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Popular Token Standards
By Ruchi Sharma
A crypto token functions in a certain manner and there are rules and conditions that dictate this. A set of such rules & conditions which define how a crypto token works are called token standard. Let us look at some of the popular token standards on Ethereum and a few others.
Token standards assist in ensuring that newly issued tokens are compatible with existing exchanges. These specifications allow people to create, issue, and deploy new tokens based on a specific blockchain. Token standards, which are a subset of smart contract standards, are primarily used on blockchains that use smart contracts.
Smart contract standards are the specific rules that a smart contract must follow to use a particular blockchain. Token standards, name registries, and other smart contract standards are available. These smart contract standards allow smart contracts to communicate with one another in an efficient manner.
ERC-20 Token Standard
The ERC-20 token standard is a template for creating fungible tokens on the Ethereum network. Each token (or fraction of a token) is equivalent to and indistinguishable from another if it is fungible.
ERC-20 tokens, like other digital assets, are most created by organisations and
tech-focused businesses. They enable the entity to customise the utility of the token, such as granting voting rights and reward mechanisms.
All ERC-20 tokens are interoperable with one another and with compatible services such as MyEtherWallet or MetaMask.
ERC-721 Token Standard
In contrast to ERC-20, which is a fungible token standard, ERC-721 is a non-fungible token standard (NFTs). Non-fungible tokens are a type of cryptographic token that, by definition, are not interchangeable with one another. Because of its unique specifications, one token cannot be exchanged for another. As a result, they’re frequently used to represent digital collectibles, game items, digital art, event tickets, domain names, and physical asset ownership records.
ERC-777 Token Standard
ERC-777 seeks to address the shortcomings of ERC-20. Through a mechanism known as ‘Hooks,’ this token standard makes it easier for smart contracts to send and receive tokens. Hooks is a function that combines two messages into one: sending tokens and notifying a contract. Not only that, ERC-777 adds the ability to reject transactions from a blacklisted address.
Another advantage of the ERC-777 token standard is that it does not render the ERC-20 token standard obsolete.
ERC-1155 Token Standard
ERC1155 is a multi-asset token standard that can be used in the same contract to create both fungible and non-fungible tokens. ERC1155 can perform the same functions as ERC20, ERC721, or both simultaneously. ERC1155 can reduce transaction costs by allowing batch processing, which eliminates the need to verify tokens individually.
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