Types of token standards?

Ethereum provides a token standards list described in ERC format and a number. ERC stands for Ethereum Request for Comment and refers to a technical document that blockchain developers can reference when writing Smart Contracts and building dApps. 

The ERC-20 Standard

The most common Ethereum token standard is ERC-20. This set of guidelines allows developers to build applications with their own unique token, which is interoperable with other products and services.

The ERC-20 standard specifically relates to fungible tokens within Ethereum. Fungibility is one of those words that you rarely encounter in general conversation but is used a lot within crypto. It describes something that is mutually interchangeable, like money. One €10 note is fungible for any other €10 note.

So ERC-20 tokens that follow the documented standard are interchangeable. Devised by Fabian Vogelsteller in November 2015, they provide an API for tokens within Smart Contracts providing the following standard functions:

• transfer tokens from one account to another
• get the current token balance of an account
• get the total supply of the token available on the network
• approve whether an amount of token from an account can be spent by a third-party account

Though the ERC-20 standard might seem a bit abstract, its importance should become a little clearer when you think about the sort of things they enable. They drove the explosion of ICOs, DEFI and are pivotal in Play-to-Earn games providing:

• Proxies for fiat money such as Stablecoins e.g USDT
• Synthetic versions of commodities like gold
• Reward or Points systems in games or e-commerce
• Lottery tickets
• Financial assets

ERC-777 Token Standard

As powerful as the ERC-20 standard, there was room for improvement addressed in an additional fungible token standard, ERC-777. The ERC-777 standard makes it more efficient for Smart Contracts to send and receive tokens through Hooks.

Hooks combine what were two messages – sending tokens and notifying a contract – into one, adding the ability to reject transactions. ERC-777 also addressed confusion around the use of Decimals.

ERC-223 Token Standard

Another flaw in the ERC-20 standard was the ease of mistakenly sending tokens to a contract address rather than a wallet address. That problem was highlighted by a Reddit user and addressed with the ERC-223 standard, which enables transactions to contracts and wallets that perform the same function.