Summary
Token standards are sets of rules and conventions that govern how cryptocurrency tokens operate. Common standards include ERC-20, BEP-20, ERC-721, and ERC-1155.
Introduction
While there are tens of thousands of cryptocurrencies, most are built using the same foundational blueprints called token standards. These standards define the key functionalities and properties of blockchain tokens.
Why Are Token Standards Important?
Interoperability
Token standards ensure products built on the same specifications can interact seamlessly. When projects follow established standards, new tokens maintain compatibility with existing platforms like wallets. For example, ERC-20 assets automatically work with services designed for that standard.
Without standards, trading multiple cryptocurrencies would be cumbersome, requiring separate wallets for each token.
Composability
Developers can reuse existing components to build new products efficiently. Token standards reduce time spent on basic functionalities, freeing developers to innovate.
Efficiency
Standards streamline smart contract interactions. Contracts deployed with token standards can monitor created tokens effectively. Features like address retrieval and balance tracking enable efficient token management through tools like contract ABIs.
Common Crypto & DeFi Token Standards
BEP-20
The BEP-20 standard powers Binance Smart Chain (BSC) tokens, enabling:
- TotalSupply: Sets a token's max supply.
- BalanceOf: Tracks user balances.
- Transfer/TransferFrom: Handles token transactions.
- Approve/Allowance: Manages third-party spending limits.
👉 Discover how BEP-20 fuels DeFi ecosystems
ERC-20
Proposed in 2015, ERC-20 remains the primary framework for fungible tokens. Key traits:
- Uniform functionality across tokens.
- Compatibility with Ethereum-based platforms.
Note: While similar to BEP-20, ERC-20 is exclusive to Ethereum.
ERC-721
The go-to standard for NFTs, requiring each token to have a unique tokenId. Functions include:
- Ownership transfers.
- Balance checks.
- Total supply tracking.
ERC-1155
A multi-token standard supporting:
- Batch operations: Transfer/query multiple assets simultaneously.
- Dual asset types: Combines fungible tokens and NFTs.
- Efficient approvals: Single-address permissions for all tokens.
Limitations of Token Standards
Tokens under different standards often lack compatibility. For instance, Bitcoin can't natively interact with Ethereum. Solutions include:
Wrapped Tokens
👉 Learn how wrapped tokens bridge blockchains
These are pegged to original assets (e.g., WETH for ETH) and operate on foreign chains via custodial "wrapping."
Conclusion
Token standards serve as blueprints for blockchain tokens. While current standards have limitations, innovations like cross-chain bridges enhance interoperability.
FAQ Section
Q: Can ERC-20 tokens be converted to BEP-20?
A: Yes, via cross-chain bridges that "wrap" tokens into compatible formats.
Q: What’s the difference between ERC-721 and ERC-1155?
A: ERC-721 is NFT-exclusive, while ERC-1155 supports both fungible tokens and NFTs.
Q: Are token standards legally binding?
A: No, they’re technical guidelines adopted voluntarily by developers.
Q: How do wrapped tokens maintain value parity?
A: They’re backed 1:1 by reserves held in secure smart contracts.
Q: Can I create a custom token standard?
A: Yes, but adoption depends on community and developer support.
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