Ethereum has revolutionized the blockchain space by enabling developers to create smart contracts and digital tokens with diverse functionalities. Central to this innovation are Ethereum Request for Comments (ERC) standards—formal guidelines that define how tokens behave on the Ethereum network. Among the most widely adopted are ERC-20, ERC-721, ERC-1155, and the more recent ERC-3525. These standards ensure interoperability, security, and seamless integration across decentralized applications (dApps), wallets, and exchanges.
But what exactly sets them apart? And why do these distinctions matter in today’s evolving Web3 landscape?
This article breaks down each standard, compares their core features, and helps you understand when to use which—whether you're a developer building a new tokenized asset or an investor evaluating blockchain projects.
What Are EIPs and ERCs?
Before diving into individual token standards, it's important to clarify two foundational terms: EIP and ERC.
An Ethereum Improvement Proposal (EIP) is a design document proposing changes or enhancements to the Ethereum protocol. Once an idea gains community consensus and is formally accepted, it becomes an EIP.
ERC, short for Ethereum Request for Comment, refers to application-level standards, often proposed before becoming official EIPs. For example, ERC-20 started as a community suggestion and was later standardized as EIP-20.
These standards provide blueprints for creating smart contracts—especially tokens—so that they can interact predictably with wallets, exchanges, and other dApps.
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What Is ERC-20? The Foundation of Fungible Tokens
Introduced in 2015 by Ethereum co-founder Vitalik Buterin and others, ERC-20 is the most widely used token standard on Ethereum. It defines a set of rules for fungible tokens—digital assets where each unit is identical and interchangeable, like traditional currencies.
For example, one DAI is always equal to another DAI, just as one dollar equals another dollar.
Core Functions of ERC-20
The ERC-20 interface includes essential functions such as:
totalSupply()– Returns the total number of tokens in circulation.balanceOf(address)– Checks the token balance of a specific wallet.transfer(address, uint256)– Enables users to send tokens to another address.approve(address, uint256)andtransferFrom()– Allow third-party spending with permission (useful for decentralized exchanges).
Because of its simplicity and broad adoption, ERC-20 became the go-to standard for launching utility tokens, stablecoins (like USDT and USDC), and initial coin offerings (ICOs).
However, its limitations became apparent as use cases expanded beyond simple payments—especially in areas like gaming and digital collectibles.
ERC-721: The Rise of Non-Fungible Tokens (NFTs)
While ERC-20 handles interchangeable tokens, ERC-721 introduced support for non-fungible tokens (NFTs)—unique digital assets where no two tokens are alike.
Each ERC-721 token has a distinct identifier (tokenId) tied to a specific owner. This makes them ideal for representing ownership of digital art, virtual real estate, in-game items, or even real-world assets.
Key Features of ERC-721
- Every token is unique and indivisible.
- Ownership is tracked individually per token.
- Supports metadata (e.g., image URL, attributes) via optional extensions.
- Enables secure peer-to-peer trading of rare or limited-edition assets.
Popular NFT collections like CryptoPunks and Bored Ape Yacht Club were built using ERC-721.
Despite its success, managing large-scale NFT projects revealed inefficiencies—especially when dealing with semi-fungible items (e.g., multiple copies of the same in-game sword). That’s where ERC-1155 comes in.
ERC-1155: The Multi-Token Standard
Developed by Enjin, ERC-1155 is a significant evolution that allows a single smart contract to manage multiple token types, including both fungible and non-fungible tokens.
This means developers can issue 1 million identical game coins and 10 unique legendary weapons—all within one contract.
Advantages Over ERC-20 and ERC-721
- Gas efficiency: Reduces transaction costs by batching transfers of different token types.
- Flexibility: Supports fungible, non-fungible, and semi-fungible tokens.
- Improved UX: Users can approve one contract for all token types instead of interacting with multiple contracts.
For example, in a blockchain game, a player could transfer gold coins (fungible), upgrade materials (semi-fungible), and a unique avatar (non-fungible) in a single transaction.
👉 Explore how multi-token standards streamline Web3 experiences
ERC-3525: The Smart Contract-Powered Token Standard
While ERC-1155 improved efficiency, ERC-3525 takes tokenization further by introducing "soulbound" or structured tokens with embedded logic—essentially making tokens more like mini smart contracts.
Unlike traditional tokens that only track balance and ownership, ERC-3525 tokens can store complex data fields and support state transitions—similar to how objects work in object-oriented programming.
How ERC-3525 Differs from ERC-1155
| Feature | ERC-1155 | ERC-3525 |
|---|---|---|
| Token Type | Fungible / Non-Fungible | Semi-fungible with structure |
| Data Model | Flat (ID + balance) | Structured (key-value slots) |
| Programmability | Limited | High (supports internal logic) |
| Use Case | Gaming, NFTs | DeFi derivatives, insurance policies |
In practical terms, ERC-3525 is ideal for representing complex financial instruments like staking positions, bonds, or insurance contracts—where each token carries not just value but also behavioral rules.
For instance, a staking derivative could automatically accrue interest over time or adjust based on market conditions—all encoded directly into the token.
Frequently Asked Questions
Q: Can I transfer ERC-721 tokens using an ERC-20 wallet?
A: Most modern crypto wallets support multiple token standards. As long as the wallet recognizes the contract address and symbol, you can view and transfer both ERC-20 and ERC-721 tokens.
Q: Is ERC-1155 replacing ERC-721?
A: Not entirely. While ERC-1155 offers greater efficiency for certain use cases (like gaming), ERC-721 remains preferred for pure NFT collections due to its simplicity and widespread tooling support.
Q: Are ERC-3525 tokens transferable?
A: Yes, but with caveats. While they can be transferred, their complexity means platforms must understand their internal structure to process them correctly—making adoption slower than simpler standards.
Q: Which standard should I use for my project?
A: Choose based on your asset type:
- Use ERC-20 for currencies or utility tokens.
- Use ERC-721 for unique collectibles.
- Use ERC-1155 for games or multi-token systems.
- Use ERC-3525 for structured financial products or dynamic assets.
Q: Do all exchanges support these standards?
A: Major exchanges like OKX support ERC-20 and ERC-721 widely. ERC-1155 support is growing, especially in NFT marketplaces. ERC-3525 is still emerging and may require custom integration.
👉 See which token standards are supported on leading platforms
Conclusion
Understanding the differences between ERC-20, ERC-721, ERC-1155, and ERC-3525 is crucial for anyone involved in blockchain development or digital asset investment. Each standard serves a distinct purpose:
- ERC-20 powers the world of fungible tokens.
- ERC-721 enables digital ownership through NFTs.
- ERC-1155 streamlines multi-token ecosystems.
- ERC-3525 paves the way for programmable, structured assets.
As Web3 evolves, so too will token standards—driving innovation in DeFi, gaming, identity, and beyond. Staying informed ensures you're prepared to leverage the right tools at the right time.