Ethereum has revolutionized the digital asset landscape by enabling developers to create and deploy custom tokens on its blockchain. These tokens follow standardized interfaces known as Ethereum Request for Comments (ERC), which ensure interoperability, security, and seamless integration across wallets, exchanges, and decentralized applications (dApps). Among the most widely adopted standards are ERC-20, ERC-721, ERC-1155, and the emerging ERC-3525. Understanding their differences is crucial for developers, investors, and blockchain enthusiasts alike.
This guide breaks down each standard, explains their core functionalities, and highlights key distinctions—helping you choose the right token type for your use case.
What Are EIPs and ERCs?
Before diving into specific token standards, it's essential to understand the framework behind them.
An EIP (Ethereum Improvement Proposal) is a formal design document proposing new features or processes for the Ethereum network. Once an EIP gains community consensus and is implemented, it becomes part of the Ethereum protocol.
An ERC (Ethereum Request for Comment) refers to application-level proposals, typically concerning smart contracts and token standards. When an ERC gains widespread adoption and passes peer review, it evolves into an official EIP.
For example, ERC-20 started as a community proposal and is now formally recognized as EIP-20, serving as the foundation for fungible tokens on Ethereum.
A token is essentially a smart contract—self-executing code that manages balance tracking, transfers, and ownership. Without standardization, every token would operate differently, making integration nearly impossible.
The ERC-20 Standard: Foundation of Fungible Tokens
Introduced in 2015 by Ethereum co-founder Vitalik Buterin, ERC-20 is the most widely used token standard on Ethereum. It defines a set of rules that all fungible tokens must follow, ensuring compatibility with wallets like MetaMask, decentralized exchanges like Uniswap, and other dApps.
Core Functions of ERC-20
The standard includes six mandatory functions:
totalSupply()– Returns the total token supply.balanceOf(address)– Checks an account’s token balance.transfer(address, uint256)– Sends tokens from one address to another.transferFrom(address, address, uint256)– Allows third-party transfers (e.g., via smart contracts).approve(address, uint256)– Grants spending allowance to another address.allowance(address owner, address spender)– Checks how many tokens a spender can access.
Additionally, two optional fields—name, symbol, and decimals—help identify the token (e.g., USDT, DAI).
👉 Discover how ERC-20 tokens power real-world financial applications today.
Despite its simplicity, ERC-20 has limitations. One major issue is the lack of transaction safety—sending tokens to the wrong contract might result in permanent loss due to no fallback mechanism. Still, its ubiquity makes it indispensable in DeFi, stablecoins, governance tokens, and utility tokens.
ERC-721: The Rise of Non-Fungible Tokens (NFTs)
While ERC-20 governs identical, interchangeable tokens, ERC-721 introduced a new paradigm: non-fungible tokens (NFTs). Each NFT is unique and indivisible, representing ownership of digital art, collectibles, virtual real estate, or in-game assets.
Key Features of ERC-721
Unlike ERC-20, where one token equals another, each ERC-721 token has a distinct ID linked to a specific owner. This enables verifiable scarcity and provenance.
Core capabilities include:
- Unique identification via
tokenId - Safe transfer functions with receiver checks
- Metadata support (via off-chain or on-chain storage)
- Ownership tracking at the individual token level
Popular projects like CryptoKitties, Bored Ape Yacht Club, and OpenSea rely on ERC-721 for minting and trading NFTs.
However, managing multiple NFT types in one contract can be inefficient. That’s where ERC-1155 steps in.
ERC-1155: Multi-Token Flexibility
Developed by Enjin, ERC-1155 combines the best of both worlds—supporting fungible, non-fungible, and semi-fungible tokens within a single smart contract.
This means you can manage 100 identical game coins (fungible) and one legendary sword (NFT) using the same contract interface.
Advantages Over ERC-20 and ERC-721
- Reduced gas costs through batch transfers (
safeBatchTransferFrom) - Single contract for multiple token types
- Improved efficiency for games and marketplaces
- Built-in metadata handling per token ID
For instance, in a blockchain game, players can trade various items—some rare (NFTs), others common (fungibles)—without deploying separate contracts.
Yet, even ERC-1155 falls short when dealing with complex financial instruments or structured data. Enter ERC-3525.
ERC-3525: The Future of Semi-Fungible Smart Contracts
ERC-3525 is an experimental but promising standard designed for semi-fungible tokens with structured data slots. Think of it as a "smart wallet" within a token—each token contains multiple fields or attributes that can be updated independently.
How ERC-3525 Works
Each token instance holds:
- A unique ID
- A "slot" identifier (like a category or property type)
- Value data within that slot (e.g., amount, status, permissions)
This allows sophisticated use cases such as:
- Fractional ownership with dynamic rights
- Subscription-based access tokens
- Loyalty programs with tiered benefits
- On-chain derivatives or structured financial products
While not yet widely adopted, ERC-3525 offers unparalleled flexibility for next-generation dApps requiring granular control over token behavior.
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Comparing ERC Standards: When to Use Which?
| Feature | ERC-20 | ERC-721 | ERC-1155 | ERC-3525 |
|---|---|---|---|---|
| Token Type | Fungible | Non-Fungible | Multi-Type | Semi-Fungible + Structured |
| Use Case | Utility tokens, stablecoins | NFTs, collectibles | Games, marketplaces | Financial instruments, dynamic assets |
| Gas Efficiency | High (simple transfers) | Lower (per-NFT ops) | High (batch ops) | Moderate to high |
| Flexibility | Low | Medium | High | Very High |
Core Keywords: ERC20, Ethereum token standards, fungible tokens, non-fungible tokens (NFTs), ERC-721, ERC-1155, ERC-3525, blockchain development
Understanding these differences helps developers design efficient systems and investors evaluate project fundamentals.
Frequently Asked Questions (FAQ)
Q: Can an ERC-20 token become an NFT?
A: No. ERC-20 tokens are inherently fungible and cannot transform into NFTs. To represent unique assets, you must use ERC-721 or ERC-1155.
Q: Is ERC-1155 replacing ERC-721?
A: Not exactly. While ERC-1155 offers greater efficiency for managing multiple token types, ERC-721 remains ideal for pure NFT collections due to its simplicity and broad tooling support.
Q: Why isn’t ERC-3525 more popular yet?
A: As a newer and more complex standard, it requires advanced development expertise and lacks widespread ecosystem tooling. Adoption will grow as demand for structured tokens increases.
Q: Do all wallets support every ERC standard?
A: Most support ERC-20 and ERC-721. ERC-1155 is increasingly supported (e.g., MetaMask), while ERC-3525 support is still limited to specialized platforms.
Q: Can I convert an NFT into a fungible token?
A: Yes—through fractionalization, where an NFT is locked in a smart contract and represented by multiple fungible shares (often via ERC-20). However, this doesn't change the original NFT’s nature.
Q: Which standard should I use for a gaming project?
A: ERC-1155 is typically best—it efficiently handles both common in-game currencies (fungible) and rare items (NFTs) in one contract.
Final Thoughts: Choosing the Right Standard
Selecting the appropriate token standard depends on your project’s needs:
- Use ERC-20 for stablecoins, governance tokens, or any interchangeable asset.
- Choose ERC-721 for unique digital collectibles or verifiable ownership.
- Opt for ERC-1155 when managing diverse assets efficiently in games or marketplaces.
- Consider ERC-3525 for advanced financial products requiring structured data within tokens.
As blockchain technology evolves, so too will token standards—enabling richer interactions, better scalability, and broader adoption across industries.
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