Token standards are the interface conventions that decide how a token behaves and how other contracts, wallets, exchanges and DeFi platforms can interact with it. The verified source material states that many Ethereum development standards focus on token interfaces, and that these standards exist so smart contracts remain composable. For a reader judging a project's token design, the practical test is simpler than the marketing: identify which standard the token claims to follow, then confirm the behavior that standard guarantees.
This guide explains what the standards actually cover, compares the three named standards, and flags what the underlying source does not establish. It is a verification framework, not an endorsement of any token.
The starting point: standards are interface conventions
According to the source, token standards define how tokens behave and interact across the Ethereum ecosystem (c03). The stated purpose is compatibility: when a new project issues a token, it stays compatible with existing decentralized exchanges and applications (c02). Standards also reduce duplicated effort, making it easier for developers to build without reinventing the wheel (c04).
That framing matters because it separates two different questions. The first is technical: does the token implement a recognized interface? The second is economic: does holding that token entitle anyone to anything? The standards answer the first question only. They provide consistency across gaming, governance and other use cases, and make Ethereum more interconnected (c05), but they do not describe value accrual.
The three standards named in the source
| Standard | What the source says it is for | Verification focus |
|---|---|---|
| ERC-20 | A standard interface for fungible (interchangeable) tokens, like voting tokens, staking tokens or virtual currencies (c07) | Confirm fungibility: units are interchangeable and the token is described as a voting, staking or currency-type asset |
| ERC-721 | A standard interface for non-fungible tokens, like a deed for artwork or a song (c08) | Confirm uniqueness: each token is a distinct asset rather than an interchangeable unit |
| ERC-1155 | Allows for more efficient trades and bundling of transactions, thus saving costs (c09); supports both utility tokens and non-fungible tokens (c10) | Confirm multi-type support and whether bundling is actually used |
The source names these as some of the most popular token standards on Ethereum (c06). It gives two examples within the ERC-1155 description, naming $BNB and $BAT as utility tokens and CryptoPunks as a non-fungible example (c10). Those are illustrative references in the source, not valuations, and they should not be read as a statement about any token's price or prospects.
Why the interface choice is a business decision
Compatibility has downstream consequences that matter to anyone evaluating a crypto company's model. If a token follows a widely recognized interface, wallets, exchanges and DeFi platforms can support it without custom integration work (c04). That lowers distribution friction. If a project invents a bespoke interface instead, the source's composability rationale suggests integration requires additional effort from every counterparty.
The fungible versus non-fungible distinction changes what the token can plausibly represent. A fungible interface suits interchangeable units such as voting or staking tokens (c07). A non-fungible interface suits unique claims such as a deed for artwork or a song (c08). A standard that supports both types (c10) invites a further question: which type is the project actually using, and for what purpose?
A verification sequence for a real token
- Identify the claimed standard. Determine whether the project says ERC-20, ERC-721, ERC-1155 or something else. The source describes these as popular standards on Ethereum (c06).
- Match the standard to the described use. Fungible units point to ERC-20 (c07); unique assets point to ERC-721 (c08); mixed or bundled usage points toward ERC-1155 (c09, c10).
- Check the compatibility rationale. Ask whether the token is intended to work with existing wallets, exchanges and DeFi platforms (c04).
- Separate interface from economics. The standards define behavior and interaction (c03); they do not assign income, governance power or redemption rights.
- Use the reference material the source points to. The source links a Token Integration Checklist credited to Trail of Bits (c13), OpenZeppelin token documentation (c14), a piece on the dangers of token integration from OpenZeppelin (c15), a token integration checklist of things to consider when interacting with tokens (c16), an ERC-20 contract walk-through (c17), and guidance on transfers and approval of ERC-20 tokens from a Solidity smart contract (c18).
- Browse the full proposal list. The source references the full list of ERC proposals for standards beyond the three described (c11).
Step five deserves emphasis. The source provides a short description of ERC-1155's efficiency benefit, namely more efficient trades and bundling of transactions, thus saving costs (c09). It does not quantify that saving. A reviewer should treat efficiency claims as directional until a project shows its own integration data.
Worked interpretation: reading a token announcement
Suppose a project announces a token and calls it an ERC-20 governance asset. Under the source's definitions, ERC-20 is a standard interface for fungible tokens, and voting tokens are one listed example (c07). The standard-label portion of the claim is consistent with the description. What the standard label does not tell you is whether votes carry binding authority, how supply is managed, or what happens to the token if the project changes direction. None of those are covered by the statements about token standards.
Now suppose a project lists both utility-token and collectible components. The source describes ERC-1155 as allowing both utility tokens and non-fungible tokens (c10). That makes ERC-1155 a plausible candidate, but plausibility is not confirmation. The verification step remains checking which interface was actually implemented.
What the source does not say
Several things a reader might want are simply absent from the verified material.
- No token price, market capitalization, return or valuation figure appears anywhere in the source. Nothing in the standards implies a price direction.
- The source does not state the total number of token standards, only that the three described are among the most popular (c06) and that a full list of ERC proposals exists (c11).
- No dates are given for when these standards were introduced or adopted. Publication date for the source page is not established.
- The source does not quantify the cost savings it attributes to ERC-1155 (c09).
- No security audit result, incident history or failure mode is described for any standard.
- Nothing in the material connects a token standard to a company's revenue, treasury or financing.
The honest conclusion is narrow. Token standards give you a way to check whether a token's behavior is predictable and interoperable. The source supports that much. It does not support any inference about whether a token is a good investment, and any such inference would have to come from evidence outside this material.