Difference between Ethereum ERC-20, ERC-223, ERC-721 and ERC-777
As if understanding Bitcoin is not difficult enough, Ethereum introduces a whole new level of complexity. Even if you have a solid technical background, it will take some time and independent research before everything makes sense-unless you are a genius.
That being said, a basic understanding of how Ethereum works can actually make it easier to understand cryptocurrencies in general. As you can see, Ethereum is a decentralized platform on which smart contracts (using the Solidity programming language) can be written and executed. It is the base layer that supports hundreds of decentralized applications (dApps).
Whenever a new application of blockchain technology and smart contracts is developed on the ether, a new ether token can be created. The simplified aspect of this process is that Ethereum provides a tokenization standard. Different types of applications will be marked according to different standards, depending on the purpose of the application.
Thanks to these standards, smart contracts and token interaction have become easier, so developers can create dapps on Ethereum. You will hear a common analogy to explain this benefit, which is iOS or Android that is similar to dapps in Ethereum-an operating system that supports applications and makes it easy to build.
At present, the most common Ethernet mark standard is the ERC-20 standard, but there are also ERC-223, ERC-721 and ERC-777 standards. This article, will explain each standard and how to use it in a decentralized ecosystem.
What is the ERC-20 token?
The ERC-20 standard used in smart contracts contains only 6 basic functions, which make tokens a reliable function. The code is very simple, you don’t need any computer science knowledge to understand it. Let’s look at it one by one.
The first is the totalSupply() function, which determines the total number of tokens that will be created for exchange in the token economy of a given project.
Then there is the transfer() function, which is used to initially distribute the token to the user’s wallet. This function is the biggest reason why ERC-20 tokens are so popular in ICOs, because when the ICO is completed, it can very easily send tokens to investors.
The transferFrom() function then allows token holders to exchange tokens with each other after the initial distribution. Suppose you want to send some BAT to a friend, this function will get your Ethereum wallet address, the recipient’s Ethereum wallet address and the amount sent, and then execute the transaction.
Next, as the name suggests, the balanceOf() function tracks the token balance in each user’s wallet. It’s very simple.
At the same time, the approve() function is used to ensure that the total supply of tokens in the economy remains unchanged. In other words, the function of this function is to ensure that no one can create additional tokens out of thin air to benefit themselves.
Finally, the allowance() function ensures that the transaction is valid before being added to the blockchain. Whenever the user wants to transfer some tokens to another wallet, the function checks whether the sending address is at least the same as the number specified in the transferFrom() function. If not, the transaction is invalid.
With these 6 functions, it becomes very simple to create new tokens and develop platforms and wallets for them. This standard has been adopted by thousands of different projects. In fact, all projects in the top 20 Ethereum tokens are ERC-20 tokens.
This is the current industry standard l is composed of 6 key token functions l has been used by thousands of different cryptocurrency projects
What is the ERC-223 token?
Although the ERC-20 standard is very useful, it is far from perfect. For example, a particularly bad design flaw of ERC-20 makes the token may be lost, and a particularly bad design flaw with ERC-20s makes the token may be lost. When people send the token to an ordinary wallet, and Sent to a smart contract by mistake. Unfortunately, so far, this has caused the loss of ERC-20 tokens worth more than 3 million U.S. dollars to date.
ERC-223 solves this design flaw by allowing users to transfer tokens to smart contracts and wallets with the same functions. In addition, ERC-223 tokens only need 1 step, not 2 steps, thereby improving the efficiency of ERC-20s. This means that ERC-223 token transmission only needs half the GAS (ie cheaper) compared to ERC-20 transmission.
In addition to this, ERC-223 tokens are backward compatible with ERC-20 tokens, which means that they maintain all the original functions while solving the bugs mentioned above.
Due to these advantages, the ERC-223 standard may one day replace ERC-20 as the most widely used Ethernet marking standard. However, most Ethereum company wallets do not yet support ERC-223 tokens, so the adoption rate by project developers is very slow.
However, considering how fast the cryptocurrency ecosystem is developing, don’t be surprised if ERC-223 tokens become popular in 2019 or even earlier.
- Use the ERC-20 token standard to solve key deficiencies
- Only half the GAS of ERC-20 tokens
- Backwards compatible with ERC-20
- Not yet used by any noteworthy cryptocurrency project
What is the ERC-721 token?
The ERC-721 token became popular at the end of 2017, and this was the first time that the ERC-721 token became famous.
The key difference between the ERC-721 token standard and other ERC standards is that ERC-721 allows developers to easily create non-fungible tokens (NFT). In other words, one token may have a different value than another token exchanged in the same platform/ecosystem.
Non-fungible tokens are very useful because they allow for the tokenization of only a single asset. This includes carefully nurtured digital cats, but also more valuable traditional assets such as art, vintage wine, real estate, diplomas, and so on.
One of the best projects in the Ethereum ecosystem, 0x protocol, is working on adding support for ERC-721 tokens and other new token standards in its v2 version, which is scheduled to be released in late July 2018.
Another high-quality but new, lesser-known project, 0xcert, focuses exclusively on non-fungible tokens and allows anyone to create, own, and verify unique assets on the blockchain. In addition, 0xcert makes it easy for developers to create dapps and smart contracts suitable for various types of unique assets.
As more real assets will be tokenized in the next few years, you can bet that the ERC-721 token standard will be more famous than the encryption standard. From art and music royalties to tickets for the next day, all ownership can be publicly transferred on the blockchain of the Ethereum company. The supply chain can ensure product integrity and traceability at an unprecedented level. The possibilities of ERC-721 are exciting to say the least.
Is a non-fungible token (NFT) can be used to mark a unique single asset
It was originally used by the Ethereum dapp CryptoKitties, but there are many possible applications besides digital games.
What are ERC-777 and ERC-820 tokens?
Similar to ERC-223, ERC-777 aims to improve the ERC-20 token standard and be backward compatible.
One reason ERC-777 is superior to ERC-20 is that, like ERC-223, ERC-223 solves the design flaw that caused more than $3 million in lost tokens. However, the uniqueness of the ERC-777 standard lies in the breadth of transaction processing mechanisms it contains.
In order to explain ERC-777, we must first start with the ERC-820 token standard. In this standard, a central registry of smart contracts is established on the Ethernet network. The registry allows anyone to “check” the smart contract address and check the functions it supports.
ERC-777 uses the same ERC-820 central registry, making smart contract functions easy to verify. It also established a whole new set of functions instead of using the same “transmission” and “approval” functions used in the ERC-20 standard. ERC-777 replaces the above functions and uses the “send” function to transmit the Ethernet itself.
Another important selling point of ERC-777 is that it allows “approved operators”, which means that people can approve smart contracts to move tokens in their own name. This makes ERC-777 highly customizable because it allows people to build additional features on top of the token, such as mixer contracts to improve transaction privacy, or provide emergency recovery in the event of loss of private keys.
In addition, ERC-777 creates a standard for minting and burning tokens, which is very useful according to the specific token economics of the project.
Unfortunately, there are currently no well-known applications built on the ERC-777 token standard for our reference, so it remains to be seen whether the standard will be widely adopted in the future.
Considering that it is more customizable than ERC-20 and reduces transaction friction, almost every application on ERC-20 can benefit from migrating to ERC-777 in the future.
For anyone who really wants to delve into the details, you can find a further explanation of the transaction processing mechanism that is part of the ERC-777 standard in the github repository.
- Use the ERC-20 token standard to solve key deficiencies
- Backwards compatible with ERC-20
- Use the function used to transfer ETH itself to make the transaction smoother
- Allows “approved operators”, making it more customizable than previous standards
Look to the future
The Ethereum platform has not remained static, and the marking standards built on it are not static. Although ERC-20 tokens currently dominate the air-based market, more and more projects should turn to the updated and improved ERC-223 or ERC-777 token standards in the future.
There are already more than 100,000 token contracts in Ethereum (yes, you read that right), and the speed of development shows no signs of slowing down. There is no doubt that most of these tokens will be redundant, useless, and worthless, but some of them may just change the world as we know it.