Token standards

Feb 27, 2024 3:14:38 PM

With the possibility for anyone to create their own tokens, standards needed to be established. Standards must be followed because the software that handles tokens, such as wallets and smart-contracts, needs to know the methods such contracts support and how to use them. It is the principle of interoperability.

In general, each has its own standard for its tokens. A standard for fungible tokens on was proposed in late 2015 through Ethereum Enhancement Proposal No. 20. As that proposal became an Ethereum Request for Comments, such a standard is commonly known as ERC20.

Other blockchains compatible with the Ethereum virtual machine, such as Polygon, Avalanche, and BNB Chain, also implemented the ERC20 standard. At BNB Chain, the ERC20 standard is known as BEP20. On Ethereum, any token that implements the ERC20 standard will be easily recognized by any network-compatible wallet.

The network has its own standard. It is defined by , which replaced the NEP-5 standard. It indicates which properties and methods a token contract should have, such as a supply total, a transfer function, and others.

Each network can establish its own standard, that is proposed by a member and approved by the community. New standards may emerge over time, with the need to correct flaws or include improvements. Some proposals gain quick acceptance by the community, while others are put on hold for future opportunities.

In addition to fungible tokens, there are also non-fungible tokens, NFTs, which have their own standards. We will talk about them in another lesson.