If you’ve dabbled in the world of NFTs, then you may have heard of names like ERC-20, ERC-721, and ERC-1155. These are called token standards – but what do they mean by that and which token standard is the best? Read on to find out how ERC-1155 works and how it stacks up against ERC-721!
What Are ERC Smart Contracts?
ERC stands for “Ethereum Request for Comments”. These are multipurpose application-level standards for Ethereum that can include token standards, package formats, name registries, and many more. Anyone can make an ERC, but not all of them can catch on and become widely used in the Ethereum community.
When you boil it down, ERC is a standard that defines certain rules on how things work on the Ethereum blockchain network. For instance, the most common one used is the ERC-20 standard. This standard is used to transfer tokens on the Ethereum blockchain from one user to another. Because of its ubiquity, almost all cryptocurrency exchanges support this protocol.
ERC smart contract standards exist as a common list of rules all related tokens and digital assets must follow. Think of ERC standards as “blueprints” for token development. These standards help developers predict the function of their new tokens in the Ethereum ecosystem, saving them a lot of time from having to repeat the token development process from scratch.
Some notable examples of ERC smart contracts include:
- ERC-20: This is the most popular fungible token standard that allows users to transfer and check their balance.
- ERC-223: This standard fixes a design flaw to prevent accidental loss on token transfers between users. ERC-827 also offers similar loss prevention functionality.
- ERC-721: The first non-fungible asset standard. Different from ERC-20, this protocol governs the use of non-fungible and non-exchangeable digital assets.
- ERC-1238: This is a token standard that governs the use of badges – non-fungible and non-transferrable tokens assigned to a certain user. Once assigned, this badge cannot be removed from its assignee.
- ERC-1400 & ERC-1404: The token standard for security tokens that represent real-world assets on the blockchain.
What Is The ERC-721 Token Standard?
ERC-721 Overview And Basic Functions
The ERC-721 token standard is the primary standard for NFTs. Non-fungible tokens that use the ERC-721 standard are made unique due to their age, rarity, or visuals.
The ERC-721 standard was first proposed by Dieter Shirley, Jacob Evans, Nastassia Sachs, and William Entriken in 2017. It was first introduced to facilitate the development of CryptoKitties, an NFT project that features randomly generated kittens that owners can trade.
This token provides functionalities such as:
- Record the address of the token owner so others can see who owns a certain token.
- Transfer a single asset from the owner to another user.
- Grant approval to another entity (i.e. NFT exchanges) to transfer NFTs between accounts.
- Keep track of every NFT owned by a certain user.
Characteristics Of ERC-721
Being the most widely-used standard for minting NFTs, the ERC-721 non-fungible token standard boasts several key characteristics that make it perfect for NFT minting. These characteristics are:
- ERC-721 tokens are one-of-a-kind – meaning that they cannot be exchanged for anything of equal value.
- Each token contains the value of the art piece attached to the token.
ERC-721 Token Standard Use Cases
Since NFTs are all one-of-a-kind, there are many uses of ERC-721 contracts in the digital world and the real world. Here are some of them:
- Art: This is possibly the most common use of ERC-721 or non-fungible tokens. NFTs were first applied to digital art and the term “NFT” has almost become synonymous with digital art.
- Real estate and other physical assets: NFTs can also be used to represent real-world properties, allowing easier transfer of ownership rights from one person to another.
- Event tickets: Unique tokens for sporting event or music concert tickets means that only token holders can enter the event, preventing ticket fraud and scalpers.
- Anti-piracy measures: NFTs can also be used in software licensing to prevent piracy and ensure the privacy of owners.
What Is The ERC-1155 Token Standard?
Overview And Basic Functions
The proposal for ERC-1155 was first created in 2018 by the team at Enjin consisting of Witek Radomski, Andrew Cooke, Philippe Castonguay, James Therien, Eric Binet, and Ronan Sandford. This token standard was proposed by this blockchain developing company because it sees that the existing ERC-721 and ERC-20 tokens aren’t flexible enough.
At its core, ERC-1155 is a token standard that can hold multiple tokens within a single contract, regardless of token type. Enjin describes ERC-1155 contracts as vending machines – big containers that can hold many different items.
Some basic functions included in ERC-1155 are:
- Transfer multiple digital assets in a single transaction.
- Check the balance of multiple assets simultaneously.
- Approve transactions of multiple tokens to a certain address.
- Automatic NFT detection – if there is only one token supplied, it will be treated as an NFT.
Characteristics of ERC-1155
When summarized, the key characteristics in the ERC-1155 token standard are:
- ERC-115 can represent fungible, semi-fungible, and non-fungible tokens at the same time.
- ERC-1155 can function similarly to ERC-20 and ERC-721 simultaneously.
- ERC-1155 supports an infinite number of tokens, unlike ERC-721 that needs a new smart contract for every token.
- ERC-1155 can perform batch transfers.
ERC-1155 Token Standard Use Cases
As a non-fungible token standard, ERC-1155 offers more flexibility than ERC-20 and ERC-721 because it can manage both fungible and non-fungible tokens together. Some proven use cases for ERC-1155 include:
- Online gaming: The ERC-1155 standard is perfect for the NFT-based gaming industry because it can hold multiple token types at the same time. An example of its application is that your health, game coin, and ammunition can be saved as fungible items, while your weapons and unique items can be stored as non-fungible tokens.
- Digital content: ERC-1155 can be used in packaged digital contents that contain different things. For example, an artist can sell a package that contains the original NFT, limited-edition reproductions, and non-exclusive pieces made available for everyone in a single batch token transfer.
What Are The Major Differences Between ERC-1155 vs ERC-721?
So what sets apart ERC-1155 and ERC-721? Both smart contract standards can be used for NFTs, but they have some fundamental differences between them. Here are three of the most prominent differences between the two standards:
ERC-721 is exclusively used to handle single NFTs. If you’re planning to issue 100 NFT pieces with ERC-721, it means you need to create 100 smart contracts. Meanwhile, the ERC-1155 standard allows you to issue infinite tokens with one contract.
Moreover, ERC-721 is limited to NFTs. With ERC-1155, you can also issue fungible elements and semi-fungible tokens alongside your NFTs.
The ERC-721 standard is notorious for its high gas fees and long transfer time, especially if you’re trading multiple tokens at the same time. ERC-1155 boasts low gas costs because you can just have one smart contract for multiple items.
When creating an ERC-721 NFT, you need to fill out details on every single one of them, which takes a lot of time. However, ERC-1155 lets you input the same set of details for your entire collection through its smart contract interface, saving you a lot of time.
While both the ERC-721 and ERC-1155 smart contract standards are created to handle NFTs, there are some fundamental differences between them. ERC-1155’s flexibility and ability to contain multiple tokens at once helps make it a better option if you’re planning to create more than one NFT.
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