between ERC-20 tokens, decentralized applications (DApps) and smart contracts.

It is important to emphasize that ERC-20 tokens are fungible assets. Just like a hundred-dollar bill or a standard gold bar, a fungible token is the same asset with equivalent units.

Due to the ease of creating ERC-20 tokens, most crypto projects used the standard during the ICO boom of 2017 to issue their native tokens and sell them to backers.

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ERC223

Example: None

ERC-223 is a fungible token standard in the Ethereum ecosystem, and its main goal is to solve some of the problems of ERC-20.

While ERC-20 is very popular among crypto projects and users, it allows people to send cryptocurrencies to smart contracts rather than wallets.

As a result, some users lost their funds due to contract failure or other reasons.

To solve this problem, ERC-223 has a function that automatically alerts users in case they accidentally send tokens to a smart contract. Such transactions are automatically cancelled, allowing the user to recover their funds (but still pay the gas fee).

Although it is backward compatible with ERC-20 coins, ERC-223 is characterized by a cheaper miner fee than it.

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ERC-721

Examples: CryptoKitties, Sorare

In contrast to ERC-20 and ERC-223, ERC-721 is a non-fungible token (NFT) standard.

Each token here is not the same coin, but unique, with its own identifier for easy verification through the blockchain.

While fungible tokens function similarly to standard gold bars or dollar bills of equivalent value, ERC-721 coins are more like works of art or other (complex) handcrafted items, each unique and unique at a certain time. In some respects it differs from others.

While they have multiple applications, the most popular use case for NFTs is in blockchain gaming solutions.

Through non-fungible tokens, blockchain gamers can collect, own and trade unique game items such as weapons, characters, clothes, mounts and vehicles.

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ERC-1155

Example: Enjin

ERC-1155 is a hybrid token standard that allows developers to create unlimited fungible and non-fungible tokens under one smart contract.

Developers must create a new smart contract for each NFT when using ERC-721, while using ERC-1155, they only need to deploy a smart contract for non-fungible tokens and fungible tokens, thus shortening It saves development time and minimizes the resources used by creators.

AAX is a digital asset exchange powered by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.

About AAX Academy

AAX is a digital asset exchange powered by LSEG Technology. AAX Academy is a user education channel created by AAX, which aims to help more users learn novice tutorials and understand the basics of blockchain.