The ERC20 token standard has shown the world the benefits of standardization. No longer did you have to learn to code to create your own ERC20 token. You can generate your ERC20 token by simply clicking on this link and filing a few form fields. The ERC20 standards served the crypto-mania of the early 2017-18 but the adoption of regulation has necessitated the development of other standards that can take the torch from the ERC20 and take decentralization to greater adoption.
To understand the difference between an EIP and ERC, click here.
The newer ERC standards cover multiple objectives such as identity management, partial fungibility, to even providing for a complete replacement of securities with tokens.
Some of the most popular ERC standards already in usage or entering usage in early 2018 are:
- ERC1400 Family
Let’s take each of them in detail to understand their value addition to decentralized economies.
This was proposed as a solution to a common problem faced by early crypto-adopters. People were mistakenly sending their tokens to contract addresses instead of wallets of the intended recipients. This used to lead to losses faced by the senders and slowed crypto-adoption.
With the ERC 223 standards, the same mistake would return an error and prevent the transfer of the ERC 223 token to an invalid address. Do note that even if the tokens are saved, the GAS applicable would still be charged.
This token standard is best known for the added functionality of modifying the total supply of the tokens created at the time of token generation. The issuer can both, add and subtract from the total supply to either, increase or decrease the supply.
Best known for the crypto-kitties game that clogged up the Ethereum Blockchain, the ERC 721 is a non-fungible token standard that enables the development of unique tokens from the same contract address. The ERC 721 standard is popularly known as the standard for creating NFTs (non-fungible tokens) or ‘nungibles’.
This token standard enables the provisioning of verified profiles for several third parties. For example, if you get your profile verified on one platform, you do not need to verify your profile for other tokens compliant to the ERC 725 standard.
This means that you can have a universal profile that enables greater control to the users over their profiles and frees the multiple third parties from the requirement of maintaining user profile databases as they become redundant. This enables a system that is similar to the SSO from Google and Facebook but instead of being controlled by a singular entity, is decentralized with sufficient checks for access-control.
Used in consonance with the ERC 725, the ERC 735 enables trusted third parties to request certain attributes associated with a verified profile for the purpose of their verification. For example, if a third party dApp wants access to the user’s biometric information, it must raise a ‘claim’ and justify the requisitioning of that particular attribute.
This enables sharing of identity attributes on a need-to-know basis instead of as a complete transfer of all associated user data.
This token standard became popular due to its simple answer to GAS costs applicable to all token transfers — reduce it to zero. What it basically does is install delegates to bear the cost of GAS costs for token transfers in exchange for a few tokens being transferred.
This is a huge value proposition for the multiplicity of ICOs that have generated huge numbers of tokens and need to onboard users quickly.
It enables the issuance of multiple types of tokens such as fungible tokens (1T=1T), non-fungible tokens (art tokens), and semi-fungible tokens (certain fund tokens) from within the same token standards.
Currently, under development as the next-generation security token standards, it is an umbrella of standards that include several different token standards to serve several different purposes. The constituent token standards of the ERC 1400 token standard family are:
These tokens correspond to the requirement of securities to contain differing metadata yet allow a level of fungibility. To this effect, the ERC 1410 token standard enables partitioning of the token into a fungible and a non-fungible component.
Token transfers in the realm of securities are subject to more conditions than a simple balance query. Security tokens can be subject to lock-in periods, jurisdictional restrictions, and other such conditions. In this case, the ERC 1594 token standard verifies the suitability of the token transfer by matching against a set of qualifying instructions before allowing the transfer of tokens.
Traditional securities are associated with several documents that relate to ownership, rights, and obligations. The ERC 1643 standard takes care of this requirement by enabling a mechanism of simplified transfer of documents for a speedy transfer of legal rights and obligations associated with the ownership of that security token.
Security token transfers are subject to certain laws which are different in different jurisdictions. The ERC 1644 token standard enables a forced retraction of the token transfers that have been deemed unlawful. These controller transfers can be managed via smart contracts to ensure transparency in operations.
While far from a complete list of token standards proposed within the Ethereum community, it captures the ones that are gaining traction within the developer communities and have the potential to become the go-to solution for upcoming token offerings.