Ethereum has revolutionized the digital asset landscape by enabling a wide variety of token standards, each designed to serve specific use cases—from fungible currencies to unique digital collectibles and beyond. This guide provides a detailed overview of the most influential Ethereum token standards, their functionalities, interconnections, and real-world applications. Whether you're a developer, investor, or blockchain enthusiast, understanding these standards is key to navigating the evolving decentralized ecosystem.
What Are Ethereum Token Standards?
Ethereum token standards are sets of rules and functions defined through Ethereum Improvement Proposals (EIPs) that dictate how tokens behave on the Ethereum blockchain. These standards ensure interoperability across wallets, exchanges, and decentralized applications (dApps), making it easier to create, manage, and exchange digital assets.
The most widely adopted standards include ERC-20 for fungible tokens and ERC-721 for non-fungible tokens (NFTs), but dozens of extensions and alternatives have emerged to address limitations and expand functionality.
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Core Ethereum Token Standards
ERC-20: The Foundation of Fungible Tokens (EIP-20)
ERC-20 is the most widely used standard for creating interchangeable tokens on Ethereum. It defines a common set of functions such as transfer(), balanceOf(), and approve(), enabling seamless integration with dApps, exchanges, and wallets.
While foundational, ERC-20 has a known limitation: users can accidentally send tokens to smart contracts that don’t support token reception, resulting in permanent loss. This vulnerability led to the development of safer alternatives.
Related Standards: ERC-223, ERC-667, ERC-777
ERC-223: Secure Token Transfers
Designed to prevent accidental transfers, ERC-223 introduces a mechanism where tokens can only be sent to contracts that explicitly accept them. If a contract doesn’t implement the required receiver function, the transaction reverts—protecting user funds.
This standard makes token transfers behave more like ETH transfers, enhancing security without sacrificing usability.
Related Standards: ERC-667, ERC-777, ERC-995
ERC-721: The Birth of Non-Fungible Tokens (NFTs)
Unlike fungible tokens, ERC-721 represents unique, indivisible assets. Each token has a distinct identifier, making it ideal for digital art, collectibles, virtual real estate, and ownership verification.
ERC-721 supports features like operator approval, safe transfers, and metadata referencing (via URI), allowing NFTs to carry rich information about the asset they represent.
Use Cases: CryptoKitties, digital art marketplaces, domain names (ENS)
ERC-777: Advanced Token Functionality with Hooks
ERC-777 enhances token interactions by introducing hooks—callback functions triggered during transfers. This allows receiving contracts to react to incoming tokens, enabling complex logic like automatic staking or fee collection.
It also simplifies approvals using operators, reducing gas costs and improving user experience compared to traditional approve() and transferFrom() patterns.
Related Standards: ERC-223, ERC-667, ERC-995
Specialized and Emerging Token Standards
ERC-809: NFT Leasing Standard
ERC-809 enables the rental of NFTs through standardized lease agreements. Users can rent out digital assets—like game items or virtual land—for a specified duration and under defined conditions.
This opens new economic models in gaming and metaverse platforms, where temporary access is more practical than ownership.
ERC-864: Shared Ownership of NFTs
This standard allows multiple parties to co-own an NFT. By embedding ownership shares directly into the contract, ERC-864 facilitates fractional ownership of high-value assets such as rare collectibles or real-world property.
It complements ERC-981, which enables partial royalties for creators.
ERC-888: Multi-Dimensional Token Standard
ERC-888 introduces a flexible model where tokens can have multiple dimensions—such as class, tier, or attribute—within a single contract. This is useful for games or loyalty programs where assets vary by type and level.
It serves as a conceptual foundation for later multi-token standards like ERC-1155.
ERC-1155: The Multi-Token Revolution
Developed by Enjin, ERC-1155 allows a single contract to manage both fungible and non-fungible tokens efficiently. It supports batch transfers, reducing gas costs significantly when moving multiple token types at once.
This standard is widely used in gaming ecosystems and NFT platforms due to its flexibility and cost-effectiveness.
Related Standards: ERC-888, ERC-998, ERC-1203
ERC-998: Composable NFTs (ERC721 + ERC20/ERC721)
Also known as "Composable NFTs", ERC-998 enables an NFT to own other tokens—either fungible (ERC-20) or non-fungible (ERC-721). For example, a virtual character (NFT) could own weapons (NFTs) and gold coins (fungible tokens).
When the parent NFT is transferred, all owned assets move with it—creating hierarchical ownership structures.
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ERC-1178 & ERC-1203: Multi-Class and Multi-Tier Tokens
These standards extend fungibility by allowing tokens within the same contract to have different classes or tiers—ideal for corporate shares, membership levels, or tiered rewards.
Both are backward-compatible with ERC-20, ensuring broad compatibility while adding granular control.
ERC-1190: Royalty Payments for NFT Creators
ERC-1190 introduces a standardized way to pay royalties to creators every time an NFT is resold. This ensures ongoing compensation in secondary markets—a critical feature for artists and content creators.
Although not yet universally adopted, it addresses a major gap in the current NFT economy.
Deprecated or Insecure Standards
Some proposals were removed due to security flaws:
- ERC-827: Allowed
approveAndCallbut posed reentrancy risks. - ERC-1003: Similar issues with unsafe contract interactions.
These serve as reminders that innovation must be balanced with rigorous security audits.
Frequently Asked Questions (FAQ)
What is the difference between ERC-20 and ERC-721?
ERC-20 tokens are fungible—each unit is identical and interchangeable (like dollars). ERC-721 tokens are non-fungible—each has a unique identity (like a deed to property).
Can one contract support multiple token standards?
Yes. ERC-1155 is specifically designed to handle both fungible and non-fungible tokens in a single contract, improving efficiency and reducing deployment costs.
Why was ERC-777 created if ERC-20 already exists?
ERC-777 improves upon ERC-20 by adding callback hooks and operator-based approvals, enabling smarter interactions with dApps while preventing accidental loss of funds when sending to incompatible contracts.
How do token standards impact gas fees?
Standards like ERC-1155 reduce gas costs through batch operations. Others like ERC-865 allow off-chain signing, deferring gas payment to third parties—improving user experience.
Are new token standards still being developed?
Yes. The Ethereum community continuously proposes new EIPs to address scalability, privacy, cross-chain compatibility, and novel use cases like soulbound tokens and decentralized identity.
What role do token standards play in DeFi and NFTs?
Token standards ensure interoperability across platforms. In DeFi, ERC-20 enables lending, trading, and yield farming. In NFTs, ERC-721 and ERC-1155 power marketplaces, gaming assets, and digital ownership.
Final Thoughts
Ethereum’s token standard ecosystem reflects the platform’s adaptability and community-driven innovation. From simple utility tokens to complex composable assets, these standards form the backbone of Web3’s financial and creative infrastructure.
As blockchain technology evolves, so too will the standards that define how we create, own, and interact with digital value.
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