Ethereum allows tokens outside of ether to be minted and traded on its blockchain. These tokens represent anything from currencies, reward points, yield-bearing assets, real-world items like gold, memberships, and more.
Common Token Standards on Ethereum
Creating digital assets on Ethereum requires developers to input information into specific code templates replicating different token types. These templates are known as token standards.
Note that using ether is necessary to pay transaction fees when interacting with these tokens.
ERC-20 (Fungible Tokens)
Fungible token creation is possible through the ERC-20 standard, allowing developers to build apps that are interoperable with other services and products. Fungible tokens are mutually interchangeable with one another.
Example functionalities of the ERC-20 standard include:
- Transferring tokens between accounts
- Getting the token balance of an account
- Getting the total supply of a token on the network
- Approving third-party spending of tokens
Often developers use the ERC-20 standard to create utility tokens, stablecoins, and security tokens.
ERC-721 (Non-Fungible Tokens)
The ERC-721 standard creates non-fungible tokens (aka NFTs). Non-fungible tokens represent unique items on the blockchain and are not equivalent to other NFTs in a collection. More on NFTs is available in our NFT lesson.
The ERC-1155 standard is an interface for contracts managing multiple token types simultaneously (fungible and non-fungible). ERC-1155 improves the functionality and efficiency of the ERC-20 and ERC-721 standards.
ERC-4626 (Yield-Bearing Assets)
ERC-4626 makes it simpler for developers to implement yield-bearing activities (like lending markets and aggregation) into applications.
- Cryptography – A study of secure communications techniques in an adversarial environment
- Metadata – Data that describes some other data. Ex. the caption describing an image
- Whitepaper – Information document used to promote or highlight the features of a solution to a problem, product, or service
If you feel prepared, take our Introduction to Bitcoin and Blockchain quiz:
- ERC-1155 Multi-Token standard. ethereum.org. (n.d.). Retrieved November 3, 2022, from https://ethereum.org/en/developers/docs/standards/tokens/erc-1155
- ERC-20 token standard. ethereum.org. (n.d.). Retrieved November 3, 2022, from https://ethereum.org/en/developers/docs/standards/tokens/erc-20
- ERC-4626 tokenized vault standard. ethereum.org. (n.d.). Retrieved November 3, 2022, from https://ethereum.org/en/developers/docs/standards/tokens/erc-4626/
- ERC-721 non-fungible token standard. ethereum.org. (n.d.). Retrieved November 3, 2022, from https://ethereum.org/en/developers/docs/standards/tokens/erc-721