ERC Tokens

An Ethereum Request for Comments (ERC) is a standard, a document that programmers use to write smart contracts on Ethereum Blockchain. They describe rules in these documents that Ethereum-based tokens must comply with.

There are many Ethereum standards. Below 2 are the most well-known and popular:

• ERC-20
• ERC-721

Before we dive into these, let's first understand what exactly a token is.

Token

A token refers to a digital asset or unit of value that is created and managed on a blockchain platform. Tokens can represent various types of assets, rights, or utilities.

In ethereum, tokens can represent virtually anything. Reputation points in an online platform, skills of a character in a game, financial assets like a share in a company a fiat currency like USD, an ounce of gold, and more.

1. ERC-20:

• The ERC-20 introduces a standard for Fungible Tokens, in other words, they have a property that makes each Token be exactly the same (in type and value) as another Token. For example, an ERC-20 Token acts just like the ETH, meaning that 1 Token is and will always be equal to all the other Tokens. (e.g. 1 NPR coin will always be equal to any other 1 NPR coin)

• ERC-20 provides below functionalities:

  1. Transfer tokens from one account to another.
  2. Get the current token balance of an account.
  3. Approve whether an amount of token from an account is spendable by a third-party account.
  4. Get the total supply of the token available on the network.

If a Smart Contract implements the following methods and events it can be called an ERC-20 Token Contract and, once deployed, it will be responsible to keep track of the created tokens on Ethereum.

Methods:

function name() public view returns (string)
function symbol() public view returns (string)
function decimals() public view returns (uint8)
function totalSupply() public view returns (uint256)
function balanceOf(address _owner) public view returns (uint256 balance)
function transfer(address _to, uint256 _value) public returns (bool success)
function transferFrom(address _from, address _to, uint256 _value) public returns (bool success)
function approve(address _spender, uint256 _value) public returns (bool success)
function allowance(address _owner, address _spender) public view returns (uint256 remaining)

Events:

event Transfer(address indexed _from, address indexed _to, uint256 _value)
event Approval(address indexed _owner, address indexed _spender, uint256 _value)

Let's understand the purpose of each of the methods.

1. name()

• It returns the name of the token.

2. symbol()

• It returns the symbol of the token.

3. decimals()

• It returns the number of decimals the token uses.
• e.g. If 8 is returned then the token amount is to be divided by 100000000 to get the user representation.

4. totalSupply()

• It returns the total supply of the tokens.

5. balanceOf(address _owner)

• It returns of account balance of an account with address _owner

6. transfer(address _to, uint256 _value)

• It transfers _value to an account with address _to
• It MUST emit Transfer event.
• The function SHOULD throw if the message caller’s account balance does not have enough tokens to spend.

7. transferFrom(address _from, address _to, uint256 _value)

• It transfers _value from account with address _from to the address _to.
• It MUST emit Transfer event.
• This method is used for a withdraw workflow, allowing contracts to transfer tokens on your behalf.
• The function SHOULD throw unless the _from account has deliberately authorized the sender of the message via some mechanism.

8. approve(address _spender, uint256 _value)

• Allows _spender to withdraw from your account multiple times, up to the _value amount.
• If this function is called again it overwrites the current allowance with _value.

9. allowance(address _owner, address _spender)

• It returns the amount which _spender is still allowed to withdraw from _owner.

Let's understand the purpose of each of the events.

1. Transfer

• This event MUST trigger when tokens are transferred, including zero value transfers.
• A token contract which creates new tokens SHOULD trigger a Transfer event with the _from address set to 0x0 when tokens are created.

2. Approval

• This event MUST trigger on any successful call to approve(address _spender, uint256 _value).

There are already many implementations of ERC-20 compliant tokens in Ethereum network. Different implementation by different teams comes with different trade-offs; including gas saving to improved security.

Please refer to this for more detailed explanation.

2. ERC-721:

• ERC-721 ntroduces a standard for Non Fungible Tokens (NFTs), in other words, this type of Token is unique and can have different value than another Token from the same Smart Contract.

• ERC-721 provides functionalities similar to ERC-20 tokens.

1. Transfer tokens from one account to another.
2. Get the current token balance of an account.
3. Get the owner of a specific token.
4. Get total supply of the token available on the network.
5. Approve that an amount of token from an account can be moved by a third party account.

The uniqueness of each ERC721 token is a key characteristic. There are one and only one of these ERC721 Tokens when you create an ERC721 token. These tokens, as NFTs, are spreading the idea and use of new assets to Ethereum.

If a Smart Contract implements the following methods and events it can be called an ERC-721 Token Contract.

Methods:

function balanceOf(address _owner) external view returns (uint256);
function ownerOf(uint256 _tokenId) external view returns (address);
function safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes data) external payable;
function safeTransferFrom(address _from, address _to, uint256 _tokenId) external payable;
function transferFrom(address _from, address _to, uint256 _tokenId) external payable;
function approve(address _approved, uint256 _tokenId) external payable;
function setApprovalForAll(address _operator, bool _approved) external;
function getApproved(uint256 _tokenId) external view returns (address);
function isApprovedForAll(address _owner, address _operator) external view returns (bool);

Events:

event Transfer(address indexed _from, address indexed _to, uint256 indexed _tokenId);
event Approval(address indexed _owner, address indexed _approved, uint256 indexed _tokenId);
event ApprovalForAll(address indexed _owner, address indexed _operator, bool _approved);

Let's understand the purpose of each of the methods.

1. blanceOf(address _owner)

• Count all NFTs assigned to an owner and return the number of NFTs owned by _owner.

2. ownerOf(uint256 _tokenId)

• Returns the address of the owner of the NFT.
• NFTs assigned to the zero address are considered invalid, and this function throws for queries about the zero address.

3. safeTransferFrom(address _from, address _to, uint256 _tokenId, bytes data)

• It transfers the ownership of an NFT from one address to another address.

4. safeTransferFrom(address _from, address _to, uint256 _tokenId)

• It transfers the ownership of an NFT from one address to another address.
• This works identically to the other function with an extra data parameter, except this function just sets data to "".

5. transferFrom(address _from, address _to, uint256 _tokenId)

• It transfers ownership of an NFT to another address.
• Remember, when invoking this method THE CALLER IS RESPONSIBLE TO CONFIRM THAT _to IS CAPABLE OF RECEIVING NFTS OR ELSE THEY MAY BE PERMANENTLY LOST

6. approve(address _approved, uint256 _tokenId)

• It is used to change or reaffirm the approved address for an NFT.
• The zero address indicates there is no approved address.

7. setApprovalForAll(address _operator, bool _approved)

• It is invoked to enable or disable approval for a third party ("operator") to manage all of msg.sender's assets.
• It emits the ApprovalForAll event.
• The contract MUST allow multiple operators per owner.

8. getApproved(uint256 _tokenId)

• It is invoked to get the approved address for a single NFT with id _tokenId.

9. isApprovedForAll(address _owner, address _operator)

• This method is invoked to query if an address is an authorized operator for another address.

Please refer to this for detailed explanation.