In the context of the 4.0 industrial revolution taking place strongly, blockchain technology has become an important infrastructure for the global digital economy. At the heart of this shift are digital assets encoded in the form of tokens. According to research from the team of experts at Tan Phat Digital, in order for these tokens to exist, communicate and develop in a decentralized network, they need a common set of rules. That is the birth of the Token Standard. Understanding standards like ERC-20, ERC-721 and ERC-1155 is not only a technical requirement for developers, but also fundamental knowledge for anyone who wants to understand the workings of decentralized finance (DeFi), NFT and GameFi markets.
What is Token Standard? The Foundation of Blockchain Interoperability
The Token Standard is a set of technical rules and programming interfaces (APIs) that dictate how a token operates, is created, and interacts on a specific blockchain network. If you think of blockchain as an operating system, token standards are like file formats (like .exe, .jpg or .mp3), ensuring that different applications can open and process them consistently.
See also: How does Blockchain work?
Essential role for interoperability and ecosystem development
Interoperability is the core value of the token standard bring. In a trustless environment, different entities such as wallets, exchanges and decentralized applications (dApps) need to know exactly how to communicate with a new token without having to rewrite the source code for each specific asset.
When a token complies with a certain standard, it automatically becomes compatible with the entire existing infrastructure of that ecosystem. For example, a wallet that supports the ERC-20 standard can store thousands of different tokens as long as they follow the same set of rules. This not only helps lower the barrier to entry for developers, but also promotes continuous innovation, as they can focus on building business logic instead of worrying about low-level technical compatibility issues.
Most popular token standards today originate on the Ethereum network through the EIP (Ethereum Improvement Proposals) process. To make it easier for readers to grasp, Tan Phat Digital summarizes important terms as follows:
EIP (Ethereum Improvement Proposal): The process of proposing changes to protocols or application standards.
ERC (Ethereum Request for Comments): A subgroup of EIP that focuses on application-level standards such as token.
Smart Contract: Code implemented on the blockchain containing the logic of the token standard.
Interface: A set of required functions that a contract must implement to comply with the standard.
Event: Messages recorded on the blockchain for external applications to follow. follow.
ERC-20: Standard for Fungible Tokens
ERC-20 is the oldest and most important token standard in Ethereum history, serving as a "common language" for equivalent and interchangeable assets. This standard has radically changed the way capital is raised and circulated in the cryptocurrency space.
Technical functions and operations of ERC-20 contracts
The ERC-20 standard specifies a minimum interface of required functions that help external applications interact with tokens predictably:
totalSupply(): Returns the total amount of tokens current to track inflation or maximum total supply.balanceOf(address): Query the balance of a specific address, helping the wallet display assets to the user.transfer(): Performs a direct transfer of tokens from the sender to the destination address.approve(): Authorizes a third party (like a DEX) allowed to spend an amount of tokens from your wallet.transferFrom(): Allows an approved third party to make transfers on behalf of the owner.decimals(): (Optional) Specifies the number of decimal places (usually 18) to split the token.
At Tan Phat Digital, we always recommend users to use solutions such as ERC20Permit (EIP-2612) for approvals via off-chain signatures, which saves gas and improves security instead of indiscriminately granting unlimited permissions.
See also: What is Smart Contract Audit?
ERC-721: Standard for Non-Fungible Tokens (NFT)
If ERC-20 represents currency, then ERC-721 represents tangible and unique assets. Each ERC-721 token possesses a unique identifier (tokenId) within the scope of a smart contract.
Data Storage and Metadata Mechanism
ERC-721 uses a function called tokenURI to return a path to a JSON file describing the properties of the NFT. Key attributes include:
Name: Item identifier (Example: "Bored Ape #1234").
Description: Details about the origin or story of the NFT.
Image: A link to a media file, typically stored on IPFS or Arweave to ensure permanence.
Attributes: Rare technical specifications or properties of the item.
In terms of security, Tan Phat Digital reminds users to avoid blanket approval functions if not absolutely necessary, as this is a common path attackers use to take over their entire NFT collection. victim.
ERC-1155: Multi-Token Standard
ERC-1155 is a "hybrid" standard, capable of managing both fungible and non-fungible tokens within a single contract. This is considered a lifeline for GameFi and Metaverse projects.
Technical Efficiency and Cost Savings
Skyweaver game case study shows a significant difference in gas costs when performing a transfer of 100 tokens:
Separate ERC-20 implementation: Costs more than 3,500,000 Gas (Average 35,000 each).
Standard ERC-1155 Deployment: Costs approximately 2,763,399 Gas (Average 27,633 each).
Deployment of ERC155PackedBalance variant: Costs only 467,173 Gas (Average only 4,671 each). type).
With the ability to transfer batch transfers (Batch Transfers), ERC-1155 helps reduce costs and storage by handling multiple asset types in just one transaction.
Compare Token Standards
To help readers of Tan Phat Digital have an overview, below is a cost comparison details:
ERC-20 Standard: Homogeneous, divisible assets; Each contract manages one type of token; Transfer each transaction; authorization based on quantity; suitable for currencies, Stablecoins, DAOs.
ERC-721 Standard: Unique, indivisible asset; Each contract manages one collection; Transfer each item; ID-based authorization; suitable for digital art, NFT real estate.
ERC-1155 standard: Supports both asset types; a contract that governs a multitude of tokens; Supports batch transfers; ecosystem-based permissions; suitable for Games, Metaverse, e-commerce.
Comparative Analysis on Other Blockchains
Although Ethereum leads, other networks have also built similar standards:
Ethereum: Uses ERC-20 and ERC-721; The advantage is the most decentralized and the largest ecosystem.
BNB Chain (BSC): Uses BEP-20 and BEP-721; The advantage is a 3 second block speed and extremely low fees (less than 0.1 USD).
Solana: Uses SPL and SPL NFT; The advantage is extremely fast confirmation speed (400ms) and the ability to process tens of thousands of transactions per second.
Tron: Uses TRC-20 and TRC-721; optimized for Stablecoin payments with a speed of 3 seconds.
10 Typical Case Studies on Token Standard application
To clarify the practicality, Tan Phat Digital synthesizes the 10 most successful examples in applying token standards:
Skyweaver (GameFi - ERC-1155): Optimization streamlines the management of thousands of cards and in-game items under a single contract, significantly reducing deployment costs and gas fees when users make bulk transfers of tokens.
BlackRock BUIDL (Institutional Finance - ERC-20):BlackRock's digital liquefaction fund uses a custom ERC-20 with Whitelist mechanism to tokenize fund shares, providing direct on-chain returns to institutional investors organization.
Starbucks Odyssey (Loyalty - Polygon NFT): Starbucks loyalty program uses "Journey Stamps" (NFT) to reward customers through interactive challenges, creating a new community experience.
Courtyard.io (RWA - Physical Collectibles): Encode physical Pokemon cards into NFTs on the Polygon network. These tokens are securely stored in Brink's warehouse, allowing users to trade global physical assets at instant speeds.
Toucan Protocol (Climate Tech - ERC-20): Encodes traditional carbon credits into BCT (Base Carbon Tonne) tokens. Standardizing carbon credits into ERC-20 tokens helps increase the liquidity of the carbon market by 3 times.
BlocHome (Real Estate - T-REX): Use the T-REX platform to fragment real estate ownership in Luxembourg, reducing administration and legal compliance costs by 90% compared to traditional methods.
MediLedger (Medical Supply Chain): Uses blockchain to trace drug origins, meet the strict standards of the Drug Supply Chain Security Act (DSCSA) and prevent counterfeit drugs.
Double Protocol (Utility NFT - ERC-4907): Platform allows users to securely rent NFTs (like game items or virtual land). Thanks to the ERC-4907 standard, usage rights will automatically expire without the owner needing to manually revoke them.
The Sandbox (Metaverse - ERC-1155): Use ERC-1155 to effectively manage land plots (LAND), avatars and countless decorative items, helping the ecosystem operate smoothly and save network resources grid.
Lost Relics (RPG Game - ERC-1155): Action role-playing game that integrates rare items in the form of ERC-1155 NFTs, allowing players to actually own and trade loot on third-party exchanges.
Frequently Asked Questions (FAQs) about Token Standard
Below are The 20 most common questions were compiled by Tan Phat Digital to answer readers' questions:
What actually is a Token Standard? Is a set of technical rules that regulate how tokens work, ensuring they can interact smoothly with wallets and exchanges.
Why is ERC-20 the most popular? Because it establishes common rules for "fungible tokens", making DeFi applications easy to integrate and highly liquid.
What is the biggest difference between ERC-20 and ERC-721? ERC-20 represents identical units (like currencies), while ERC-721 represents unique units (like NFTs).
Why does GameFi favor ERC-1155? Because it allows managing both in-game currency (fungible) and items (NFT) in the same contract, saving significant gas costs.
What is a "semi-fungible" token? A type of token that can initially be replaced (like a movie ticket) but after use will become unique (a keepsake).
How dangerous is the "Race Condition" error in ERC-20? An attacker can take advantage of the change in approval limit to withdraw more tokens than the number of owners allowed.
Where is NFT metadata stored? Usually stored on decentralized systems such as IPFS or Arweave to ensure it cannot be deleted or altered by third parties.
What problem does ERC-4626 solve? It standardizes the interface for yield-bearing vaults, making it easier for DeFi protocols to connect with each other.
tính tập trung cao hơn Ethereum. How does Token Standard support RWA? It provides the transfer control tools and transparency needed for legal compliance when tokenizing real assets.
What standard does BlackRock's BUIDL Fund use? The fund uses a custom ERC-20 standard with a strict whitelist mechanism to control owners.
How to cancel token approval (Revoke Approval)? Users can use tools like Revoke.cash or the Token Approvals feature on Etherscan.
How does ERC-6551 turn an NFT into a wallet? It creates a "Token Binding Account" (TBA) that enables the NFT itself to own assets and make transactions.
How does ERC-4907 support NFT rental? It separates the "owner" and "user" roles, with an automatic expiration feature.
What is "Account Abstraction"? Is a technology that turns e-wallets into smart accounts with self-recovery of passwords and multi-layer security.
How is ERC-7575 different from ERC-4626? It is an extension of ERC-4626, allowing a repository to manage multiple assets at the same time instead of just one.
Why is infinite "approve" risky? If the dApp contract is hacked, an attacker can withdraw all the tokens in your wallet without consent ý thêm.
What's special about the SPL standard on Solana? It is designed for extremely high speed (processing in 400ms) and extremely low fees, supporting both fungible and NFT.
Do Token Standards provide more security? Yes, because these standards have been thoroughly tested by the community, helping to avoid basic logic errors in smart contract programming.
Future Trends
The ecosystem is moving towards smarter standards such as:
ERC-4626: Standardizing yield stores in DeFi.
ERC-4337: Account abstraction, making e-wallets as easy to use as traditional banking applications system.
ERC-6551: Allows each NFT to own its own wallet address, turning NFT into an independently operating entity.
Tan Phat Digital: Choosing the appropriate token standard is an important strategic step. ERC-20 still dominates finance, ERC-721 asserts its position in unique art, and ERC-1155 is the future of multi-asset virtual economies. When entering a new era, safety and convenience will be top priorities, bringing blockchain technology closer to the majority of global users.
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