Introduction
Ethereum’s smart contract capabilities have given rise to different token standards that define how digital assets function on the blockchain. The three most important standards are:
- ERC-20 (For fungible tokens like cryptocurrencies)
- ERC-721 (For non-fungible tokens/NFTs)
- ERC-1155 (Hybrid standard for both fungible and non-fungible tokens)
This guide explains each standard’s technical differences, use cases, and real-world applications to help developers and crypto enthusiasts understand Ethereum’s token ecosystem.
1. ERC-20: The Standard for Fungible Tokens
What is ERC-20?
ERC-20 is the most widely adopted token standard for fungible tokens (interchangeable assets with identical value).
Key Features
- Uniform Value – 1 token = 1 token (like dollar bills)
- Widely Supported – Used by most exchanges and wallets
- Basic Functions –
transfer(),balanceOf(),approve()
Required Functions in ERC-20 Contracts
solidity
function totalSupply() public view returns (uint256); function balanceOf(address _owner) public view returns (uint256); function transfer(address _to, uint256 _value) public returns (bool); function approve(address _spender, uint256 _value) public returns (bool); function transferFrom(address _from, address _to, uint256 _value) public returns (bool);
Use Cases
- Cryptocurrencies (USDT, USDC, LINK)
- Utility tokens (BAT, UNI)
- Governance tokens (AAVE, COMP)
Pros & Cons
| Pros | Cons |
|---|---|
| Simple to implement | Only supports fungible tokens |
| High compatibility | No batch transfers (inefficient) |
| Used by 500,000+ tokens | Basic functionality only |
2. ERC-721: The NFT Standard
What is ERC-721?
ERC-721 is the standard for non-fungible tokens (NFTs)—unique digital assets with distinct properties.
Key Features
- Unique Tokens – Each token has a different value
- Metadata Support – Stores additional data (images, attributes)
- Ownership Tracking – Verifiable on-chain ownership
Required Functions in ERC-721 Contracts
solidity
function balanceOf(address _owner) external view returns (uint256); function ownerOf(uint256 _tokenId) external view returns (address); function safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes data) external payable; function approve(address _approved, uint256 _tokenId) external payable;
Use Cases
- Digital art (CryptoPunks, Bored Apes)
- Collectibles (NBA Top Shot)
- Gaming assets (Axie Infinity)
- Real-world asset tokenization (real estate, patents)
Pros & Cons
| Pros | Cons |
|---|---|
| Enables true digital ownership | Higher gas fees than ERC-20 |
| Supports rich metadata | Only for non-fungible assets |
| Used by major NFT projects | More complex to implement |
3. ERC-1155: The Multi-Token Standard
What is ERC-1155?
ERC-1155 is a hybrid standard that supports both fungible and non-fungible tokens in a single contract.
Key Features
- Multi-Token Support – Fungible, non-fungible, and semi-fungible
- Batch Transfers – Save gas by sending multiple tokens at once
- Efficient – Reduces contract deployment costs
Required Functions in ERC-1155 Contracts
solidity
function balanceOf(address _owner, uint256 _id) external view returns (uint256); function balanceOfBatch(address[] calldata _owners, uint256[] calldata _ids) external view returns (uint256[] memory); function safeTransferFrom(address _from, address _to, uint256 _id, uint256 _value, bytes calldata _data) external; function safeBatchTransferFrom(address _from, address _to, uint256[] calldata _ids, uint256[] calldata _values, bytes calldata _data) external;
Use Cases
- Gaming (Enjin for in-game items)
- Fractionalized NFTs
- Enterprise token systems (loyalty points + NFTs)
- DeFi protocols with multiple asset types
Pros & Cons
| Pros | Cons |
|---|---|
| Supports all token types | Less adoption than ERC-20/721 |
| Massive gas savings | More complex development |
| Ideal for gaming/metaverse | Fewer wallet integrations |
Comparison Table: ERC-20 vs ERC-721 vs ERC-1155
| Feature | ERC-20 | ERC-721 | ERC-1155 |
|---|---|---|---|
| Token Type | Fungible | Non-Fungible | Both |
| Batch Transfers | No | No | Yes |
| Gas Efficiency | Medium | Low | High |
| Metadata Support | Basic | Advanced | Advanced |
| Use Cases | Cryptocurrencies | NFTs | Gaming, Multi-Token Systems |
| Adoption | Very High | High | Growing |
Which Token Standard Should You Use?
Choose ERC-20 If:
- You’re creating a cryptocurrency or utility token
- You need maximum compatibility with exchanges/wallets
- Your tokens are identical in value
Choose ERC-721 If:
- You’re creating unique digital assets (NFTs)
- Each token has distinct properties/value
- You need verifiable ownership (art, collectibles)
Choose ERC-1155 If:
- You need both fungible and non-fungible tokens
- Gas efficiency is critical (gaming, metaverse)
- You want to manage multiple token types in one contract
Conclusion
Ethereum’s token standards enable different types of digital assets:
- ERC-20 → The backbone of DeFi and cryptocurrencies
- ERC-721 → Powering the NFT revolution
- ERC-1155 → The future of efficient multi-token systems
As blockchain technology evolves, ERC-1155 is gaining traction for its flexibility, while ERC-721 remains dominant for NFTs. Developers should choose based on their specific use case.