Top 10 Token Standards You Should Know

Educated blockchain investors take time to understand the top token standards. Token standardization has come a long way since its introduction in 2017. These standards provide a structure that enables developers to innovate without losing interoperability with the network ecosystem. Today, there are token standards that are specific to certain needs and requirements.

These purpose-built tokens allow for more functionality without sacrificing security and performance. They are the backbone of the industry and have helped many new businesses enter the sector in a streamlined manner. Here are the top 10 token standards you need to know, in no particular order.

Why Token Standards are Important

Token standards save developers a lot of time and money because they don’t have to worry about creating solutions for already standardized functions. As such, they can focus on their innovative ventures and not on redefining already existing processes.

Token standards are one of the most vital aspects of the market. They provide a structure to drive innovation without reducing liquidity, interoperability, security, and other factors that occur when there is a race to create without standards. Consequently, there are now more standards than ever.

1. ERC-20

The concept of a token standard seems normal today. However, that wasn’t always the case. Ethereum brought forth the first widely used token standard. The ERC-20 token standard was originally designed to be used in-house to streamline the creation of new assets created by the development team.

The team realized that there was a strong demand for an easier way to create tokens that could operate with already existing exchanges. The decision to make ERC-20 open to the public made perfect sense. Looking back, it helped to catapult blockchain adoption and can be credited with driving the 2017 market push.

The ERC-20 token standard remains the most widely used in the world today. There are thousands of ERC-20 tokens in circulation. Additionally, many other projects adhere to ERC-20 standards to ensure they can take part in Ethereum DEXs and DeFi.

The concept of a token standard continues to expand and Ethereum now has many options for developers to consider. Despite the additional selection, ERC-20 remains one of the most popular options for crowdfunding and DeFi projects.

2. Algorand Standard Asset (ASA)

The Algorand blockchain is a project that supports advanced smart contract programmability and defined actions. The network leverages the use of the Algorand Standard Asset (ASA) protocol to ensure uniformity across its growing ecosystem. This standard is capable of creating fungible and non-fungible assets.

Algorand is a layer 1 blockchain that enables ASA tokens to represent any on-chain or off-chain asset. The standard offers full tokenization to the market and has miniscule fees compared to some other networks on this list.

The ASA standard has some features that make it ideal for businesses. For example, the Role Based Asset Control (RBAC) option enables developers to create regulatory-compliant tokens. These tokens can include restrictions on how, when,  and to whom they transfer between.

Additionally, the network supports advanced features like mediation systems that can quarantine accounts and enforce contracts based on resolutions. These options make Algorand a smart business option to consider.

3. TRC-20

The TRC-20 tokens standard shares many aspects with ERC-20 and is compatible with the network. The main difference is that the TRC-20 standard operates on the TRON Virtual Machine (TVM). This advanced DeFi-capable blockchain infrastructure was first introduced in 2017 by Justin Sun as a way to improve streaming.

Tron has had strong backing and is one of the most proponent networks in Asia. Additionally, the firm purchased BitTorrent in 2018. The network is a DPoS blockchain that offers high scalability and programmability to the market.

Notably, Tron developers enjoy lower gas fees than ERC-20 token creators and users. These lower fees have helped the project draw new users to the community. Also, the TRC-20 tokens standard has additional requirements compared to the ERC. Every token must have a standardized token supply, balance functions, approval, allowance, and transfer standards. As such, Tron developers can create decentralized platforms with less effort while enjoying compatibility with many ERC-20 platforms.

4. NEP5

NEO developers quickly followed suit after the success of ERC-20 and entered the market with the NEP5 (NEO Enhancement Proposals) standard. This standard helped the project secure the nickname the Ethereum of China. As one of the only projects that received approval from the Chinese government, the blockchain has seen growing functionality,

NEO developers enjoy the ability to program in a touring complete environment. This designation means they can complete all actions in the system. Consequently, there has been an uptick in the network’s Dapp ecosystem.

Also, NEO offers token developers some cool features that are attractive to those who need to manage multiple types of tokens simultaneously. Consequently, the network has seen extensive adoption in the fields of digital identification, tokenization, and multi-layered smart contracts.

Today, the NEP5 token standard offers a lot of options for the smart economy. For example, the network supports restricted and security tokens. These options require criteria to be met before a transfer of the asset. Additionally, NEO has a strong community of supporters who remain a pioneering force in the blockchain market.

5. XRC-20

The XRC-20 token standard is how XDC Network and XiFin blockchain developers program smart contracts and create digital assets and decentralized platforms. These networks offer ultra-low fees and high scalability with immediate block finality.

XRC-20 tokens can currently be found in many different sectors of the market. They are often used in DeFi and NFT platforms. One of the main advantages of this standard is that it can handle a wide selection of assets, including non-fungible and regulated tokens.

Both The XinFin and XDC networks offer high sustainability when compared to previous networks. These systems leverage a user-friendly interface, plug-and-pay options, plus a helpful community to streamline the creation of Dapps. Notably, developers have a lot of flexibility when building tokens using XRC-20, which makes it a popular option for financial dapps in particular

One reason why XRC-20 has found a home in the regulated token market is that these assets are compatible with ISO 20022 financial communications standards. This compatibility helps them to enjoy higher interoperability with legacy systems. As such, XDC-20 continues to see growing adoption in the market.

6. dGoods

EOS is one of the top-performing programmable blockchains in the world. EOS developers leverage the dGoods standard when creating on the EOS.IO Stack. EOS offers high transaction throughput, a supportive development community, and an expanding network of Dapps. At the core of the ecosystem is the dGoods standard.

Programming on EOS is free and open source. The dGoods standard has helped the network expand due to its reliability. It includes unique features for token creation, such as a hierarchical naming structure. This process enables developers to create sub-tokens that are tagged to another NFT.

Notably, these subtokens can be categorized in several different ways to meet your needs. Additionally, all dGoods enable developers to create dapps that display all relevant information. This data can include issuance dates, types, and features. This info is presented in a graphical format that is easy enough for new users to operate.

There are many templates to help you tokenize assets using the dGoods standard.  These templates include metadata and other crucial components to ensure the security and usability of your assets. Notably, the dGoods standard began as an option for EOS token creators but today is available on multiple networks.

7. ERC-6551

Ethereum is the king of token standards as it was the first network to introduce these options. The network has seen a multitude of token standards emerge lately due to restrictions found in the ERC-20 standard. One such standard is the ERC-6551 tokens standard.

This standard is an improvement to the ERC-721 standard which was created to simplify NFT creation. This standard enables developers to launch NFTs alone or in batches and monitor their actions. These tokens can seamlessly interact with erc-20 platforms which makes them very usable.

The ERC-6551 protocol builds on the ERC-721 token standard and enables tokens to operate as digital wallets. This structure means that the NFTs can trade, store, purchase, and sell other tokens directly from their interface. Enabling digital assets to custody of other assets is a game changer that has many in the market excited.

The EC-6551 standard is the newest on this list. It entered the market this year and was a collaborative effort between Manifold and Future Primitive. Notably, Manifold is an aFNT creator platform. They realized that there was a growing demand for gaming NFTs, such as avatars, to have customizable wearables and other features.

The ERC-6551 tokens standard operates as a sort of digital backpack that enables your FNT to store their accessories and collectibles without the need for a third-party wallet. These token-bound accounts could take NFT collecting and gaming to the next level.

8. BRC-20

In May 2023, an anonymous developer who goes by the name Domo introduced a way to make individual denominations of Bitcoin, also called satoshis, unique.  He figured out that he could leverage Bitocin’s logical ordering system to give each satoshi a unique number. This structure is called ordinal theory.

The concept began when DOMO realized that the taproot update made in November 2021 made it possible to store a script file on Bitcoin as JSON data. The ability to add small bits of code or text to satoshis opens the door for added usability and functionality on the network. What’s unique about this approach is that there are no smart contracts used to create these tokens.

BRC-20 tokens live on the Bitcoin blockchain directly. These collectibles don’t have a massive DeFi ecosystem to support them, but they are backed by a diehard community of Bitcoiners.

To date, people have created ordinals that have text, images, videos, and audio messages. These collectibles mostly mimic other popular NFT projects at this point. Notably, there is some concern about the added congestion creating more slowdowns for the Bitcoin network, as reports show that over 10 million inscriptions have entered the market since May 2023.

9. BRC-721E

The BRC-721 tokens standard is another new option that has made some waves in the market. This standard entered the market in May 2023 and was created by the Ordinals Market and Bitcoin Miladys. The goal of this standard is to help users convert their ERC-721 NFTs to Bitcoin-powered assets.

The process to create a BRC-721E token is unique in that a user must designate a Bitcoin address for their new token and burnt hair ERC-721 token first. This task is accomplished by sending it to a special wallet that has no send feature, which removes it from circulation permanently.

The user then takes the data they received from the burn and uses ordinal theory to inscribe it on a satoshi. This data includes identifiers such as the burn transaction. The system then creates and sends the BRC-721 token to the user. Notably, this is a one-way process that can’t be undone in the same transactions.

This arrangement stores the token’s metadata on the ordinal market rather than the Bitcoin blockchain directly. This reduces congestion on the Bitcoin network but doesn’t eliminate all of the effects of these new protocols on the network’s performance and fees.

The main advantage of the BRC-721E protocol is the ability to diversify your NFT collection. There is a lot of respect for Bitcoin and Bitcoin-powered NFTs are seen by many as the pinnacle collectibles due to the network’s history and current status. Additionally, Ethereum users can now access the ordinal platforms, which continue to spring up.

10. SPL

The Solana Program Library standard can be compared to the ERC-721 and EC-20 standards in one. This protocol helps Solana develop crates using a standardized interface. They stipulate crucial elements using this standard, such as the creation, management, transference, and destruction of tokens in the network.

Notably, SPL is a flexible standard that supports a wide array of digital assets ranging from NFTs to security tokens. All SPL tokens enjoy full interoperability within the SPL ecosystem, including wallets, DEXs, and Dapps. As such, more SPL tokens are in circulation than ever.

A Standard for Every Use

You Can see from this list that there are many different approaches to standardization. You have some standards that work across multiple blockchains and others that are network-specific and even use-case-specific. All of these options have helped token standardization become a guiding light to those seeking to help build a decentralized economy.

You can learn more about exciting blockchain projects here.