Token

April 05, 2024

Token Standards Explained

The cryptocurrency world extends far beyond Bitcoin. In this world, a vast array of digital assets known as crypto tokens power a multitude of functions. These different token types can represent anything from currencies and in-game items to digital artwork and even voting rights. But how do these tokens operate and interact on their underlying blockchains? This is where token standards come into play.

Token standards function as a set of detailed instructions, similar to a blueprint. Token standards define how crypto tokens are created, behave, and interact on a specific blockchain network.

Imagine a blockchain as a vast digital ledger that records transactions. Token standards establish clear guidelines for developers to build smart contracts — self-executing programs residing on the blockchain — that govern the creation and management of these tokens. These standards ensure interoperability, meaning tokens created using a specific standard can seamlessly work with wallets, exchanges, and other applications that support the same standard.

In this article, we’ll explore how these token standards function, highlight the most popular standards used across popular blockchains, and explain the benefits they offer to both developers and users. By the end of this article, you’ll gain a strong understanding of how token standards lay the foundation for a thriving crypto tokens ecosystem.

How do Token Standards Work?

Rule Book

Token standards are like the rulebooks of the crypto world, dictating how cryptocurrency tokens interact within blockchain networks. They also set the ground rules for smart contracts, ensuring they can perform essential functions smoothly.

Think of it as a universal language not only for blockchain but also for developers: as the interfaces and features are standardized, anyone can create their own cryptocurrency token.

This means that: by following the established standards, developers can create tokens which are compatible with a wide range of wallets, exchanges, and other blockchain-based applications. This interoperability leads to the creation of a vast ecosystem of defi applications, while enabling developers to focus on making their tokens unique without worrying about compatibility issues.

Tools

Developers often take advantage of various tools and frameworks, such as; web3.js (web3 JavaScript API), web3.py (web3 Python API), NFT APIs as provided by DeCommas API, or even Moralis auth API, and a lot more available varieties.

These libraries and APIs provide developers with a convenient way to communicate with the blockchain, as well as interact with smart contracts and manage token transfers and balances.

In short, token standards make crypto more accessible, interoperable, and exciting for everyone involved, and even with new ideas emerging; like on-chain messaging with inscriptions or the proposed ERC-404 standard for token recovery; the core role of token standards remains unchanged: ensuring a standardized crypto token ecosystem.

Examples of Token standards

Below, we examine a number of token standards, their unique features, how to interact with them, and some examples under each.

ERC-20 Token Standard:

Feature: ERC-20, an Ethereum Request for Comment standard, manages multiple utility tokens on the Ethereum blockchain. The ERC-20 token standard (the most popular ERC standard) defines a set of rules for fungible tokens, allowing developers to create them with standardized functions such as transfers, approvals, and balance inquiries. This tutorial helps on how to set it up.
Interaction: Users can interact with ERC-20 tokens using Ethereum wallets or decentralized exchanges (DEXs) by sending and receiving tokens or trading them with other users.
Example: Popular cryptocurrencies like Wrapped Ethereum (WETH), Chainlink (LINK), USD Tether (USDT).

Looking to build a dApp that interacts with ERC-20 tokens? The following feature in these articles is sure to interest you:

2. ERC-721 Token:

Feature: ERC-721 is a token standard on the Ethereum network used for creating non-fungible tokens (NFTs) which contrary to tokens created using the ERC-20 standard are not divisible. Each token is unique and represents ownership of specific digital assets or collectibles, such as digital arts, game items, or real estate.
Interaction: You typically interact with ERC-721 tokens when buying, selling, or transferring NFTs in NFT marketplaces or platforms which support ERC-721 token standards. Articles on Azcoinnews or Somsubhra frequently cover interesting developments in the NFT space.
Example: Examples include: CryptoKitties, Decentraland parcels, CryptoPunks, etc, representing digital collectibles, virtual real estate, and unique digital art.

Check out these helpful tutorials on DeCommas API NFT endpoints, which are based on the ERC-721 token ecosystem:

3. ERC-777 Token:

Feature: ERC-777 is an extension of the ERC-20 standard with additional features such as batch transfers, improved security, and token meta-information. It aims to enhance user experience and utility token functionalities.
Interaction: Interacting with ERC-777 tokens is similar to ERC-20 tokens, where users can transfer tokens using Ethereum wallets or decentralized exchanges that support ERC-777 standards.
Example: Fewer compared to ERC-20 and ERC-721 tokens, but projects like WETH (Wrapped Ether) have explored ERC-777 tokens potential, and others being AAVE and UMA.

4. ERC-1155 Token:

Feature: ERC-1155 is a multi-token standard on the Ethereum blockchain designed to manage both fungible and non-fungible tokens within a single smart contract. It optimizes gas costs and reduces network congestion by enabling batch transfers and atomic swaps.
Interaction: Similarly to ERC-20 and ERC-721 tokens, you can interact using compatible wallets and platforms that support the ERC-1155 standard for transfers and trades.
Example: Enjin Coin (ENJ) and Axie Infinity (AXS) are examples of tokens based on the ERC-1155 standard.

5. BEP-20:

BEP-20 Standard

Feature: BEP-20 is a token standard on the Binance Smart Chain (BSC). It defines a set of rules for creating fungible tokens on the Binance Smart Chain, allowing for token transfers, approvals, and balance inquiries.
Interaction: Users can interact with BEP-20 tokens through decentralized exchanges on the Binance Smart Chain, or through wallets that support the Binance Smart Chain, such as MetaMask with BSC network configuration.
Example: Examples tokens include Binance Coin (BNB), PancakeSwap (CAKE), and Venus (XVS).

6. TRC-20:

TRC-20 Standard

Feature: TRC-20 is a token standard on the TRON blockchain. It allows for the creation of fungible tokens on the TRON network, enabling token transfers, approvals, and balance inquiries.
Interaction: You can interact with TRC-20 tokens using TRON-compatible wallets and decentralized exchanges on the TRON network.
Example: Examples of TRC-20 tokens include TRON (TRX), BitTorrent (BTT), and WIN (WINk).

7. SPL (Solana Token Program):

SLP Standard

Feature: SPL is a token standard on the Solana blockchain, designed for creating fungible and non-fungible tokens. It leverages Solana’s high-performance blockchain architecture for fast and low-cost token transactions.
Interaction: Interaction with SPL tokens is via Solana-compatible wallets and decentralized exchanges on the Solana blockchain.
Example: Examples of SPL tokens include Serum (SRM), Raydium (RAY), and Star Atlas (ATLAS).

8. TZIP-7 and TZIP-12:

TZIP Standards

Feature: TZIP-7 and TZIP-12 are token standards proposed by the Tezos blockchain community. TZIP-7 defines a standard for fungible tokens, while TZIP-12 defines a standard for non-fungible tokens (NFTs).
Interaction: Users can interact with TZIP-7 and TZIP-12 tokens using Tezos-compatible wallets and platforms that support these standards.
Example: Examples of tokens based on TZIP-7 and TZIP-12 standards are still emerging as the Tezos ecosystem continues to develop.

9. ERC-404:

Feature: ERC-404, proposed as an unofficial Ethereum standard, introduces a hybrid token concept. It blends characteristics of ERC-20 (fungible tokens) and ERC-721 (non-fungible tokens) to create semi-fungible tokens. This allows for the division and trading of individual units within a single NFT, opening up new possibilities for fractional ownership and asset valuation within the NFT space.
Interaction: While ERC-404 is still under development, interacting with these tokens might involve specialized wallets and marketplaces that support the standard. Existing ERC-20 and ERC-721 compatible platforms likely wouldn’t be compatible without upgrades.
Example: Pandora token, Syncswap 404 wrapper, Real Estate NFTs, an ERC-404 token could represent a high-value virtual property in a metaverse game. Another real world example is collectible Card Games.

10. Inscriptions

Feature: Inscriptions leverage the Ordinals protocol on Bitcoin to embed various data types directly onto the Bitcoin blockchain. This unlocks a new layer of functionality for the Bitcoin network, enabling users to permanently store text, images, and even small applications directly on the blockchain.
Interaction: Interacting with inscriptions currently requires specialized wallets and tools designed to read and write data to the Bitcoin blockchain using the Ordinals protocol. Mainstream Bitcoin wallets likely wouldn’t support inscriptions without significant modifications.
Example: An artist could use inscriptions to permanently link a unique identifier to a physical artwork, creating a verifiable record of authenticity and ownership on the Bitcoin blockchain. Other areas where inscriptions are useful include supply chain tracking, educational certificates, etc.

11. ERC-4337

Feature: ERC-4337, also known as Account Abstraction Using , is a relatively new Ethereum standard designed to improve user experience within defi. It achieves this by separating key management and transaction authorization. Unlike traditional Ethereum accounts where users manage private keys and pay gas fees in ETH, ERC-4337 allows for the use of smart contract wallets. These wallets can hold private keys, manage gas fees with various tokens or even eliminate gas fees altogether, and streamline transaction authorization processes.
Interaction: While still in its early stages, ERC-4337 is already being implemented by some leading DeFi projects. Argent, a popular self-custody wallet, now supports ERC-4337, allowing users to interact with DeFi applications without needing to manage private keys directly or hold ETH for gas fees.
Example: Argent wallet, Paymaster feature on Syncswap and ZKswap.

12. BRC-20

Feature: BRC-20 is an experimental token standard that enables the creation and transfer of fungible tokens on the Bitcoin blockchain. Inspired by Ethereum’s ERC-20 standard, BRC-20 leverages the Ordinals protocol to inscribe data onto individual Satoshis (smallest unit of Bitcoin) and create unique tokens. This opens up new avenues for the Bitcoin network, allowing for the development of DeFi applications, loyalty programs, and potentially even security tokens representing real-world assets.
Interaction: BRC-20 token interaction is still in its early stages. Currently, it requires specialized wallets and applications that support the Ordinals protocol for Bitcoin. These might not be as widely used or user-friendly as mainstream Bitcoin wallets.
Example: Cryptocurrencies like ordi, Trac BRC, Oshi, etc.

DeCommas API

The DeCommas API offers a powerful toolset for querying different token standards through our DataLayer API, some of which are: the widely-used ERC-20, and ERC-721 (NFT). This allows for easy retrieval of essential token data, including token balances, transaction histories, and metadata associated with tokens adhering to these standards.

ERC-20 APIs: For easy retrieval of token balance, token metadata, transfer list, amongst many other use cases.
ERC-721APIs: For easy retrieval of NFT transfers, top NFT holders, NFT metadata and collection metadata.
ERC-4337 APIs: For easy retrieval of operations carried out by a user in the network (See: Building a Feature to Track UserOps using DeCommas API).

DeCommas API Full Documentation

Refer to our detailed documentation page for a comprehensive guide on how to leverage the DeCommas API to query token standards.

The documentation offers insights into API endpoints, request parameters, authentication methods, and response formats, enabling you to integrate token querying functionalities seamlessly into your applications:

Also, check out our blog page on accessing DeCommas API endpoints. These articles provide step-by-step tutorials, code samples, and example use cases.