Rise of New Token Standards: Overview of Popular Token Standards and Their Solutions

Recently, the cryptocurrency industry seems to have experienced a “New Token Standard Trend.” These new token standards implement specific functionalities by embedding new rules into the underlying blockchain. Tokens issued using these new standards also appear to be gaining popularity.

WikiBit has organized a review of the recent popular token paradigms, hoping to help users discover value while being alert to scams.

Difference Between Coin and Token

Bitcoin, the first blockchain network, was designed to enable people to make global peer-to-peer payments using its native currency, also known as Bitcoin or BTC. Subsequently, similar blockchains emerged, such as Litecoin (LTC) and Dogecoin (DOGE), which serve similar purposes.

All cryptocurrencies that rely on their own blockchain networks are referred to as coins.

Later, Ethereum was introduced, introducing the concept of blockchain-based decentralized applications and protocols. Although Ethereum also has its own “coin,” named ETH, and functions similarly to BTC, its primary purpose is to facilitate transactions and operations for applications and protocols built on the network.

Developers of these applications can create in-app currencies, which do not have their own dedicated blockchains but are stored on Ethereum. With Ethereum, users can also create other forms of independent digital assets, which can be stored on Ethereum in an immutable manner. These in-app currencies or digital assets created and stored on Ethereum are what we call tokens.

ERC Standard

The Ethereum ecosystem is decentralized, but there still needs to be someone to establish rules, issue upgrade requests, and set standards to define various possibilities on blockchain. For this purpose, most users of Ethereum need to submit Ethereum Improvement Proposals (EIPs), discuss the specific details, and vote to decide whether to reject or begin implementing the proposals.

ERC stands for Ethereum Request for Comment and is a subclass of EIP. Well-known ERC token standards include ERC-20, ERC-721, and so on. Taking ERC-20 as an example, it defines a set of general rules, such as how tokens can be transferred, how transactions can be approved, and the total supply of tokens.

Inventory of Recent Popular Token Standards

The emergence of “token standards” originates from Ethereum. Other public blockchains that typically use the Ethereum Virtual Machine (EVM) will often replicate the corresponding token standard names. Even for public blockchains that do not use EVM, such as Solana, the Spl20 standard and the ERC-20 standard have identical definitions.

ERC-404

The ERC-404 standard pioneered by Pandora has sparked a wave of exploration into the integration patterns of FT (Fungible Tokens) and NFT (Non-Fungible Tokens).

ERC-404 attempts to 'merge' certain characteristics of the ERC-20 standard and the ERC-721 standard. By combining the token divisibility of the ERC-20 standard, it enhances the liquidity of ERC-721 standard NFTs. ERC-404 tokens can be traded on platforms like Uniswap, similar to fungible tokens. At the same time, one ERC-404 token can correspond to one NFT, known as a Replicant NFT. The mathematical relationship between them is as follows:

nReplicant NFT = [nERC404]

Where nReplicant NFT represents the quantity of Replicant NFTs, nERC404 represents the quantity of ERC404 tokens, and [n] denotes the largest integer not greater than that number.

Simply put, having a whole token allows one to hold an NFT. For example, a user holding 0.5 tokens owns 0 NFTs; a user holding 1 token owns 1 NFT; a user holding 1.5 tokens owns 1 NFT; a user holding 2 tokens owns 2 NFTs; a user holding 2.5 tokens owns 2 NFTs, and so on.

ERC-404 was once envisioned to be applied in the blockchain gaming sector, addressing the issues of low NFT efficiency, poor liquidity, and price differences. Additionally, the 404 protocol can provide additional income for liquidity providers. However, the high Gas fees have always been criticized.

ERC-50

The essence of the ERC-50 protocol is fair issuance, with nearly all operations during the presale process written into the smart contract. This protocol can automatically distribute tokens, lock them up, refund, and add LP (Liquidity Provider) to the pool automatically. According to the project team, the project can achieve: no administrators, no pre-sale allocations (often referred to as 'rat trading'), and no RUG pulls (rug pull scams).

The code documentation of the protocol highlights the following points:

• No admin, no special withdrawal rights, no rats, no one can be faster than others, no one can rug pull, and all raised funds will be added to the liquidity pool.

• The contract inherits from ERC20 token contracts.

• Fair launch function for Uniswap-V2 liquidity pools is added.

• Players only need to send the corresponding amount of Ether to the contract to receive tokens.

• Players can deposit tokens into the contract at any time before launch to get a refund.

• After meeting the conditions, players only need to send 0.0005 Ether to the contract, and the contract will send all sold tokens and the equivalent Ether from the contract to the DEX exchange to increase liquidity. Tokens can be traded immediately.

• Currently, only the Uniswap-V2 version of the contract is provided to prevent liquidity from being added before launch.

The functionalities implemented by ERC-50 are no different from the features widely implemented by IDO platforms. It integrates the entire process and writes it into the underlying system. The token protocol has received a warm welcome in the MEME token series.

314 Token Standard

The 314 token standard trend is driven by ERC-314, which allows tokens to be bought and sold through contract transfers.

The ERC-314 protocol was initially applied to the SIMP token. The innovation of this project lies in the fact that users can directly transfer ETH to its contract to purchase tokens and transfer tokens to its contract for selling, with gas costs much lower than DEX swap transactions. Subsequently, community members provided feedback that there were issues with the protocol contract formula and the LP (Liquidity Pool) Owner permissions were not truly transferred. Many people also experienced sandwich attacks during the buying and selling process, leading to increased transaction costs.



Subsequently, the trend of the 314 token protocol spread to other public blockchains, with multiple token protocols issuing new tokens based on fixing the original issues of ERC-314.

It is worth noting that many projects describe themselves as 'experimental products.' With the popularity of such tokens, there are also scam projects issuing tokens using various new token standards. WikiBit advises you to pay attention to the security of your funds when participating in such activities.