Token standards are rules and protocols that determine how tokens function on a blockchain. Different blockchains have their own token standards to ensure interoperability, security and efficiency. Here are some of the major token standards in the top 10 blockchains with Turing complete environments Ethereum, Solana, BNB and XRP:
Ethereum Token Standards
Ethereum has developed many token standards to facilitate the creation and management of digital assets. These standards ensure that tokens are interoperable with various decentralized applications and services within the Ethereum ecosystem.
- ERC-20: The ERC-20 standard is most commonly used for creating fungible tokens on the Ethereum blockchain. These tokens are interchangeable, making them suitable for currency, staking tokens, and utility tokens. ERC-20 tokens follow a set of rules, including how tokens can be transferred, how transactions are approved, and how users access data about a token.
- ERC-721: This standard is used to create unique and non-interchangeable NFTs. ERC-721 tokens are often used for digital art, collectibles, and other unique assets. Each token has a unique identifier, which sets it apart from other tokens.
- ERC-777: The ERC-777 standard improves on ERC-20 by enabling more complex interactions, such as sending tokens to a contract and notifying the contract in a single transaction. It also includes enhanced privacy and security features, which address some of the limitations of the ERC-20.
- ERC-1155: This multi-token standard makes it possible to create fungible and non-fungible tokens within one contract. ERC-1155 supports batch transfers, which can reduce transaction costs and network congestion. This standard is useful for applications that require management of multiple token types.
- ERC-4626: Designed for tokenized vaults, ERC-4626 optimizes and unifies the technical parameters of yield-bearing vaults. This standard aims to streamline the creation and management of vaults that generate returns on deposited assets.
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DN-404: DN-404, or ‘Divisible NFT-404’, is an experimental standard designed to address the limitations of ERC-404 by improving the efficiency, scalability and interoperability of tokenized assets. DN-404 uses a split approach with base ERC-20 tokens representing fractions of NFTs and mirror ERC-721 tokens representing the actual NFTs. This design improves transaction throughput, reduces costs and facilitates cross-chain transactions.
Solana Token Standards
Solana, known for its fast and cheap transactions, has developed its own set of token standards to support its growing ecosystem of decentralized applications and digital assets.
- SPL (Solana Program Library): The SPL token standard is used for fungible and non-fungible Solana blockchain tokens. Unlike Ethereum, which has separate standards for different types of tokens, SPL uses a unified approach where differences are defined during the token creation phase. This standard ensures that SPL tokens are interoperable with Solana wallets and smart contracts.
- Token-2022: Token-2022 is an improvement of the SPL standard and introduces new functionalities such as interest-bearing tokens and improved transfer options. This standard aims to provide more flexibility and advanced features for developers and users of the Solana blockchain.
BNB (Binance Smart Chain) token standards.
Binance Smart Chain (BSC) has developed token standards to support its decentralized application and service ecosystem. These standards are designed to be compatible with Ethereum’s ERC standards, facilitating interoperability between the chains.
- BEP-2: The BEP-2 standard is used for tokens on the original Binance Beacon Chain, mainly for the native BNB coin and other tokens on the decentralized Binance exchange. BEP-2 tokens follow a set of rules that ensure they are easy to trade and manage on the Binance Chain. This chain is currently in the process of sunsetting.
- BEP-20: This standard is used on the BSC and is compatible with the Ethereum ERC-20 standard. BEP-20 allows the creation of various types of tokens, including utility tokens, stablecoins and more. BEP-20 tokens can be easily exchanged with BEP-2 tokens, providing flexibility and interoperability within the Binance ecosystem.
XRP Ledger Token Standards
Designed for fast and efficient cross-border payments, the XRP Ledger has its own standards for creating and managing tokens.
- XRP: XRP, the native token of the XRP Ledger, is used for transactions and as a bridge currency for cross-border payments. Unlike other token standards, XRP itself does not follow a specific token standard such as ERC-20, but is an integral part of XRP Ledger’s operations.
- XLS (XRP Ledger Standards): These standards describe the specifications and protocols for creating and managing tokens on the XRP Ledger. XLS standards ensure interoperability and compatibility within the XRP ecosystem, facilitating the creation of different types of tokens, including fungible and non-fungible tokens.
Main differences
- Interoperability and ecosystem: Ethereum’s ERC standards are highly specialized and have a broad ecosystem, making them suitable for various applications, but often leading to higher complexity and gas costs. Solana’s SPL standard is more uniform and offers lower transaction costs and faster settlement times, which is beneficial for high-throughput applications. BNB’s BEP standards are designed for compatibility with Ethereum’s ERC standards, facilitating cross-chain interoperability. XRP Ledger’s XLS standards aim to ensure interoperability within the XRP ecosystem.
- Transaction costs and speed: Ethereum is known for higher transaction fees and slower processing times, especially during network congestion. Due to its unique consensus mechanisms, Solana offers significantly lower fees and faster transactions. BNB Smart Chain also offers lower transaction fees compared to Ethereum, while XRP Ledger is optimized for fast and efficient cross-border payments.
- Token types and flexibility: Ethereum offers a variety of token standards for different use cases, including fungible tokens (ERC-20), non-fungible tokens (ERC-721), multi-tokens (ERC-1155), and hybrid tokens (DN-404.) The SPL Solana standard combines fungible and non-fungible token functionalities within a single protocol. BNB’s BEP-20 standard extends the functionality of ERC-20, while XRP Ledger’s XLS standards provide a framework for fungible and non-fungible tokens.
Each token standard plays a crucial role in its respective blockchain ecosystems, enabling the standardized and interoperable creation, management and transfer of digital assets.