Token Standards Explained: ERC-20, ERC-721, ERC-1155, and ERC-4626

What a Token Standard Is

A token is just data inside a smart contract: a ledger of who owns how much, plus the rules for moving it. A token standard is the agreement on what that ledger's functions are called and how they behave.

Picture the alternative. If every token invented its own way to check a balance or send a transfer, every wallet would need custom code for every token, and every exchange would need a bespoke integration per listing. New tokens would be nearly unusable. The standard kills that problem. If a token implements ERC-20, then MetaMask, Coinbase, Uniswap, and a thousand other apps already know how to talk to it, because they were all written against the same interface.

That is the entire value of a standard: interoperability. A token is not a special app. It is a contract that promises to answer a known set of questions in a known way. The standard is that promise.

How Token Standards Work

A standard is published as an Ethereum Request for Comments (ERC), which is the application-layer half of an Ethereum Improvement Proposal (EIP). It specifies required functions, optional functions, and events. A token "is" ERC-20 if its contract implements that interface, nothing more.

Required Functions and Events

ERC-20, proposed by Fabian Vogelsteller in 2015, defines six required functions and two events.^[1] The functions cover the basics: total supply, an address's balance, sending tokens (transfer), and a two-step approval flow (approve plus transferFrom) that lets a contract spend tokens on your behalf. That approval pattern is what makes a DEX swap or a deposit possible without handing over custody. The two events, Transfer and Approval, are logs that wallets and explorers watch to track activity.

Optional Metadata

ERC-20 also defines optional functions that describe the token: name, symbol, and decimals. Decimals matter more than they look. Most tokens use 18, so one whole token is stored on-chain as a number with eighteen zeros. The contract holds integers; the decimals tell the interface where to put the point.

Fungible vs Non-Fungible

The deepest split between standards is fungibility. ERC-20 tracks a balance: an amount per address, and every unit is identical. ERC-721 tracks ownership of unique IDs: token #1423 is a distinct thing from token #5822, with its own owner and metadata.^[2] That single difference, balance versus unique ID, is why one standard underpins money-like assets and the other underpins NFTs. For the deeper NFT picture, see our NFTs basics guide.

The Main Ethereum Token Standards

ERC-1155, introduced by Witek Radomski and the Enjin team, is the workhorse for games. A single contract can hold thousands of identical "common potions" alongside one unique "legendary sword," and its safeBatchTransferFrom moves many token types in one transaction, which saves a lot of gas versus deploying a separate contract per item.^[3]

ERC-4626 sits one level up. It standardizes a vault: deposit an underlying ERC-20, receive share tokens that represent a claim on the vault's total assets, and those shares are themselves ERC-20 compatible.^[4] Finalized in 2022, it gave DeFi a common interface for deposit, withdraw, and conversion previews, so any integrator can plug into a yield vault the same way regardless of who built it.^[5]

Why Standards Drive Interoperability

The payoff of standards is most visible at the edges of the system, in wallets and exchanges.

When a project launches a new ERC-20, it does not have to call MetaMask or Coinbase to ask for support. The wallet already knows how to read a balance and build a transfer, because the new token answers the same six function calls every other ERC-20 does. List the contract address and it works. The same logic powers DEXes: Uniswap can pool any ERC-20 against any other because it only ever needs the standard interface, never per-token code.

This is also why composability is real in DeFi. ERC-4626 shares can be deposited into another protocol that accepts ERC-20s, which can issue its own ERC-4626 shares, and the stack just works because every layer speaks the same interface. Standards turn tokens into Lego bricks. The shape is fixed, so they snap together.

Token Standards on Other Chains

Ethereum was first, so its ERC numbers became the reference, but the concept is universal. Other chains have their own standards filling the same roles.

BNB Chain's BEP-20 is essentially ERC-20 with extras, which is why a token and its wallet integrations port over with little change.^[6] Solana takes a different architectural path with its SPL Token program, but the role is identical: SPL is Solana's equivalent of ERC-20, the blueprint that lets any Solana wallet or app handle a new fungible token.^[7] The takeaway is that "token standard" is a chain-agnostic idea. Each ecosystem reinvents the same interoperability layer in its own way, and Ethereum's ERCs simply set the vocabulary the rest of the industry borrowed.

Risks and Limits

A standard guarantees the interface, not the behavior behind it. That gap is where the risk lives.

• Standard-compliant does not mean safe. A contract can implement ERC-20 perfectly and still contain a hidden mint function, a transfer tax, a blacklist, or a pause switch. The interface tells you how to call it, not whether the team can rug it.
• Non-standard quirks break integrations. Some tokens deviate in ways that pass casual inspection but break protocols, such as fee-on-transfer tokens that deliver less than the amount sent, or tokens that return no boolean on transfer. These edge cases have caused real losses in DeFi.
• Approvals are an attack surface. The approve/transferFrom pattern that makes DeFi work also means a malicious contract you approved can drain the approved token later. Unlimited approvals are convenient and dangerous, which is why revoking stale approvals is basic hygiene.
• Standards are not retroactive. Older tokens predate newer safety conventions. CryptoPunks, for example, predate ERC-721 and needed a wrapper to become standard-compliant.

The interface is a contract about syntax. Reading the actual code, or trusting an audit of it, is the only way to know what the token really does.

Combining Token Standards Knowledge with Other Pillars

Token Standards + Fundamentals

Standards are an application of smart contracts, and ERC-721 is the direct foundation of NFTs. Understanding the standard explains why an NFT is "just" a unique ID in a contract and why every NFT marketplace can list any collection.

Token Standards + On-Chain Analysis

Almost everything tracked in DeFi TVL is denominated in ERC-20 tokens and increasingly held in ERC-4626 vaults. Knowing the standards tells you what the on-chain balances and share tokens actually represent.

Token Standards + Coins

The chain a token lives on dictates its standard. A coin issued on Ethereum is ERC-20, the same asset bridged to BNB Chain becomes BEP-20, and on Solana it is an SPL token. Same value, different wrapper.