How do Token Standards Work?
Token standards are essential frameworks that define the rules and functionalities for creating and managing tokens on a blockchain. Primarily, two popular token standards are ERC-20 and ERC-721. These standards enable interoperability between different applications and wallets within the Ethereum blockchain ecosystem.
1. ERC-20
ERC-20 tokens are fungible, meaning each token is identical and can be exchanged on a one-to-one basis. This standard outlines six mandatory functions: totalSupply(), balanceOf(address), transfer(address, uint256), transferFrom(address, address, uint256), approve(address, uint256), and allowance(address, address). Developers can create tokens that adhere to these functions, facilitating interactions across various platforms.
2. ERC-721
In contrast, ERC-721 tokens are non-fungible, meaning each token is unique and cannot be exchanged on a one-to-one basis. This standard is widely used for digital collectibles and assets, like NFTs (Non-Fungible Tokens). The ERC-721 standard includes functions such as ownerOf(uint256) and safeTransferFrom(address, address, uint256), which ensure unique token management.
Conclusion
Token standards streamline the development process, enhance security, and promote consistency across the blockchain ecosystem, ultimately allowing more projects to thrive and innovate.