Ethereum token standards explained: ERC-20, ERC-721, and ERC-1155 for beginners

An Ethereum token standard is a shared rulebook every token follows so that any wallet, exchange, or app can handle it without custom code. The three you meet most are ERC-20 for interchangeable tokens, ERC-721 for unique NFTs, and ERC-1155 for both at once. This guide explains each, then the approval risk that ties them together.

What is an Ethereum token standard, and why does it exist?

A token standard is an agreed list of functions a token contract must include, so that wallets and apps know how to read its balance and move it. Ethereum has thousands of different tokens, and standards are the reason one wallet can hold all of them. Without a shared rulebook, every token would need its own custom software.

The easiest way to picture this is a shipping container. Before standard containers, every cargo had its own odd-shaped crate, and every crane and truck had to be built to fit it. Once the world agreed on one container size, any ship, any port, and any truck could carry any cargo. A token standard does the same job for digital tokens. The token can hold anything, a dollar-pegged coin, a voting right, a game item, but the outside shape is identical, so the whole network can handle it on sight.

One point trips up almost every beginner, so let us settle it early. ETH, the coin you pay gas with, is not a token in this sense. ETH is Ethereum's built-in native currency, handled by the network itself. Tokens are something different: they are small programs, called smart contracts, that run on top of Ethereum and keep their own ledger of who owns what. When you hold 100 USDC, the Ethereum network is not tracking that. A USDC contract is, and your wallet simply asks that contract for your balance. For background on where these tokens actually sit, see Blofin's explainer on what a crypto wallet is.

That difference matters for safety later. Because a token is a separate contract, your wallet has to be granted permission to let other apps move it, and that permission is where most avoidable losses happen. We will get there. First, the three standards themselves.

What is ERC-20 and why is it everywhere?

ERC-20 is the standard for fungible tokens, meaning every unit is identical and interchangeable, the way one dollar is the same as any other dollar. It was proposed by developer Fabian Vogelsteller in November 2015 and later finalized as the EIP-20 specification (source: EIP-20 specification). Almost every coin you trade that is not a chain's own currency is an ERC-20 token.

Think of ERC-20 tokens as cash in a wallet. If you have two $10 bills, you do not care which is which, and you can split, combine, or send any amount. Stablecoins like USDC, governance tokens like Uniswap's UNI, and staking tokens like Lido's LDO are all ERC-20 tokens. They behave differently as investments, but mechanically they share the same shape, which is exactly why your wallet shows them in one tidy list.

What does that shared shape actually contain? The standard defines a short set of functions, and you can understand them in plain words:

• totalSupply reports how many tokens exist.

• balanceOf reports how many a given address holds.

• transfer sends tokens from you to someone else.

• approve grants another address permission to spend up to a set amount of your tokens.

• transferFrom lets that approved address actually move the tokens.

• allowance reports how much permission you have granted.

The first three are obvious. The last three, the approval trio, are the ones that let decentralized apps work, and also the ones that get people drained. We will unpack them fully in the approval section. For now, just notice that ERC-20 is so widely adopted that hundreds of thousands of these token contracts exist on Ethereum as of 2026, from multi-billion-dollar stablecoins down to tiny project tokens (source: ethereum.org token standards). One rulebook, an entire economy of interchangeable assets.

What is ERC-721 and how do NFTs differ from regular tokens?

ERC-721 is the standard for non-fungible tokens, where each token is unique and cannot be swapped one-for-one with another. It was created by William Entriken, Dieter Shirley, and co-authors and finalized on January 24, 2018 (source: EIP-721 specification). Every ERC-721 token carries its own ID number, so the contract can tell token number 5 apart from token number 4,001.

Picture numbered seats at a concert instead of cash. Two seats both cost money, but seat 1A and seat 22F are not interchangeable, because one might be front row and the other at the back. An NFT works the same way. The contract holds a list of unique IDs, and owning the token means owning that specific ID. That is what makes ERC-721 suitable for digital art, collectibles, event tickets, and proof-of-ownership records.

A bit of accurate history helps here, because a common myth gets it wrong. CryptoPunks, the 10,000-image collection from Larva Labs, launched in June 2017, several months before ERC-721 was finalized. So the original CryptoPunks were not built to the ERC-721 standard at all, and some had to be wrapped in an ERC-721 layer later to trade on standard marketplaces (source: CryptoPunks history, Kraken). The Bored Ape Yacht Club, which launched in April 2021 at 0.08 ETH per mint, was a proper ERC-721 collection from day one. The lesson is that the standard came after the first experiments, then made everything that followed interoperable. How NFTs are minted, stored, and traded is a bigger topic that our separate guide on NFTs on Ethereum covers in full.

What is ERC-1155 and what problem did it solve?

ERC-1155 is a multi-token standard that can hold fungible, non-fungible, and semi-fungible tokens inside a single contract. It was introduced by Witek Radomski and the Enjin team and reached final status in June 2019 (source: EIP-1155 specification). It exists because gaming and large collections needed something more efficient than deploying a brand-new contract for every item.

A video game makes the value obvious. Imagine a game with gold coins, which are fungible because one coin equals another, plus a thousand identical health potions, which are semi-fungible because they are interchangeable until you use one, plus a single legendary sword that is truly unique. With the older standards, the studio would need separate ERC-20 and ERC-721 contracts and a lot of duplicated work. ERC-1155 lets one contract manage all of it, each item type getting its own ID, and it can move many items in a single batch transfer. That batching cuts the gas cost of handing a player twenty different items at once.

The "semi-fungible" idea is the part worth slowing down on, because it is genuinely useful. A concert ticket before the show is interchangeable with any other ticket in the same tier, so it behaves like a fungible token. The moment you use it to enter, it becomes a unique, spent stub, more like an NFT. ERC-1155 can represent that whole life cycle in one place. For most holders, you will meet ERC-1155 mainly through games and newer NFT collections, and your wallet handles it the same way it handles the others.

ERC-20 vs ERC-721 vs ERC-1155: how do they compare?

The three differ mainly in what they represent and how many token types one contract can hold. ERC-20 handles identical fungible units, ERC-721 handles single unique items, and ERC-1155 handles any mix of both in one contract with batch transfers. Most wallets and exchanges support all three, so as a holder you rarely choose, you just receive whatever a project issued.

This table does the heavy lifting. Read it as the quick map you can return to.

Notice the trend reading left to right. Each standard adds flexibility. ERC-20 keeps it simple with one fungible token per contract. ERC-721 introduces uniqueness. ERC-1155 combines everything and adds efficiency for projects juggling many item types. These three are the standards a holder meets most, but they are not the only ones: you may also see ERC-4626 for tokenized yield vaults and the ERC-223 and ERC-777 variants that aimed to make transfers safer. They build on the same idea rather than replacing it. The standards are not unique to Ethereum either, because the same rulebooks have been adopted across other compatible chains, which is part of why the wider ecosystem fits together. That cross-chain reuse is one of the structural differences explained in our comparison of how Bitcoin and Ethereum differ, since Bitcoin has no equivalent token-standard layer at its base.

How do token approvals work, and why are they risky?

A token approval is permission you grant to a smart contract to move a set amount of one of your tokens, using the approve and transferFrom functions from the ERC-20 standard. Decentralized apps need this so they can pull tokens into a trade or deposit on your behalf. The risk is that a broad or unlimited approval, given to a contract that is later compromised, can be used to drain that token from your wallet.

Here is the valet-key picture. When you hand a valet a special key, they can park your car but not open the glovebox. An approval is meant to be that limited key. The problem is that many apps ask for an unlimited approval by default, which is closer to handing over the full keys forever. As long as the app is honest and its code is safe, nothing happens. If that contract has a flaw or turns malicious, whoever controls it can call transferFrom and take up to the amount you approved, without asking again.

Walk through a worked example with real numbers. Suppose you want to swap 500 dollars of USDC on a decentralized exchange. The app asks you to approve USDC spending. If you approve exactly that 500, it is the limited valet key, and the app can only ever touch that much. If instead you click the default unlimited approval, you have granted that contract permission to move all of your USDC, now and in the future. Months later you might hold 20,000 dollars of USDC and have forgotten the approval entirely. If that old contract is exploited, the attacker can pull the full 20,000, not the 500 you originally meant.

This is not a rare edge case. Approval-based theft is one of the most active drain methods in crypto, with named incidents like the LI.FI bridge exploit in July 2024 draining millions from wallets that had granted broad approvals, and reputable trackers logging hundreds of millions in approval-related losses across recent years (source: approval exploit tracker, Revoke.cash). From Blofin's operational perspective, the single most common avoidable loss we see among self-custody users is not a hack of an exchange, it is an old, forgotten token approval to a contract that later turned malicious. The tokens were never unsafe sitting in the wallet. The open permission was the hole.

How do you stay safe with token approvals?

You stay safe by limiting how much you approve, checking what you have already approved, and signing approvals on a device you control. None of this requires technical skill, and it removes most of the risk that the approval system creates. Treat every approval pop-up as handing out a key, and ask how big a key it really needs to be.

A short routine covers the practical steps. First, when an app offers a custom approval amount, set it close to what you are actually spending rather than accepting the unlimited default, so a future exploit cannot reach your whole balance. Second, review your active approvals from time to time using a reputable approval-checking tool, and revoke any you no longer use, since each revoke is just a normal transaction. Third, for larger holdings, sign from a hardware wallet, so that even if your computer is compromised, no approval can be granted without a physical confirmation on the device.

Two habits prevent the most common mistakes around the contracts themselves. Always confirm a token's official contract address before interacting, because scammers deploy look-alike tokens with the same name to trick you into approving the wrong one. Be careful never to send tokens directly to a token's own contract address either, because tokens sent that way are usually stuck forever, with no way to get them back. And remember that approvals only apply to fungible-style tokens you grant, so simply holding a token or an NFT in your wallet, without approving anything, does not expose it. The danger is the permission, not the possession. Knowing how crypto wallets work makes these checks feel routine rather than scary, and turns the approval system back into the limited valet key it was meant to be.

Frequently asked questions

Is ETH itself an ERC-20 token?

No. ETH is Ethereum's native currency, handled directly by the network, not by a token contract. This actually causes a small problem for apps that expect every asset to follow the ERC-20 rulebook. The workaround is Wrapped ETH, or WETH, which is a genuine ERC-20 token that you can redeem one-for-one for ETH. So when an app asks you to wrap ETH, it is converting your native coin into a standard token so its code can handle it the same way it handles everything else.

Do I pay gas to approve a token?

Yes. An approval is a real Ethereum transaction, so it costs a gas fee, usually small in 2026 but never zero. Revoking an approval is also a transaction and carries its own small fee. This is worth knowing because it means there is a tiny cost to good hygiene, but the cost of revoking an unused approval is far smaller than the potential loss from leaving a risky one open. Budget a few cents for the safety step.

What is a token's contract address, and why does it matter?

Every token lives at a unique contract address, a long string starting with 0x, and that address is the token's true identity. Names and symbols can be copied freely, so scammers create fake tokens with the same ticker as a popular one. Before you trade or approve a token, confirm its contract address against an official source such as the project's site or a major exchange listing. The address, not the name, tells you whether a token is the real one.

Can the same token exist on other blockchains?

Sometimes, but it is not automatic. A token standard like ERC-20 is reused across many Ethereum-compatible chains, so a project can deploy a version of its token on several networks. Those versions are usually separate contracts linked by a bridge, not the same token magically appearing everywhere. This is why you must always check which network and which contract address you are dealing with, since a token on one chain is not interchangeable with its twin on another unless a bridge connects them.

Are token standards used outside Ethereum?

Widely. The ERC-20, ERC-721, and ERC-1155 patterns were so successful that most other smart-contract chains adopted compatible versions, which is a big reason the broader ecosystem interconnects. Even tokenized real-world assets, covered in our guide to tokenized real-world assets, typically use these same standards. The standards started on Ethereum, but they have effectively become the shared language for tokens across much of the industry.

Where do I actually trade these tokens?

Fungible ERC-20 tokens trade on both centralized and decentralized exchanges, while NFTs trade mainly on specialized NFT marketplaces. The trade-offs between the two exchange types, including when approvals come into play, are laid out in our comparison of centralized and decentralized exchanges. The short version is that centralized exchanges hold the token for you and need no on-chain approval, while decentralized apps act from your own wallet and therefore ask for the approvals discussed above.

Researched and written by the Blofin Academy editorial team with AI-assisted drafting. Primary sources include the EIP-20, EIP-721, and EIP-1155 specifications from eips.ethereum.org, the token-standards documentation from ethereum.org, and approval-exploit records from Revoke.cash, with NFT history cross-checked against Kraken Learn. All facts independently verified against cited documentation current as of June 2026.

This article is for informational purposes only and does not constitute financial advice, investment guidance, or a recommendation to buy, sell, or hold any digital asset. Cryptocurrency markets involve significant risk and you should conduct your own research and consult qualified professionals before making investment decisions. Blofin Academy content reflects the state of public information at time of publication; protocol parameters, fees, and ecosystem data change frequently.