ERC-1155；The Ethereum Token Standard for Storing and Transferring Multiple Types of Tokens.

[TL;DR]

Over the years, Ethereum has remained popular as the go-to blockchain to host all sorts of virtual tokens. The leading network supports a wide range of assets with diverse use-cases, and what addresses the specific needs and facilitates the deployment of these are token standards.

A token standard can be described as guidelines that provide instructions for creating, issuing, and releasing new tokens. They are typically defined by the host platform and allow compatibility with exchanges.

Token standards determine the details of an asset, such as the method of transfer, how holders can access the pertinent data, and the total supply of the asset. Whether or not tokens can be fractionalized also falls onto the token standard. Fungibility is also dependent; this entails whether individual tokens are unique or interchangeable.

To date, one essential Ethereum token standard is ERC-20; this token standard outlines a basic set of rules that all Ethereum-based tokens have to adhere to. ERC-721, the standard for non-fungible tokens, has dominated the scene to some extent since NFTs shot to fame roughly two years ago.

A key feature of non-fungible tokens is contained in their name; they are non-fungible. This means that each token is unique on a cryptographic level, which is a big part of what makes them so valuable. The ERC-721 token standard directs how NFTs are used on the Ethereum blockchain.

Notably, another token standard has emerged recently to steal the show, ERC-1155, the multi-token standard. The first draft of ERC-1155 surfaced in 2018 and was approved the following year. However, the token standard hasn't garnered as much attention as its counterparts until now. Let's explore why this has changed alongside other details of this standard.

Keywords; Ethereum, ERC-1155, Token standard


What is ERC-1155?

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Also known as the flexible standard, the central idea behind ERC-1155 was to create a token standard that worked for various token types. Tokens (often termed cryptocurrencies) fall into two major categories: fungible or non-fungible, interchangeable or individually unique units.

In the Ethereum blockchain, these sorts of tokens are managed by ERC-20 and ERC-721, respectively. This means that they cannot be lumped together during transactions. In simple terms, it is impossible to transfer a USDC token and a crypto-kitties NFT in a single transaction. However, with ERC-1155, this changed entirely.

ERC-1155 blends the functions of its famous predecessors, ERC-20 and ERC-721. Among others, one major characteristic is that it supports the transfer of multiple types of tokens. ERC-1155 is a token standard that accommodates various token types and allows them all to be part of one transaction.


What Prompted the Development of ERC-1155?

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ERC-1155 is vastly implemented within gaming circles; this makes sense considering Witek Radomski, co-founder of gaming company Enjin, had a primary role in creating ERC-1155. The token standard was designed to mitigate issues developers and players alike encountered with blockchain-based games.

The current gaming model utilizes both non-fungible and fungible tokens to represent in-game items. Parcels of land and unique firearms could be non-fungible, while common weaponry could be fungible. With thousands or even hundreds of thousands of these items needed for the massive volume of players, developers had to work within ERC-20 and ERC-721 functionality and draw a smart contract for each token/item.

This also resulted in inefficient transfers as in-game assets can often be resold; however, players would have to transfer items in separate transactions. Radomski compared the entire set-up to a person having a different phone for each app they used. Other individuals who contributed to the 2018 proposal include Andrew Cooke, Philippe Castonguay, James Therien, Eric Binet, and Ronan Sandford.


How ERC-1155 Stands Apart; Core Features

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Batch Transfers
This is especially advantageous in the NFT industry as, unlike traditional tokens, users cannot transfer them in bulk. Each non-fungible token has a tailored, smart contract, and thus they require individual transfers. Coupled with the high-gas fees the ERC-721 token standard imposes, this is highly inefficient. ERC-1155 does not limit the number of tokens allowed per transfer. This cuts down network congestion as well as the transaction fee.


Multi-token Functionality

This is one of the best and most hyped (for good reason) features of ERC-115; it defines its status as a flexible standard. The token standard is equipped to manage both fungible and non-fungible tokens. A lone smart contract is sufficient to accommodate this function, and this translates into the next feature, which is;

SafeTransfer Rules

This feature allows users to recover their funds if they accidentally send them to the wrong address. ERC-1155 enables the transfer to be reverted; other token standards do not possess this feature, which heightens the standard's appeal. It helps lessen the likelihood of exploitation with this function and others.

The Introduction of Semi Fungible Tokens

EIP-1155 creates a space for the existence of semi-fungible tokens. These, also known as SFTs, exist as fungible tokens for the duration of trading; however, once they have been redeemed, they lose their pre-trade value and become non-fungible tokens. A sound basis for comparison is concert or game tickets; the tokens turn into collectibles after the event.


Existing Use Cases

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One of the most prominent platforms to implement EIP-1155 has already been mentioned, Enjin. As mentioned above, the company's leader was one of the individuals that submitted the proposal that brought ERC-1155 to life. The Ethereum community gave the green light for the token standard in June 2019, about a year after the underlying proposal EIP 1155 emerged.

A good-sized portion of Enjin's product and service offering utilizes ERC-1155. In line with what Radomski revealed was the directive of the standard, several games have incorporated it into their tokenomic model.

Adidas is one big-name brand that has adopted the token standard. The sporting goods manufacturer implemented ERC-1155 in phases 1-3 (out of 4) in its NFT project 'Into the Metaverse." Depending on the acquired phase, the tokens provide buyers with access to a range of virtual and real-world merchandise from the company.


Other platforms that have adopted ERC-155 include blockchain-based gaming firm Horizon, in their game Skyweaver and NFT marketplace OpenSea, allowing several creators to use a single smart contract. However, only one individual can mint additional copies.


Conclusion

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ERC-1155 is establishing its place as a key player in the development of the blockchain P2E gaming industry and the NFT space.

Its extensive functionality makes it the perfect tool to expand asset applications and broaden the horizons for most projects. It also helps improve efficiency and can reduce costs further as time goes on, a positive point for the whole of the Ethereum ecosystem.

This could help facilitate more accessible entry into the NFT industry and the wider crypto sphere. Additionally, ERC-1155 is a good fit for Decentralized Autonomous Organizations (DAOs). As these entities grow more commonplace and DAO tokenomics call for various types of tokens, the relevant token standard will be majorly instrumental in their operations.

While ERC-20 and ERC-721 have seen more use on Ethereum in the four years since ERC-1155 first appeared, this doesn't necessarily negatively affect the token standard. Its versatility more than speaks for it, as shown by the recent surge in popularity.






Author: Gate.io Observer: M. Olatunji
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