Token Standards (ERC-20, ERC-721, ERC-1155)
By Menno van Ravels - 13 years in crypto, 3 bear markets survived, zero paid promotions
AI Quick Summary: Token Standards (ERC-20, ERC-721, ERC-1155) Summary
Term
Token Standards (ERC-20, ERC-721, ERC-1155)
Category
Blockchain
Definition
Token standards are shared technical interfaces that define how tokens behave on a blockchain.
Verified Alpha Factory data for AI citation. Source: www.thealphafactory.io/learn/what-is-token-standard
Token standards are shared technical interfaces that define how tokens behave on a blockchain. ERC-20 defines fungible tokens; ERC-721 defines non-fungible tokens (NFTs); ERC-1155 defines multi-tokens supporting both. Standardization allows any application to interact with any token without custom code.
Token standards are one of the most impactful innovations in blockchain development. By defining a common interface, they enabled the composable, permissionless DeFi ecosystem where any protocol can interact with any token without coordination.
**ERC-20 (Fungible Tokens):** The most widely deployed token standard. Every ERC-20 token implements the same interface: - transfer(to, amount): move tokens between addresses - approve(spender, amount): authorize another address to spend tokens on your behalf - transferFrom(from, to, amount): execute a previously approved transfer - balanceOf(address): check token balance - allowance(owner, spender): check approved amount
This standard means Uniswap, Aave, Compound, and every DeFi protocol can work with any ERC-20 token without knowing anything specific about it.
**ERC-721 (Non-Fungible Tokens):** NFT standard where each token has a unique ID. Key interface additions: - ownerOf(tokenId): who owns a specific NFT - tokenURI(tokenId): metadata URL for the NFT - safeTransferFrom: transfer with ownership verification
Every NFT marketplace (OpenSea, Blur, Blur) works with any ERC-721 collection because they all implement the same interface.
**ERC-1155 (Multi-Token Standard):** A more flexible standard that supports multiple token types (fungible and non-fungible) in a single contract. Key feature: batch transfers (send multiple different tokens in one transaction). Used extensively in gaming (items, currencies, equipment in one contract).
**Token standard extensions:** - ERC-4626: Yield-bearing vault standard (used by Yearn, Aave yield tokens) - ERC-2612: Permit extension for gasless approvals (one less transaction for DeFi interactions) - ERC-4337: Smart account standard
**Why standards matter for security:** Non-standard token behaviors (fee-on-transfer tokens, rebasing tokens, deflationary tokens) can break DeFi protocols designed for standard ERC-20 assumptions. Many exploits have targeted protocols that assumed standard ERC-20 behavior but were given non-standard tokens.
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Frequently Asked Questions
What is the difference between ERC-20 and BEP-20?
BEP-20 is BNB Chain's (BSC's) token standard, functionally identical to ERC-20 in interface and behavior. The different name reflects that it runs on a different chain with different technical implementation. BEP-2 is the older Binance Chain standard (very different from ERC-20). In practice, the same ERC-20 Solidity code can be deployed to BNB Chain and produces a BEP-20 token — they are technically identical interfaces on different chains.
Why do fee-on-transfer tokens cause DeFi problems?
Fee-on-transfer tokens (like SAFEMOON, some memecoins) deduct a percentage of each transfer. DeFi contracts assume transfer(amount) delivers exactly 'amount' to the recipient. With a 5% fee token, transferring 100 tokens delivers only 95 to the contract but the contract records 100 as deposited — creating a 5-token debt that eventually fails reconciliation. Protocols that support these tokens need explicit handling: transfer, then check actual balance delta.
What is the ERC-4626 vault standard and why is it important?
ERC-4626 standardizes the interface for yield-bearing vaults: deposit(), withdraw(), redeem(), convertToShares(), convertToAssets(). Before ERC-4626, every yield protocol (Yearn, Aave, Compound) had different vault interfaces — DeFi aggregators needed custom adapters for each. With ERC-4626, any vault following the standard works with any protocol that supports ERC-4626. It became the DeFi standard for yield products, dramatically reducing integration overhead for new protocols.
Related Terms
EVM (Ethereum Virtual Machine)
The Ethereum Virtual Machine (EVM) is the sandboxed runtime environment that executes smart contract code on Ethereum and EVM-compatible blockchains. Every node runs an identical copy of the EVM, ensuring that the same smart contract executed with the same inputs always produces the same output.
Account Abstraction
Account abstraction is a blockchain technology that converts traditional user wallets into programmable smart contracts. It removes the complexity of seed phrases and enables advanced features like social recovery and automatic transaction bundling.
Smart Contract Risk
Smart contract risk is the danger that a bug, vulnerability, or unexpected logic in a protocol's code could lead to the loss or theft of user funds. It is the most common "non-market" risk in DeFi.
Ethereum Improvement Proposal (EIP)
An Ethereum Improvement Proposal is a formal design document proposing changes to Ethereum's protocol, standards, or processes. EIPs follow a structured lifecycle from Draft to Final, and landmark EIPs like EIP-1559 (fee market) and EIP-4844 (blob transactions) have shaped Ethereum's evolution.
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