A token standard is a set of unified software requirements and rules that a token issued on a given blockchain platform must conform to. Adhering to the standard guarantees that the token will be correctly recognized and supported by wallets, exchanges, smart contracts, and other services in the ecosystem.
The most well-known standard historically has been ERC-20 (Ethereum Request for Comments), developed for the Ethereum blockchain. It describes a basic set of functions, such as transferring tokens, checking a balance, and granting spending allowances, which makes creating your own fungible token a comparatively straightforward task. Later, other standards appeared as well, for example ERC-223, intended to address a number of its predecessor's shortcomings.
Why standards are needed
- Compatibility of the token with the blockchain infrastructure;
- Predictable behavior of smart contracts;
- Simplified integration with wallets and exchanges.
In addition to fungible tokens, there are standards for non-fungible tokens and other types of assets. Choosing the right standard depends on the project's goals and the blockchain platform used, so it is important for developers to define the requirements for the token being issued in advance.
