Smart Contracts are simply programs stored on a blockchain that run when predetermined conditions are met.
Codified Smart Contract are “if/when…then…” statements that are written into code on a blockchain.
Examples of Codified Smart contracts are Ethereum and AAVE
Are you an Ethereum blockchain developer or an entrepreneur planning to issue Ethereum-based tokens? You might be looking around to find what ERC standards mean and how they matter to you.
An Ethereum Request for Comments (ERC) is a document that smart contract programmers using the Ethereum blockchain platform write. Additionally, they describe rules in these documents that Ethereum-based tokens must comply with.
The Ethereum community accepts some of these documents after working through the EIP processes, finalizes them, and then developers implement them. This is how the document becomes an ERC. ERCs originate as EIPs and could address diverse areas, e.g., tokens and registration names.
Examples of ERC Standards
1. ERC20 Standard- The Most Popular Token Standard
ERC20 refers to a scripting standard used within the Ethereum blockchain. This technical standard dictates several rules and actions that an Ethereum token or smart contract must follow and steps to be able to implement it.
Besides, it is perhaps easiest to think of ERC20 as a set of basic guidelines and functions that any new token created in the Ethereum network must follow. It is a fungible token standard. This means that two coins of any token built on it have the same value at a given time.
2. ERC-721 Standard- The Standard for NFTs
ERC-721 is a token standard on Ethereum for non-fungible tokens (NFTs). Fungible means interchangeable and replaceable; Bitcoin is fungible because any Bitcoin can replace any other. Each NFT, on the other hand, is unique. One NFT cannot replace another.
3. ERC-777 Standard-Reduces Friction in Crypto Transactions
ERC-777 is a proposed standard that includes a function to identify the receipt of tokens and start a smart contract immediately after the first transaction. While lowering the transaction overhead, it also allows a user to reject incoming tokens from a blacklisted address.
The blacklisting of an address can be for various reasons, such as hacking or illegal activities. As such, the ability to decline payment from such an address improves the security position of an Ethereum DApp.
ERC-777 upholds all strengths of ERC 20. Besides, OpenZeppelin has already implemented ERC-777 to build, automate, and operate decentralized applications.
4. ERC-1155- The Most Advanced NFT
ERC 1155 solves all the major issues of ERC20 and ERC-721 — the former best token standards for non-fungible tokens. For ERC-1155, users can create multiple tokens in a single contract. Also, you can use ERC-1155 for fungible and non-fungible use cases. These traits make ERC1155 better at storage management, efficient, and budget-friendly.
Final Thoughts
The Ethereum ecosystem keeps flourishing because it made room for upgrades, and through that, several ERC standards have been approved to improve the Ethereum ecosystem.
There are several other token standards — apart from the ERC standards. For example, the NEP5 token from NEO is very similar to ERC20 and ERC223. Also, each of these token standards has different purposes, advantages, and disadvantages.
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