An Ethereum Request for Token (ERC) token standard is a framework for smart contract development on the Ethereum network. It defines the core properties of a blockchain token. Many of us are only aware of the ERC-20 token standard, but it's not the only one. In this article, we explore more novel ERC token standards that enhance the overall functionality of the Ethereum ecosystem.
Developers can ensure the interoperability of their tokens with other tokens in the Ethereum network. ERC token standards play a critical role in creating the Ethereum ecosystem. They cover protocols, including token ownership, token transfer functions, smart contract security, and more.
Let us understand some of the latest standards listed below:
ERC-165 is an Ethereum Improvement Protocol (EIP) that defines and publishes what standard interfaces a smart contract implements. It regulates the identification and detection of interfaces. DApps and smart contracts can detect whether another contract or dApp deploys a particular interface or set of interfaces using ERC-165.
The standard facilitates more efficient interaction between dApps and smart contracts on the Ethereum network. This standardized way of checking function implementation of smart contracts helps developers to build interoperable dApps ad smart contracts.
ERC-165 describes supportsInterface, an interface that takes a 4-byte interface ID as input and gives a boolean value specifying whether the contract executes the interface. This interface implementation enables a smart contract to state the interfaces it supports.
ERC-165 assists in making a more modular and interoperable ecosystem of smart contracts and dApps.
Check It Out | A Quick Guide to Ethereum ERC Token Standards
ERC-621 is an add-on to the ERC-20 token standard. It provides the functionality of burning tokens or redeeming them for another asset. ERC-621 adds functions to increase and decrease the total supply of tokens in circulation. This functionality can help token issuers to manage the token economy and ensures price stability.
A crypto project can burn its ERC-621 tokens by sending them to a designated burn address. This process eliminates those tokens from circulation permanently. It decreases the total supply of tokens and possibly increases their value.
Token holders can use this standard to redeem tokens for another asset, including fiat currency or crypto. Users can easily trade their tokens in exchange for other assets. So, redeeming tokens gives the users more utility and flexibility.
This ERC token standard enables enterprises to create tokens for loyalty programs and develop stablecoins.
Also, Read | ERC-20 Token Standard | Things You Must Know
ERC-827 is another extension of the ERC-20 token standard. It adds support for additional transaction data. It enables token transfer and the approval by the holder to spend by a third party.
This standard is applicable when dealing with complex transactions. Additionally, it is ERC-20 compatible.
One can use this standard to specify added data about the transaction, such as an invoice ID or a reference number. This functionality enables easier token integration into existing financial applications and systems.
ERC-827 standard support the "approveAndCall" function that lets token holders accept the token transfer and trigger a function call in a single transaction.
Businesses can use this standard in the case of smart contracts and dApps, where one has to take multiple actions in a single transaction. ERC-827 offers an extensible token standard for the Ethereum network.
Also, Read | The Increasing Inevitability of Hybrid Smart Contract Development
ERC-884 token standard enhances the performance of ERC-20 and ERC-721 standards. It adds support for assets' fractional ownership. ERC-884 tokens denote a portion of a prime asset that a holder can transfer like other tokens.
ERC-884 standard gives the functionality to create new types of investment opportunities and financial resources. Additionally, it offers more transparency and liquidity for asset ownership.
ERC-865 token standard aims to enhance user experience and minimize transaction costs related to the token transfer. Unlike ERC-20 and ERC-223 standards, ERC-865 permits token exchanges to be purchased by parties other than the sender. It enables users to send tokens without covering the associated gas costs, which might be advantageous for dApps and other services that demand a high volume of token transfers.
A token owner can accomplish it through ERC-865's new "transferPreSigned" function, which enables a third party to cover the gas costs related to a token transfer. For this function, the owner must sign a message with the transfer information in it so that it can be sent to the network by a third party. As a result, less gas is needed for the transfer because users can more effectively pay gas expenses.
Also, Check | ERC-20 Token Standard | Development Essentials
ERC-4626 token standard aims to improve and standardize the technical features of yield-bearing vaults. It offers a common API for tokenized yield-bearing vaults that denote shares of a single underlying ERC-20 token. ERC-4626 also describes an optional add-on for ERC-20-based tokenized vaults for adding and removing tokens and accessing balances.
By employing various tactics, lending markets, aggregators, and genuinely interest-bearing tokens assist users in determining the greatest yield on their crypto tokens. Users apply these tactics with minimal variation, which may lead to mistakes or waste of development funds.
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Other further recommendations should improve the Ethereum standardization community as a whole. Just like with ERC-20, it will take time to agree on standards, approve them, and adapt them for practical application. The ERCs covered here are a basic glimpse of ERC token standard development. As long as the Ethereum network is up and running, it's expected that various crypto communities will create a growing number and range of tokenization standards to accommodate a wide range of use cases.
If you want to develop smart contracts or dApp using ERC token standards, then our blockchain developers can assist in the development process.