Ethereum has long been a cornerstone of the blockchain ecosystem, serving as the foundation for thousands of decentralized applications (DApps) and digital assets. Despite challenges like high gas fees and network congestion, its robust security, consistent upgrades, and innovative smart contract capabilities make it the top choice for developers and projects alike. One of Ethereum’s most transformative contributions is its token standards — protocols that define how tokens are created, managed, and exchanged.
At the heart of this innovation are three primary token standards: ERC-20, ERC-721, and ERC-1155. These standards have enabled the creation of everything from fungible utility tokens to unique digital collectibles. Understanding them is essential for anyone exploring the world of decentralized finance (DeFi), non-fungible tokens (NFTs), or blockchain-based gaming.
What Are the Main Token Standards on Ethereum?
Ethereum’s flexibility comes from its support for various token standards, each designed for specific use cases. The three most prominent are:
ERC-20: The Standard for Fungible Tokens
Introduced in 2015, ERC-20 is the most widely adopted token standard on Ethereum. It defines a set of rules that all fungible tokens must follow, enabling seamless interaction across wallets, exchanges, and DApps.
Fungible means each token is identical and interchangeable — just like dollars or bitcoins. This makes ERC-20 ideal for creating cryptocurrencies used in payments, staking, governance, or as utility tokens within platforms.
Key functions defined by ERC-20 include:
- Transferring tokens between addresses
- Querying account balances
- Approving third-party spending
- Tracking total supply
Because of its standardization, any ERC-20 token can be easily integrated into services like MetaMask, Uniswap, or Coinbase. This interoperability has fueled the explosive growth of DeFi, where users swap, lend, and borrow tokens with minimal friction.
Many major cryptocurrencies are built on ERC-20, including stablecoins like USDT and DAI, as well as platform tokens such as UNI and LINK.
ERC-721: The Birth of Non-Fungible Tokens (NFTs)
While ERC-20 handles interchangeable assets, ERC-721 was created for unique, non-fungible items. Each ERC-721 token represents a one-of-a-kind digital asset — think digital art, virtual real estate, or rare in-game items.
Unlike fungible tokens, you cannot trade one NFT directly for another and expect equal value; each has distinct properties and provenance recorded on-chain.
This standard powers the NFT revolution, enabling verifiable scarcity and ownership. Platforms like CryptoKitties, one of the first major NFT projects, used ERC-721 to let users breed and trade unique digital cats.
Today, ERC-721 underpins marketplaces like OpenSea and Rarible, where artists and creators monetize digital works. Ownership is transparent and immutable, giving rise to new models in gaming, identity, and intellectual property rights.
👉 Explore how NFTs built on Ethereum are redefining digital creativity and ownership.
ERC-1155: The Multi-Token Revolution
Building on the strengths of both ERC-20 and ERC-721, ERC-1155 introduces a more efficient and flexible approach. Developed by Enjin, this standard allows a single smart contract to manage multiple token types — both fungible and non-fungible.
Imagine a video game where one contract handles:
- Fungible tokens (e.g., gold coins)
- Non-fungible items (e.g., legendary swords)
- Semi-fungible assets (e.g., limited-edition skins)
With ERC-1155, all these can coexist in one place, reducing transaction costs and complexity. It also supports batch transfers — sending multiple different tokens in a single transaction — which improves scalability and user experience.
This efficiency makes ERC-1155 increasingly popular in blockchain gaming and metaverse applications, where diverse asset types interact frequently.
Notable Ethereum-Based Tokens You Should Know
Several high-profile tokens built on Ethereum have become central to the crypto economy. Here’s a look at some of the most influential:
DAI – The Decentralized Stablecoin
DAI is an algorithmic stablecoin pegged to the US dollar, issued by MakerDAO. Unlike centralized stablecoins, DAI maintains its value through over-collateralized smart contracts rather than fiat reserves. This makes it a key player in DeFi lending and borrowing protocols.
USDT – The Most Widely Used Stablecoin
Tether (USDT) is the largest stablecoin by market cap. While it exists on multiple blockchains, its Ethereum-based version follows the ERC-20 standard. It serves as a bridge between traditional finance and crypto markets, offering price stability amid volatility.
UNI – Governance Token of Uniswap
UNI powers Uniswap, the leading decentralized exchange (DEX) on Ethereum. Holders can vote on protocol upgrades, fee structures, and treasury allocations, making it a prime example of decentralized governance in action.
LINK – Connecting Smart Contracts to Real-World Data
Chainlink (LINK) enables smart contracts to securely access off-chain data like stock prices or weather information. As a critical oracle network, Chainlink ensures that DeFi applications operate based on accurate external inputs.
MANA – Currency of the Decentraland Metaverse
MANA is used within Decentraland, a virtual world built on Ethereum. Users spend MANA to buy land parcels, wearables, and experiences — forming a true digital economy powered by blockchain.
BAT – Rewarding Attention in Web3
Basic Attention Token (BAT) is integrated into the Brave browser. It rewards users for viewing privacy-respecting ads and allows publishers to earn income directly — challenging traditional online advertising models.
Do All Ethereum-Based Tokens Have Value?
Not all tokens hold intrinsic value — but many do, especially those built on established standards like ERC-20.
The ERC-20 standard dominates in terms of utility and market adoption. Its compatibility across platforms means investors can easily trade tokens like USDT for DAI or swap governance tokens across DeFi protocols — all thanks to shared technical specifications.
Moreover, most major stablecoins are ERC-20 compliant, allowing traders to enter and exit positions using familiar dollar-denominated assets. This ease of use significantly lowers barriers to entry in crypto markets.
Additionally, because ERC-20 tokens operate within Ethereum’s vast ecosystem, they benefit from:
- Broad wallet support
- Integration with leading exchanges
- Access to DeFi protocols like Aave and Compound
- Transparent transaction tracking
As Ethereum continues to evolve through upgrades like EIP-4844 and layer-2 scaling solutions, the efficiency and affordability of using these tokens will only improve.
Frequently Asked Questions (FAQ)
Q: What is the difference between ERC-20 and ERC-721?
A: ERC-20 tokens are fungible — each unit is identical and interchangeable — while ERC-721 tokens are non-fungible and uniquely identifiable, often used for NFTs.
Q: Can a token be both ERC-20 and ERC-721?
A: No single token can be both, but a project can issue multiple token types using different standards. ERC-1155 offers a solution by supporting both within one contract.
Q: Why are most stablecoins based on ERC-20?
A: Because ERC-20 ensures compatibility with wallets, exchanges, and DeFi platforms — crucial for stablecoins that need widespread usability.
Q: Is ERC-1155 replacing ERC-721?
A: Not exactly. While ERC-1155 offers more flexibility, ERC-721 remains popular due to its simplicity and established infrastructure.
Q: How do I store Ethereum-based tokens?
A: You can use any Ethereum-compatible wallet like MetaMask, Trust Wallet, or Ledger — they support all major token standards.
Q: Are all tokens on Ethereum valuable?
A: No. While standards provide technical legitimacy, value depends on adoption, utility, team credibility, and market demand.
👉 Start exploring Ethereum-based tokens with a secure and user-friendly platform today.