Introducing EMS Trading API  

EMS Trading API

- Unlimited trading accounts in just one place.

ERC-721

ERC-721 is a technical standard on the Ethereum blockchain for creating non-fungible tokens (NFTs).

ERC-721 - Definition

ERC-721 is a technical standard on the Ethereum blockchain for creating non-fungible tokens (NFTs). Unlike fungible tokens such as ERC-20, where each token is identical and interchangeable, ERC-721 tokens are unique and indivisible. They represent ownership of distinct digital or physical assets.

ERC-721 tokens have several key characteristics:

  • Uniqueness: Each token has a unique identifier that distinguishes it from others.
  • Ownership Tracking: The standard ensures a secure and transparent record of ownership on the Ethereum blockchain.
  • Metadata Storage: Tokens can store metadata like images and descriptions, enhancing their uniqueness.
  • Interoperability: ERC-721 tokens work with various decentralized applications that support the standard.
  • Standard Functions: Includes functions such as transferFrom(), ownerOf(), balanceOf(), approve(), and getApproved() for managing tokens.

ERC-721 operates through smart contracts on the Ethereum blockchain. These contracts define functions to create, transfer, and manage NFTs. Each token is linked to a unique tokenId and contract address, forming a globally unique identifier. This standard ensures that tokens can be tracked individually, preventing duplication or division.

ERC-721 is used in various industries:

  • Digital Art: Artists create unique digital artworks as NFTs, verifying authenticity and ownership.
  • Gaming: In-game assets like characters and items are tokenized, allowing players to own and trade them permanently.
  • Collectibles: Digital collectibles such as trading cards leverage ERC-721 to maintain uniqueness.
  • Virtual Real Estate: Virtual worlds use ERC-721 to represent ownership of virtual land and properties.
  • Certificates and Tickets: ERC-721 tokens can serve as digital certificates or event tickets, ensuring verifiable ownership.

William Entriken, Dieter Shirley, Jacob Evans, and Nastassia Sachs proposed the ERC-721 standard in January 2018. It was developed to overcome the limitations of the ERC-20 standard, which is unsuitable for representing unique assets.

The success of projects like CryptoKitties showed the potential of non-fungible tokens, leading to the widespread adoption of ERC-721.

ERC-721 defines mandatory and optional functions that a smart contract must implement to comply with the standard:

  • balanceOf(address _owner): Returns the number of tokens owned by an address.
  • ownerOf(uint256 _tokenId): Returns the owner of a specific token.
  • transferFrom(address _from, address _to, uint256 _tokenId): Transfers ownership of a token.
  • approve(address _approved, uint256 _tokenId): Approves another address to transfer a specific token.
  • getApproved(uint256 _tokenId): Returns the approved address for a token.
  • Metadata Extension (ERC721Metadata): Allows tokens to have additional metadata like name, description, and image URI.
  • Enumerable Extension (ERC721Enumerable): Enables enumerating all tokens in the contract and tokens owned by a particular address.

The primary difference between ERC-721 and ERC-20 is fungibility:

  • ERC-20 Tokens: Fungible. Each token is identical and interchangeable. Ideal for cryptocurrencies and utility tokens.
  • ERC-721 Tokens: Non-fungible. Each token is unique and cannot be exchanged on a one-to-one basis. Suitable for digital collectibles and unique assets.

Additionally, ERC-20 supports fractional ownership through decimals, while ERC-721 tokens are indivisible.

  • Uniqueness: Each token is distinct, providing true ownership of unique assets.
  • Transparency: Ownership and transaction history are recorded on the blockchain.
  • Interoperability: Compatible with various decentralized applications and marketplaces.
  • Digital Provenance: Facilitates verification of the authenticity and origin of digital assets.
  • High Transaction Fees: Ethereum network congestion can lead to expensive gas fees.
  • Scalability Issues: Ethereum's scalability is limited, affecting transaction speed and costs.
  • Complexity: Developing ERC-721 contracts requires advanced technical knowledge.
  • Market Volatility: The NFT market can be highly speculative and volatile, posing investment risks.

Several projects utilize the ERC-721 standard:

  • CryptoKitties: One of the first and most popular NFT projects, allowing users to breed and trade unique digital cats.
  • Decentraland: A virtual world where users can buy, sell, and trade virtual land using ERC-721 tokens.
  • OpenSea: The largest NFT marketplace, supporting various ERC-721 tokens for various digital assets.
  • Bored Ape Yacht Club: A collection of 10,000 unique ape-themed NFTs that also serve as membership tokens to an exclusive club.
  • SuperRare: A digital art platform where artists can tokenize and sell their unique artworks as ERC-721 NFTs.

ERC-721 continues to evolve with developments aimed at enhancing scalability and reducing transaction costs. Innovations like Ethereum 2.0 and cross-chain solutions are expected to address current limitations. These advancements will foster broader adoption and enable more diverse applications of non-fungible tokens.

  • Unique Standard: ERC-721 is the foundational standard for creating non-fungible tokens on the Ethereum blockchain, ensuring each token is distinct and indivisible.
  • Comprehensive Features: It offers essential functionalities like ownership tracking, metadata storage, and interoperability with various decentralized applications.
  • Wide-ranging Applications: ERC-721 is utilized in sectors including digital art, gaming, virtual real estate, and collectibles, enabling secure ownership and seamless trading of unique items.
  • Pros and Cons: While ERC-721 provides transparency, digital provenance, and interoperability, it also faces challenges such as high transaction fees, scalability issues, and market volatility.
  • Evolving Landscape: Ongoing advancements like Ethereum 2.0 and layer 2 solutions are enhancing the ERC-721 standard, aiming to improve scalability, reduce costs, and expand its applicability in the blockchain ecosystem.