Tokens on Ethereum are not separate blockchains — they are smart contracts that follow a specific standard. These standards are called ERC (Ethereum Request for Comments) and define how tokens behave: how they are sent, received, and queried.

The three most important standards are ERC-20 (fungible tokens like USDC), ERC-721 (NFTs), and ERC-1155 (multi-token). Understanding these standards means understanding a large part of the Ethereum ecosystem.

ERC-20 — The Standard for Fungible Tokens

ERC-20 is by far the most used token standard on Ethereum. Proposed in 2015, it defines a uniform interface for fungible tokens — tokens where every unit is identical and interchangeable, just like dollar bills.

Well-known ERC-20 tokens: USDC, USDT (Tether), DAI, UNI (Uniswap), LINK (Chainlink), SHIB (Shiba Inu), MATIC (Polygon)

An ERC-20 contract implements six core functions: totalSupply (total supply), balanceOf (check balance), transfer (send), transferFrom (delegated send), approve (grant approval), allowance (check approval).

Important for users: Before you make a token swap, you must give the smart contract an "approval" — permission to move your tokens. Only grant approvals to trusted contracts, and revoke them regularly on revoke.cash.

ERC-721 — The Standard for NFTs

ERC-721 was proposed in 2017 by Dieter Shirley and is the standard for Non-Fungible Tokens (NFTs). Unlike ERC-20, every ERC-721 token is unique — each has its own token ID and can have its own metadata.

Use cases: Digital art, collectibles, gaming items, membership cards, domain names (ENS uses ERC-721), digital identities, event tickets.

Each NFT has a token ID that is unique within the contract. Metadata (image, name, properties) is usually referenced via a URI pointing to IPFS or a server. The contract itself only stores the ID and the owner — not the image.

Security note: When buying NFTs, always verify the contract address on the official marketplace. Fake NFT collections with similar names are a common scam.

ERC-1155 — Multi-Token Standard

ERC-1155 was proposed by Enjin and combines the properties of ERC-20 and ERC-721 in a single contract. An ERC-1155 contract can manage both fungible and non-fungible tokens simultaneously.

Advantages: Batch transfers — you can send multiple different tokens in a single transaction, saving gas. The contract code is also more efficient because you don't need a separate contract for each token type.

Typical usage: Gaming (games with many different items), NFT collections with editions (e.g., 100 copies of one artwork), and systems that need both fungible and non-fungible tokens.

Comparing the Three Standards

ERC-20: Every token is identical, infinitely divisible, ideal for currencies and utility tokens. Like a $10 bill — each is identical.

ERC-721: Every token is unique with its own ID, not divisible, ideal for digital collectibles and property rights. Like a painting — each is one of a kind.

ERC-1155: Can do both — fungible and non-fungible tokens in one contract. Batch transfers possible, more gas-efficient for many token types. Like a warehouse with different products.

Other Important Standards

ERC-4626 (Tokenized Vaults): A standard for yield vaults in DeFi. Defines how deposited tokens are converted to vault shares. Makes DeFi yield products more interoperable.

ERC-4337 (Account Abstraction): Technically not a token standard, but revolutionary for user experience. Enables smart contract wallets with features like gas sponsoring (someone else pays your gas fees), social recovery, and batch transactions.

ERC-2612 (Permit): Allows approvals via signature instead of transaction. Saves one gas fee, but also carries phishing risks — never sign a permit message you don't understand.

How to Identify a Token's Standard

The easiest way is through a block explorer like Etherscan. Search for the contract address and look under "Token Tracker." There you'll see the type (ERC-20, ERC-721, ERC-1155) and other details like total supply and number of holders.

In your wallet, ERC-20 tokens appear as balances (like a bank account), while ERC-721 and ERC-1155 tokens appear as individual objects (like a collection).

Verify Token Address

Check the Ethereum address of a token contract for correctness.

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