It is impossible to be interested in smart contracts and not encounter ERC-20 tokens. We at BeFund know how to work well with this phenomenon in the world of the Ethereum blockchain, so we want to do two things at once:
- Just to explain what ERC-20 tokens are;
- Share the experience of our team on their application for our customers.
So make yourself comfortable, let’s not get distracted by various little things.
The standard that fixed the rules
At the moment, no one knows the exact number of tokens created, as well as the various blockchains in which they are located. It is clear that programmers used common principles and knowledge to create tokens, but used completely different methods and approaches. This whole process can be rightly described with the word “chaos”. And where there is chaos, humanity always tries to establish order. This is how ERC-20 tokens appeared in the Ethereum blockchain.
On November 19, 2015, on the Ethereum blockchain website, in the “Ethereum Improvement Proposals” section, the then 31-year-old developer Fabian Vogelsteller posted a proposal to standardize the creation of replacement tokens. Officially, the protocol for such requests is called “Ethereum Request for Comments”, or ERC for short. Vogelshter’s proposal received serial number 20 and was soon accepted and approved by the creator of Efir, Vitalik Buterin. This is actually the whole secret of the strange abbreviation ERC-20.
However, the impact from the implementation of the standard gave smart contracts on Ethereum an incredible boost, as it greatly simplified and systematized the work of developers. Simply put, ERC-20 is a set of rules to follow when creating new smart contracts. Such tokens can be stored at the same address on the Ethereum network. That is why the ability to create tokens without the need to run a separate blockchain practically freed the hands of all developers.
In turn, Ethereum broke the rules of Bitcoin “1 network – 1 token” and became the first blockchain platform in the world, where an unlimited number of tokens and smart contracts could function and interact with each other at the same time. It is comparable in scale to the Great Industrial Revolution, only in the web3 world.
Main features of the standard
ERC-20 provides a list of 9 options: 6 of them are mandatory, 3 are optional, but recommended in any case. Among the mandatory:
- totalSupply — required for the total emission of digital assets, regulates the ban on the creation of new coins when their number reaches a maximum;
- balance0f — indicates the priority number of tokens fixed at a specific address of the ICO organizers;
- transfer — a guarantee of the transfer of tokens to investors who have invested resources at the ICO stage;
- transferFrom — used for payment transactions between different users, allows you to distribute currency between them;
- approve — required to check the possibility of execution under a smart contract;
- allowance — checks the compliance of the balance at a specific address with the amount of the desired transfer.
The availability of information based on this data allows maintaining a single code base that interacts with any token of the ERC-20 standard. Optional parameters include the name of the token, its ticker (a unique abbreviation of letters, for example BTC for Bitcoin), and the maximum number of decimal places in fractional numbers. As you can see, you can still work without the latest features. And the presence of the main ones allows you to perform the main operations with the token: creation and exchange.
BeFund experience
Today, the ERC-20 standard is the most popular in the world in general, and in the Ethereum blockchain in particular. Since the tokens of this standard are interchangeable, our team applied the creation rules in most projects with smart contracts. We have experience using the standard to create game tokens that are used by players within a closed game system and grow in value as you progress through the game. Also, our developers implemented a project of automated smart contracts for a company that provides all types of real estate services and much more.
Although ERC-20 is the most popular, it is far from the only standard. Over time, Vogelshter’s brilliant idea was also improved and supplemented by fresh thoughts of subsequent generations of smart contract developers. Each of them also came from the “Ethereum Improvement Proposals” section, which means it was marked with the letters ERC and another number assigned by the system.
Of course, there are many updates to the standard. But the purpose with which these updates were created is important here. Usually, such standards are derived from ERC-20, but contain specific functions aimed at solving specific tasks. In accordance with the requests of our customers, the developers of BeFund used the following standards:
- ERC-223 — used in a startup project in the field of finance. This standard was approved to improve usability, which is important for novice developers. With its help, you can minimize the probability of accidental transfer of tokens. Our team implemented the smart contract required by customers and handed it over for further independent development;
- ERC-621 — used to develop a loyalty system in an eCommerce project. This standard has special tools for regulating the total number of tokens. Due to their increase or decrease, our customers manage marketing campaigns in their own business;
- ERC-721 is a standard that rose to prominence after the rise of NFTs. It is necessary for the creation of non-interchangeable tokens, which are actually the works of art of artists. BeFund participated in the launch of several NFT collections, so the use of the standard was mandatory for the implementation of the technical task;
- ERC-1155 is an enhanced version of the previous standard. Its feature is the ability to store both non-fungible and fungible tokens in one smart contract. Our team implemented a special project where both assets (artwork) and the necessary tokens confirming ownership rights exist.
So, as you can see, ERC standards are created to implement any business ideas of modern progressive people. For this, the very first version of the standard is quite enough, but if the smart contract you need requires special conditions, BeFund specialists are able to choose the one that will suit the project as best as possible. Contact our managers for detailed consultation and let’s get more benefit from implemented blockchain projects!
