Understanding Ethereum Token Standards: ERC-20, ERC-721, and ERC-1155

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Ethereum has revolutionized the digital economy by enabling decentralized applications and programmable digital assets. At the heart of this innovation are token standards—agreed-upon rules that define how tokens behave on the blockchain. The most widely adopted among them are ERC-20, ERC-721, and ERC-1155. These standards shape how we create, manage, and interact with digital assets, from cryptocurrencies to non-fungible tokens (NFTs).

This guide breaks down each standard with clear explanations, use cases, and practical code examples—helping developers and enthusiasts understand their differences, strengths, and real-world applications.

What Is an ERC Token Standard?

An ERC (Ethereum Request for Comment) is a technical document proposing improvements to the Ethereum network. Once accepted, these become standards that ensure interoperability across wallets, exchanges, and dApps.

The three core token standards—ERC-20, ERC-721, and ERC-1155—serve distinct purposes:

👉 Discover how token standards power next-gen blockchain applications

ERC-20: The Foundation of Fungible Tokens

Key Features

ERC-20 is the most widely used token standard on Ethereum. It was introduced in 2015 and formalized in 2017, becoming the backbone of initial coin offerings (ICOs) and decentralized finance (DeFi).

Core Characteristics:

Standard Methods

The ERC-20 interface includes six essential functions:

totalSupply()        // Returns total token supply
balanceOf(address)   // Checks account balance
transfer(to, amount) // Sends tokens to another address
approve(spender, amount) // Authorizes another address to spend tokens
allowance(owner, spender) // Checks approved spending limit
transferFrom(from, to, amount) // Transfers approved tokens

These methods ensure compatibility across wallets, exchanges, and smart contracts.

Sample Implementation Using OpenZeppelin

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";
import "@openzeppelin/contracts/access/Ownable.sol";

contract MyToken is ERC20, Ownable {
    constructor(address initialOwner) ERC20("MyToken", "MTK") Ownable(initialOwner) {}

    function mint(address to, uint256 amount) public onlyOwner {
        _mint(to, amount);
    }
}

This minimal contract creates a custom fungible token with minting capability restricted to the owner.

Use Cases

ERC-721: The Birth of Non-Fungible Tokens (NFTs)

What Makes ERC-721 Unique?

ERC-721 introduced the concept of non-fungibility on Ethereum. Each token is unique and indivisible, representing ownership of a specific digital or physical asset.

Core Features:

Key Functions

balanceOf(address)           // Number of NFTs owned
ownerOf(tokenId)             // Current owner of a specific NFT
approve(to, tokenId)         // Approve a single NFT transfer
getApproved(tokenId)         // Check current approval
setApprovalForAll(operator, approved) // Approve all NFTs to an operator
isApprovedForAll(owner, operator)     // Verify bulk approval status
transferFrom(from, to, tokenId)       // Transfer ownership
safeTransferFrom(...)                 // Safe transfer with receiver checks

Example: Creating an NFT Collection

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import "@openzeppelin/contracts/token/ERC721/ERC721.sol";
import "@openzeppelin/contracts/access/Ownable.sol";

contract MyNFT is ERC721, Ownable {
    uint256 private _nextTokenId;

    constructor() ERC721("MyNFT", "MNFT") Ownable(msg.sender) {}

    function safeMint(address to) public onlyOwner {
        uint256 tokenId = _nextTokenId++;
        _safeMint(to, tokenId);
    }
}

This contract allows the owner to mint new NFTs with incrementing IDs.

Real-World Applications

👉 Learn how NFTs are transforming digital ownership today

ERC-1155: The Multi-Token Revolution

Why ERC-1155 Stands Out

Developed by Enjin in 2018, ERC-1155 combines the best of both worlds: it supports fungible, non-fungible, and even semi-fungible tokens within a single smart contract.

Advantages Over ERC-20 and ERC-721:

Core Interface

balanceOf(address, id)               // Balance of a specific token ID
balanceOfBatch(addresses[], ids[])   // Batch balance query
setApprovalForAll(operator, approved) // Approve all token types
isApprovedForAll(owner, operator)     // Check approval status
safeTransferFrom(from, to, id, amount, data) // Single transfer
safeBatchTransferFrom(...)            // Transfer multiple tokens at once
mint(account, id, amount, data)       // Create new tokens
mintBatch(to[], ids[], amounts[], data) // Create multiple tokens
burn(account, id, amount)             // Destroy tokens
burnBatch(account, ids[], amounts[])  // Destroy multiple tokens

Sample Contract for Game Assets

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import "@openzeppelin/contracts/token/ERC1155/ERC1155.sol";
import "@openzeppelin/contracts/access/Ownable.sol";

contract GameAssets is ERC1155, Ownable {
    constructor() ERC1155("") Ownable(msg.sender) {}

    function setURI(string memory newuri) public onlyOwner {
        _setURI(newuri);
    }

    function mint(address account, uint256 id, uint256 amount, bytes memory data)
        public
        onlyOwner
    {
        _mint(account, id, amount, data);
    }

    function mintBatch(address to, uint256[] memory ids, uint256[] memory amounts, bytes memory data)
        public
        onlyOwner
    {
        _mintBatch(to, ids, amounts, data);
    }
}

This contract can represent everything from gold coins (fungible) to legendary swords (non-fungible) in a single deployment.

Ideal Use Cases

Frequently Asked Questions (FAQ)

Q: What’s the main difference between ERC-20 and ERC-721?

A: ERC-20 tokens are fungible—each is identical and interchangeable—making them suitable for currencies. ERC-721 tokens are unique and non-fungible, ideal for representing one-of-a-kind digital assets like artwork or collectibles.

Q: Can ERC-1155 replace ERC-20 and ERC-721?

A: While ERC-1155 is more flexible and efficient for managing multiple asset types, it doesn't fully replace the others. Many platforms still rely on ERC-20 and ERC-721 due to widespread support and simplicity.

Q: Are NFTs always based on ERC-721?

A: Not necessarily. While most early NFTs used ERC-721, many modern projects now use ERC-1155, especially when dealing with multiple similar items (e.g., trading cards). ERC-1155 reduces costs and improves scalability.

Q: How do I choose which standard to use?

A: Choose based on your use case:

Q: Do these standards work outside Ethereum?

A: Yes! These standards have been adopted by other EVM-compatible blockchains like BNB Chain, Polygon, Avalanche, and OKX Chain—ensuring broad interoperability.

Final Thoughts

Understanding ERC-20, ERC-721, and ERC-1155 is essential for anyone building or investing in the Web3 space. Each standard serves a vital role:

As blockchain evolves, so will these standards—driving innovation in gaming, finance, identity, and beyond.

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