Guide to NFT Standards

ERC stands for "Ethereum Request for Comments." It’s a set of rules and protocols that all tokens built on Ethereum must follow to be compatible with its network. Developers can use these standards as guidelines while developing smart contracts and dApps that can be used to create, manage, and exchange tokens on the Ethereum blockchain. In this article, we’re going to discuss various ERC standards and what they’re used for.

ERC-20

ERC-20 is one of the most commonly used standards on Ethereum. It was first introduced in 2015 and is used to create fungible tokens. Contrary to NFTs (non-fungible tokens), these tokens are identical in value to every other token of the same type and can be used interchangeably.

ERC-20 has been used to create tokens for a variety of projects, such as stablecoins, utility tokens, and security tokens. Ethereum’s governance token Ether itself is an ERC 20 token.

ERC-223

ERC-223 improves upon the ERC-20 standard by including an additional function for handling incoming token transactions. It doesn’t lead to permanent loss of tokens if sent to a contract address that does not support them, unlike ERC-20, thus providing a better user experience.

It also reduces the amount of gas required for each transaction and makes token transfers more efficient.

ERC-165

ERC-165 is an Ethereum Improvement Proposal (EIP) that establishes a standard interface for smart contracts, allowing them to publicize their supported functions and capabilities. This leads to more efficient interactions between various smart contracts and dApps, i.e., interoperability. In turn, it also simplifies the development process for developers.

ERC-621

ERC-621 is an extension of the ERC-20 and ERC-223 standards, offering additional functionality by enabling tokens to be burned or redeemed for other assets. It gives creators and companies some control over the number of tokens in circulation, thus maintaining price stability.

Functionalities like token burn and redemption can be used in the creation of stablecoins or loyalty programs.

ERC-721

ERC-721 is the standard used in creating non-fungible tokens, i.e., NFTs. Unlike ERC-20 tokens that are fungible, each ERC-721 token possesses a unique identity, making them non-interchangeable. This makes ERC-721 tokens a perfect fit for assets like collectibles, game items, digital art, and real estate.

The standard outlines a set of functions that facilitate the creation, ownership, and transfer of NFTs. Each NFT is distinguished by a unique identifier and can carry associated metadata like a name, description, and image.

ERC-721C

ERC-721C was designed to enforce on-chain royalties effectively. Unlike ERC-721 and ERC1155, which are the most frequently created and traded NFT types, this new standard introduces programmable royalties. This feature empowers creators to permanently exclude zero-fee exchanges from hosting their works.

The brainchild of a blockchain gaming company Limit Break, ERC-721C was conceived to provide creators with the ability to establish their royalty rules on-chain. It facilitates the development of a unique type of royalties contract that can be customized as per the creator's preferences.

ERC-777

Introduced in 2018, ERC-777 is a token standard made to expand the functionality of ERC-20 and ERC-223. Its main advantage over ERC-20 lies in its efficiency in token transfers. The ERC-20 standard requires two separate transactions for token transfers, leading to higher transaction fees and longer processing times. However, ERC-777 introduces a new function called "send" that enables token transfers to be completed in a single transaction. This improvement makes ERC-777 more efficient and cost-effective.

ERC-827

The ERC-827 standard aims to enhance the overall functionality of the Ethereum blockchain with its ability to support more complex transactions that involve not only token transfers but also additional data.

Unlike the ERC-20 and ERC-223 standards which are restricted to token transfers, ERC-827 incorporates extra data fields. These fields can be utilized to provide supplementary information about the transaction, such as a reference number or an invoice ID. This added feature facilitates the integration of tokens into existing financial systems and applications.

ERC-884

This is the token standard that fractional ownership of assets possible. For instance, a piece of artwork could be divided into 1,000 tokens, with each token signifying 0.1% ownership of the artwork. Thus, ERC-884 opens up new investment opportunities in NFTs and other assets and increases their transparency and liquidity.

ERC-865

The ERC-865 standard aims to enhance the user experience and minimize transaction costs associated with token transfers. One of its unique features is that it allows someone other than the sender to make the payment for token transfers. So now users can transfer tokens without necessarily having to pay themselves with their wallet. By enabling third-party payment of transfer fees, it makes token transfer more user-friendly and cost-effective. This feature can prove to be helpful for dApps and other services that undergo large volumes of token transfers.

ERC-1155

ERC-1155 is a unique token standard that allows you to create both fungible and non-fungible tokens within a single contract, offering substantial benefits in terms of efficiency and adaptability. It can streamline the management of multiple token types by reducing the number of necessary transactions. These tokens can be called "semi-fungible." For example, a game item might have unique properties (making it non-fungible) while also sharing certain properties with other items (making it fungible).

ERC-4626

ERC-4626 presents a standard API for tokenized yield-bearing vaults, thus simplifying their technical aspects. Moreover, ERC-4626 offers a fundamental functionality for depositing & withdrawing tokens, and verifying balances by incorporating an optional extension for tokenized vaults that use the ERC-20 standard.

The purpose of ERC-4626 is to minimize errors and reduce the wastage of development resources in yield-bearing vaults since they’re quite important for lending markets, aggregators, and interest-bearing tokens.

ERC-6551

Introduced in February 2023, the ERC-6551 token standard can turn each ERC-721 token into a smart contract account, known as a "token-bound account." This enables NFTs to interact with dApps and own assets independently. It can also collect rewards, execute certain processes, and communicate with other accounts. Essentially, it makes NFTs more independent and interactive.

To summarize, ERC standards are a set of rules that every token built upon Ethereum has to follow. Token transfer functions, token ownership, smart contract security, etc. are all covered under these rules. Now that you know of the different ERC standards, you can better understand the functions and capabilities of various projects.