Token standards are the foundational rules that govern how digital tokens operate on a blockchain. They define everything from how tokens are created and transferred to how they interact with wallets, exchanges, and decentralized applications (dApps). Whether you're dealing with fungible tokens like stablecoins or non-fungible tokens (NFTs) representing unique digital art, token standards ensure consistency, interoperability, and security across the ecosystem.
Understanding token standards is essential for developers, investors, and users navigating the world of blockchain and decentralized finance (DeFi). From Ethereum’s widely adopted ERC-20 to multi-token innovations like ERC-1155, these protocols shape the functionality and future potential of digital assets.
Core Concepts: Token Standards and Smart Contracts
At their core, token standards are a subset of smart contract standards—technical specifications that dictate how a smart contract must behave to function correctly on a given blockchain. These standards outline required functions, data structures, and behaviors, enabling developers to build compatible and predictable token systems.
For blockchains supporting smart contracts—like Ethereum, EOS, or Tezos—token standards serve as blueprints for creating, issuing, and managing new tokens. Without them, every developer would implement tokens differently, leading to fragmentation, incompatibility, and security risks.
👉 Discover how token standards power next-gen blockchain applications.
The most well-known token standards originate from Ethereum, where the Ethereum Request for Comment (ERC) system formalizes proposals through Ethereum Improvement Proposals (EIPs). Once reviewed and accepted by the community, an EIP becomes an ERC standard—freely available for any developer to use.
Major Ethereum Token Standards
ERC-20: The Standard for Fungible Tokens
ERC-20 is the most widely used token standard, designed for creating fungible tokens—tokens that are interchangeable because each unit holds identical value. Just like one dollar bill can be exchanged for another, one ERC-20 token is equivalent to any other of the same type.
This standard underpins countless projects, including stablecoins (e.g., DAI), utility tokens (e.g., BAT), and DeFi governance tokens. Its widespread adoption ensures compatibility across wallets (like MetaMask), exchanges, and dApps.
Key functions required by ERC-20 include:
totalSupply: Total number of tokens in circulation.balanceOf: Check a user’s token balance.transfer: Send tokens directly to another address.approveandallowance: Allow third-party contracts to spend tokens on behalf of a user.transferFrom: Enable approved transfers by contracts.
Optional metadata like name, symbol, and decimals enhance usability. Despite its success, ERC-20 has limitations—such as lack of callback mechanisms—which newer standards aim to fix.
ERC-721: The Birth of NFTs
While ERC-20 governs interchangeable assets, ERC-721 introduced non-fungible tokens (NFTs)—unique digital assets that cannot be replaced by another identical item. Each ERC-721 token has distinct properties, making it ideal for digital collectibles, artwork, in-game items, and ownership records.
Unlike ERC-20, where balances are numerical, ERC-721 tracks individual token IDs tied to specific owners. This enables provable scarcity and authenticity—key features behind platforms like OpenSea and games like CryptoKitties, one of the first major NFT projects.
Each NFT includes metadata (often stored off-chain) describing its attributes, ensuring verifiable uniqueness in decentralized environments.
ERC-777: Enhanced Functionality with Hooks
ERC-777 improves upon ERC-20 by introducing hooks—callback functions that notify receiving contracts when tokens are transferred. This eliminates the need for separate approval and transfer steps, streamlining interactions between smart contracts.
Additionally, ERC-777 supports operator roles, allowing trusted addresses to manage tokens on behalf of users. It also enables rejection of transfers from blacklisted addresses—adding a layer of compliance and security.
Importantly, ERC-777 remains backward compatible with ERC-20. This means existing infrastructure can still interact with ERC-777 tokens without disruption, easing adoption.
ERC-1155: The Multi-Token Revolution
Developed by Enjin, ERC-1155 represents a leap forward by supporting multiple token types within a single contract—including fungible, non-fungible, and semi-fungible tokens.
This standard solves key inefficiencies in ERC-721. For example, transferring multiple NFTs previously required individual transactions—costing time and gas fees. With batch transfers, ERC-1155 allows bundling dozens of assets into one operation.
Its flexibility makes it ideal for gaming ecosystems, marketplaces, and DeFi platforms needing diverse asset management. As described by its creators, it's "a single smart contract that can govern an infinite number of tokens."
👉 See how multi-token standards are reshaping digital economies.
Token Standards Beyond Ethereum
While Ethereum dominates the smart contract space, other blockchains have developed their own token frameworks tailored to performance, scalability, or governance models.
EOS: eosio.token Contract
On the EOSIO blockchain, the eosio.token smart contract defines how tokens are created and managed. Unlike Ethereum’s standardized ERC formats, EOS relies on system-level contracts maintained by Block.one. The native EOS token itself is issued via this contract.
EOS emphasizes high throughput and low-latency transactions, making it suitable for enterprise applications and decentralized apps requiring rapid execution.
NEO: NEP Series Standards
The NEO blockchain uses NEO Enhancement Proposals (NEPs) to standardize token behavior:
- NEP-5: Analogous to ERC-20, supports fungible tokens.
- NEP-11: The NFT standard on NEO.
- NEP-17: A refined fungible token standard replacing NEP-5 with improved efficiency and clarity.
These standards support NEO’s vision of a “smart economy” combining digital identities, assets, and smart contracts.
Tezos: TZIP Framework
Tezos employs TZIPs (Tezos Improvement Proposals) to define interoperability standards:
- TZIP-7: Similar to ERC-20, handles fungible token operations.
- TZIP-12: Offers a unified interface supporting both fungible and non-fungible tokens—mirroring the versatility of ERC-1155.
Tezos’ on-chain governance model allows smooth upgrades to these standards without hard forks.
Frequently Asked Questions (FAQ)
Q: What is the difference between a coin and a token?
A: Coins (like ETH or BTC) operate on their own blockchain as native currency. Tokens are built on top of existing blockchains using standards like ERC-20 or NEP-5.
Q: Are all NFTs based on ERC-721?
A: While many are, newer standards like ERC-1155 also support NFTs. Some blockchains use alternatives like NEP-11 (NEO) or TZIP-12 (Tezos).
Q: Why do token standards matter for developers?
A: They ensure compatibility with wallets, exchanges, and dApps. Using established standards reduces bugs and accelerates integration.
Q: Can one blockchain support multiple token standards?
A: Yes. Ethereum supports ERC-20, ERC-721, ERC-777, and ERC-1155 simultaneously. Developers choose based on use case.
Q: Is ERC-20 obsolete now that better standards exist?
A: No. Due to massive adoption and backward compatibility, ERC-20 remains dominant in DeFi and token issuance.
Q: How do I check if a token follows a specific standard?
A: You can inspect its smart contract code on explorers like Etherscan or verify its function signatures against the official ERC documentation.
👉 Explore leading blockchain networks supporting modern token standards today.
Final Thoughts
Token standards are the invisible architecture behind the digital asset revolution. By defining clear rules for creation, transfer, and interaction, they enable trustless innovation across DeFi, NFTs, gaming, and beyond.
As blockchain ecosystems evolve, so too will these standards—driving greater efficiency, security, and cross-chain compatibility. Whether you're building the next big dApp or investing in digital assets, understanding token standards is key to navigating this dynamic landscape.
Core Keywords: token standards, ERC-20, ERC-721, ERC-1155, smart contracts, blockchain tokens, NFTs, fungible tokens