Token Standard

A token standard is an agreed set of functions that a token's smart contract must implement, so that any wallet, exchange, or application can work with it the same way. Standards are what make tokens interoperable: a wallet does not need custom code for every new asset, because it already knows how a compliant token behaves. On Ethereum these are published as ERCs (Ethereum Request for Comments).

The point is a common interface. If every token exposed its balance and transfer functions differently, every app would have to integrate each one by hand. A standard fixes the names and behavior of those functions, so a token that follows it plugs into the existing ecosystem the moment it launches.

Different jobs call for different standards. ERC-20 is the base standard for fungible tokens, where every unit is interchangeable - stablecoins, most fund shares of one class. ERC-721 and ERC-1155 handle non-fungible or mixed tokens, where items are unique. For regulated real-world assets, security-token standards like ERC-3643 and ERC-1400 extend the fungible model with identity checks and transfer restrictions, so the token can enforce who is allowed to hold it.

Choosing the right standard is one of the first decisions in tokenizing an asset. A plain ERC-20 is permissionless - anyone can receive and send it - which is fine for a utility token but wrong for a security that must stay among approved investors. Picking a standard that cannot enforce the compliance the asset needs is a design mistake that is painful to fix after launch.

For an investor, the standard mostly works invisibly in the background; for a builder, it decides what the token can and cannot do.

Source: Ethereum docs (ethereum.org), as of 2026.