Beyond Gaming – Exploring the Utility of ERC-1155 Token Standard!
Exploring the Utility of ERC-1155 Token Standard and What is an ERC Token Standard and Why We Need One?
ERC stands for ‘Ethereum Request for Comments.’ It is a technical document created by smart contract developers at Ethereum that defines a set of rules. A developer coding a new token needs to follow these rules to implement tokens for the Ethereum ecosystem. Before becoming a standard, an ERC must be revised, commented and accepted by the community.
But why define rules?
The answer to this question lies in the very fabric of the Ethereum eco-system. To perform specific functions in the ecosystem, Ethereum supports decentralized apps (Dapps). Depending on these specific functions which solve the purpose of the Dapp, it might need to produce tokens that would act as a currency or represent assets like gold or property. Now, these tokens need to be stored in wallets and traded on popular cryptocurrency exchanges. Otherwise, they won’t hold any value. These wallets, exchanges etc. also follow the rules define in the ERC documents to ensure compatibility, and support all the tokens that are based on specific ERC token standards.
Read more: What Are Dapps? The New Decentralized Future
So, it’s simple – ERC documents define standard guidelines that everyone can follow to build compatible tokens and the apps that would support them.
The Gaming ERC-1155 Token Standard – Combining the Utility of ERC-20 & ERC-721
The ERC-1155 token standard allows the creation of fungible, semi-fungible and non-fungible tokens in a single token standard. This feature gives ERC-1155 token standard an edge over the ERC-20 and ERC-721, that allow either the creation of fungible tokens (ERC-20) or non-fungible tokens (ERC-721).
Read more: ERC20 Tokens: A Comprehensive Origin Story
Fungible tokens don’t have unique identities and can be replaced by other identical tokens, like in the case where tokens work as currency. In contrast, non-fungible tokens have unique identities and are irreplaceable. They represent unique assets on Blockchain, like a house.
But games have both types of items – fungible and non-fungible. Hence, following either ERC-20 or ERC-721 token standard won’t be sufficient for a developer coding for a Blockchain-based ecosystem for a game. Let’s understand this with an example. In a game, there can be ‘med-kits’ that are fungible (one can be placed by other), limited-edition costumes that are semi-fungible (since they are available to a few users) and unique weapons that are non-fungible. This is where ERC-1155 token standard comes into the picture.
Moreover, the ERC-1155 token standard doesn’t require to deploy a separate code for each non-fungible token, something which is required in ERC-721. In ERC-1155, the ‘common code’ across tokens is stored in a central smart contract with a unique identifier that can be referenced by other smart contracts. It enables smart contracts to ‘re-use’ code from the central smart contract. This method eliminates the need to copy the repetitive code, saving a lot of storage space and GAS wasted in processing the same code again and again.
Read more: What is Ethereum Gas: Step-By-Step Guide
Is Gaming the Only Use-Case for ERC-1155 Token Standard?
There are many real-life scenarios that make use of both fungible (replicable) and non-fungible (unique) items. For example – the digital content & artwork. There are artworks & digital content that have unique identities. For example, there is only one original “Whistler’s Mother” painting. Also, there can be limited edition prints made by an artist that is only available to a selected few. And then there are non-exclusive artworks that can be bought and reproduced by anyone. These scenarios are apt for designing fungible, semi-fungible and non-fungible tokens respectively, and an Ethereum-based ecosystem that requires all of them need to follow the ERC-1155 token standard.
ERC-1155 Token: Conclusion
Whether or not your Blockchain use case has requirement of fungible, non-fungible and semi-fungible items, it is always good to have the capability to offer any of these tokens in a single token standard. ERC-20 and ERC-721 token standards require spending GAS units for every smart contract executed. The method of referring to a central smart contract thus makes more sense, since it would cost fewer GAS units as well as utilize fewer resources which is beneficial for everyone!
About the Author
Anas: Currently pursuing PH.D. in Marketing, his latest interest includes emerging technologies such as Blockchain, IoT and A.I.