Smart contract and token standards exist to support basic functionality on the Ethereum blockchain space, like allowing users to trade digital assets and make atomic swaps. That said, every type of token or smart contract standard can only execute pre-programmed tasks, and changing or amending the code is extremely difficult.
As a result of this planned inefficiency, blockchain enthusiasts continuously develop various token types to unlock additional functions on the Ethereum network. That’s where the ERC-875 and ERC-721 standards come in.
These two conventions were built upon the existing ERC-20 token standard, which helps deploy smart contracts for blockchain projects. But just because these protocols use the same foundation does not mean they’re identical.
So, how do they differ, and which optional functions do they bring to the table? Keep reading to find out more about these two standards for cryptocurrency tokens.
What Are ERC Token Standards?
Before diving into the differences between ERC-875 and ERC-721, it’s essential to define ERC token standards as these digital tokens support all functionality across the blockchain ecosystem. Let’s start by comparing and defining smart contract and token standards.
Smart Contract Standards vs Token Standards
The advent of blockchain technology has brought the idea of a decentralized digital economy to the forefront, which is made possible by smart contracts. These contracts are chunks of code that improve on the original functionalities of the blockchain. In addition, they contain detailed descriptions and parameters for the planning and development of blockchain applications and projects.
On the other hand, token standards are a subset of smart contract standards. These protocols act as the “interface” between the code and other applications and crypto assets on the blockchain.
But how does this relate to ERC standards? The answer is that these standards come together in a comprehensive ERC document containing both the technical details and how it’s supposed to interact with other blockchain games and apps.
ERC vs EIP
ERC stands for “Ethereum Request for Comment”, which may be familiar to individuals with prior coding knowledge. As the name suggests, these ERCs are the product of peer evaluation or “comments”.
Anyone can propose an ERC, but it has to start as an EIP or an Ethereum Improvement Proposal. Then, the EIP must pass through several rounds of approval by an appointed committee before being used as an ERC.
What Is The ERC-721 Token Standard?
If you’ve heard of NFTs (Non-Fungible Tokens), then you’ve seen the ERC-721 standard in action. This type of token can turn any JPEG, video, or 3D model into a valuable financial asset, but how is this achieved? Without getting too technical, it borrows functions from the ERC-20 standard while also adding optional tasks addressing rarity and value.
This is attributed to the “non-fungible” nature of this type of token, which means it’s unique and can’t be swapped out for anything else. However, the real value of a non-fungible token is in its perceived rarity, which artists can leverage to make a considerable profit. So, while many people joke about simply saving an NFT’s art assets, only the actual owner would be holding the rights to it.
The implementations of ERC-721 are far and wide as of 2022. The gaming industry, sports industry, and even the real estate industry are dipping their toes into this new type of technology.
However, today’s primary application of ERC-721 is selling and trading artwork on-blockchain. A few notable examples of successful non-fungible token projects are CryptoPunks, Bored Ape Yacht Club, and generative project Squiggles.
What Is The ERC-875 Token Standard?
Before we begin, it’s important to note that the term “token standard” doesn’t correctly represent ERC/EIP-875. That’s because this EIP was withdrawn in 2021, long after Dieter Shirley drafted it. However, despite its withdrawal, EIP-875 was still an exciting project because it sought to fix one of the most significant trading issues on the blockchain: gas fees.
It intended to remedy this significant issue by hosting “bids” for a specific transaction off-chain, meaning that users wouldn’t have to pay gas fees yet. The seller would have to cryptographically “sign” a message containing the price of their NFT and its expiration date, but this would only have been transmitted to the blockchain when a single transaction was about to occur. That meant sellers didn’t need to pay gas fees to list or update their items.
This proposed system also meant that buyers could purchase NFTs without any cryptocurrency in their wallets. Hypothetically, they could’ve even made purchases with cash or credit cards, even for gas fees. The protocol would have automatically made an atomic swap for the necessary currency.
There was a lot of potential in the ideas behind ERC-875, but it simply didn’t pass the community’s standards. Some users expressed their concern that this EIP would directly compete with proposals 721, 841, and 821. Additionally, many blockchain developers thought that ERC-875 ignored the majority of improvements made by other submissions in exchange for its capacity to trade fiat for NFTs.
On top of this, the project lost steam due to incomplete documentation and inactivity. Key factors like a gas analysis and sample implementation were lacking or inconsistent, which lost the trust of its supporters. However, the EIP’s authors seem to maintain hope in the project for a later date.
What Are The Differences Between ERC-721 And ERC-875?
Typically, it’s essential to understand the difference between two virtual token standards because they can support different kinds of tasks, but that doesn’t apply in this comparison.
Earlier, we mentioned that ERC-875 was withdrawn shortly after the proposal. With this in mind, it doesn’t make sense to make any comparisons with ERC-721 when trying to find a token standard for your application. For that, you can check out our other ERC-721 comparisons below:
That aside, discussing the intended purpose of ERC-875 vs. the current functions of ERC-721 is still interesting from an enthusiast’s point of view. ERC-875 was built to improve upon the systems imposed by ERC-721, specifically by cutting gas costs and making NFTs more accessible for a broader range of users. This isn’t a bad idea, although many existing ERCs aim to solve the same problem without sacrificing its quality of life improvements.
But how does this type of token compare to the ERC-721 standard? The answer is that ERC-721 cared little about efficiency and cost issues and more about defining NFTs as static and immutable. Both proposals competed for approval at one point, but the more robust 721 came out as the only standard to see real implementation.
That said, ERC-875’s withdrawal demonstrates the true democratic nature of blockchain development. If the community doesn’t believe a specific proposal is helpful or viable, it simply won’t be approved and formalized as an ERC.
The blockchain landscape and its technology appeals to many people because of its democratic nature. Everyone can partake and influence the way things develop, as demonstrated by token and smart contract standards. Furthermore, the open and accessible nature of blockchain development led to both the ERC-721 and ERC-875 standards, although only one out of the two is currently in use.
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