4.2 Token Standards: ERC-20, BEP-20, and Others

In the world of blockchain technology, tokens are digital assets that represent various forms of value, rights, or ownership. These tokens are created using specific rules or standards that ensure they operate in a consistent and predictable way across the blockchain.

Understanding token standards is crucial for anyone looking to engage with cryptocurrencies, decentralized applications (dApps), or blockchain projects in general.

In this lesson, we’ll explore what token standards are—focusing on widely used examples like ERC-20 and BEP-20—and how they fit into the broader blockchain ecosystem.

What Are Token Standards?

Token standards are guidelines or specifications that dictate how tokens should behave on a particular blockchain.

They ensure that tokens are interoperable and behave predictably across various platforms such as wallets, decentralized exchanges (DEXs), and smart contracts.

Token standards define:

• How tokens are created
• How they are transferred
• How smart contracts and applications can interact with them

Why Token Standards Matter

Token standards are crucial to the success and scalability of blockchain ecosystems. Here’s why:

✅ Interoperability

Tokens built on the same standard can seamlessly interact with wallets, exchanges, DeFi protocols, and marketplaces without requiring custom code or integration efforts. This enhances cross-chain compatibility and ensures that tokens can be used across different dApps and platforms within the same ecosystem.

✅ Consistency

By following a shared token standard, developers create predictable, well-defined behavior for their tokens. This reduces bugs, improves documentation, and increases user trust, as users can rely on the standard’s familiar functionality across different projects. It also encourages open-source development, where developers can build upon and learn from others.

✅ Security

By using well-established and audited token standards, developers minimize the risk of introducing security vulnerabilities and bugs. Token standards are often reviewed by the community and security experts, ensuring that common issues (such as reentrancy attacks) are avoided. However, developers still need to ensure their own contract logic is secure, especially when introducing custom functionality like minting or burning.

✅ Efficiency

Token standards provide predefined functions (e.g. transfer(), approve()) that developers can reuse, enabling quicker and more efficient creation of new tokens. This allows developers to focus on building unique features or integrations, which speeds up innovation and fosters a more diverse and thriving ecosystem. Token standards also help new projects launch more rapidly, contributing to the overall growth of the blockchain space.

How Token Standards Work in Practice

The adoption of token standards greatly improves the usability and functionality of blockchain systems. Here’s how token standards generally operate in practice:

1. Smart Contract Deployment: Developers create a smart contract that implements a specific token standard interface (e.g. ERC‑20 on Ethereum or BEP‑20 on BNB Chain). This contract defines how the token behaves—including how balances are tracked and how tokens are transferred or approved for spending.
2. Token Issuance: Tokens are “minted” (created) based on parameters coded into the contract—such as total supply, ownership distribution, minting permissions, and possible deflation mechanisms (like burning). Some tokens mint all supply at once; others support ongoing minting.
3. Interaction with DApps: Once deployed, tokens can be used in decentralized applications (dApps) like DeFi protocols, games, or NFT marketplaces. These dApps interact with the token contract through standardized functions (like transfer() or approve()), enabling transfers and payments.
4. Exchanges: Tokens following well-known standards can be integrated into exchanges—both centralized and decentralized. Standardized interfaces allow exchanges to recognize and support tokens easily, although centralized exchanges often require additional listing procedures, including audits or issuer verification.

ERC-20: The Standard for Ethereum-Based Tokens

What is ERC‑20?

The ERC-20 (Ethereum Request for Comment 20) standard is the most widely recognized and used token standard in the cryptocurrency world. It defines a set of rules that Ethereum-based tokens must follow to ensure they are compatible with Ethereum's ecosystem. An ERC-20 token can represent anything from digital currencies to NFTs (non-fungible tokens) and much more. Ethereum’s ERC-20 token standard allows for the creation of smart contracts, which enable automatic token transactions without the need for intermediaries.

Key Features of ERC-20 Tokens

Uniformity: Each ERC-20 token follows the same basic rules, ensuring compatibility across Ethereum wallets, exchanges, and other applications.

Functions: ERC-20 tokens must implement certain functions to handle basic token operations:

Note: There are also optional metadata functions: name(), symbol(), decimals(), etc.

How ERC-20 Tokens Operate

1. Minting: When an ERC-20 token is created, a smart contract is deployed on the Ethereum blockchain, which specifies the total supply and the rules for the token. In most cases, the initial supply is set upon deployment and is fixed. However, some ERC-20 tokens are designed to allow additional minting of tokens after deployment, enabling dynamic supply control (for example, inflationary tokens or tokens used in staking mechanisms).
2. Transferring: Users can transfer ERC-20 tokens between Ethereum addresses using the standard transfer functions defined by the smart contract. Transfers require gas fees, which are paid in ETH, and these fees can vary based on network congestion and contract complexity.
3. Trading: Since all ERC-20 tokens follow the same standard, they can be easily traded on decentralized exchanges (DEXs) and centralized exchanges (CEXs). The standardization ensures that exchanges don’t have to customize their listings for each new token, making the integration process quick and efficient. On DEXs, ERC-20 tokens are typically traded through liquidity pools, and on centralized exchanges, they are handled like any other asset, with order books and market makers.

Real-World Examples

• Tether (USDT): While Tether is issued on multiple blockchains, the ERC-20 version is one of the most commonly used on Ethereum-based platforms and in the DeFi ecosystem. Tether maintains its 1:1 peg to the dollar by holding a reserve of fiat and other assets.
• Chainlink (LINK): Chainlink is a decentralized oracle network that enables smart contracts to securely interact with real-world data (e.g. price feeds, weather data, or IoT sensors). LINK, the native token of the Chainlink network, is used to pay oracle nodes for retrieving and verifying off-chain data. The ERC-20 LINK token plays a critical role in the DeFi ecosystem, where smart contracts rely on real-world data to execute.
• Uniswap (UNI): UNI is the governance token for the Uniswap decentralized exchange (DEX), one of the most popular platforms for swapping ERC-20 tokens.

Purpose and Benefits

• Interoperability: Because all tokens implementing ERC‑20 adhere to the same interface, wallets, exchanges, dApps can support many tokens without custom integration.
• Standardized Behaviours: The core functions of ERC-20 tokens, such as transfer(), approve(), and balanceOf(), always behave in predictable and consistent ways. This standardization ensures that developers and users can interact with any ERC-20 token using the same interfaces, reducing the complexity of integrating and interacting with new tokens. This consistency leads to greater reliability, user trust, and developer efficiency.
• Ecosystem Maturity: The Ethereum ecosystem has a large and mature body of code, tools, libraries, and audits that significantly reduce the risks for developers. Established platforms like OpenZeppelin provide secure smart contract templates, which help developers avoid common vulnerabilities. The availability of well-reviewed code and auditing resources enables developers to create tokens with lower risk, while also benefiting from a proven and secure ecosystem.

Limitations and Known Issues

• Gas Fees and Scaling Limitations: Ethereum’s network congestion and high gas fees can make small or frequent transactions expensive, especially during times of high demand. This is particularly problematic for DeFi applications, NFTs, and microtransactions. While Ethereum's Layer-2 solutions (such as Optimism, Arbitrum, and Polygon) offer potential solutions for scaling and reducing fees, Ethereum's mainnet continues to face scalability challenges. Ethereum 2.0 aims to address some of these issues with upgrades like sharding and proof-of-stake, but these solutions are still in development.
• Token Loss Risks: Since ERC-20 tokens do not include a standard “on-receive” hook, there is a risk that tokens sent to a smart contract or address that is not designed to accept them may be lost irrecoverably. If users mistakenly send tokens to a contract that doesn’t support ERC-20 tokens or isn't designed to handle them, the tokens may be permanently lost, as there is no refund mechanism built into the ERC-20 standard. Therefore, it's critical to double-check contract addresses and ensure the recipient is capable of handling ERC-20 tokens properly.
• Allowance Front‑Running Risks: The ERC-20 token approval pattern (using the approve() and transferFrom() functions) can be vulnerable to front-running attacks, where an attacker exploits the timing between the approval and the actual token transfer. In these attacks, an attacker can observe approval transactions on the blockchain and execute their own transferFrom() call before the legitimate transaction occurs, resulting in the loss of tokens. Developers can mitigate this by using safer approval patterns (e.g. increaseAllowance() and decreaseAllowance()) and reducing the window for approval events.

BEP-20: The Standard for Binance Smart Chain-Based Tokens

What is BEP-20?

The BEP-20 standard is the BNB Chain counterpart to Ethereum’s ERC-20. While both standards define similar token functionality, BEP-20 is optimized for the high-speed, low-fee ecosystem of BNB Chain, which supports faster block times (~3 seconds) and more cost-efficient transactions compared to Ethereum. BEP-20 tokens integrate seamlessly within the BNB Chain ecosystem and can be used across a wide range of decentralized applications (dApps), exchanges, and wallets.

Key Features of BEP-20 Tokens

Compatibility: Like ERC-20, BEP-20 tokens are fully compatible with BNB Chain’s decentralized exchanges, wallets, and other dApps, ensuring easy integration within the BNB Chain ecosystem.

Functions: BEP-20 tokens implement key functions similar to ERC-20, including transfer(), approve(), allowance(), and transferFrom(), which enable token transfers, approval workflows, and balance tracking. Additionally, developers have the flexibility to extend BEP-20 with optional features like minting, burning, or freezing tokens, allowing for further customization based on use cases.

How BEP-20 Tokens Operate

1. Minting: BEP-20 tokens are created through smart contracts deployed on the Binance Smart Chain. Developers can set parameters like total supply, initial distribution, and minting rules, allowing for flexible tokenomics.
2. Transferring: BEP-20 tokens can be transferred between wallets and users, provided they follow the BEP-20 standard. This ensures interoperability across Binance Smart Chain wallets, exchanges, and dApps, with the option to include additional features like token freezing or whitelisting.
3. Trading: BEP-20 tokens can be traded on decentralized exchanges and centralized exchanges that support BSC. Centralized exchanges may require listing procedures such as audits and compliance checks.

Real-World Examples

• PancakeSwap (CAKE): CAKE is the governance and utility token for the PancakeSwap decentralized exchange (DEX) on BNB Chain. Users can stake CAKE for rewards, participate in governance, and provide liquidity to earn more CAKE tokens. It’s a BEP-20 token designed for low-cost and high-speed transactions within the BNB Chain ecosystem.
• Binance Coin (BNB): Originally launched as an ERC-20 token on Ethereum, BNB was migrated to BNB Chain when the chain was launched in 2020. BNB now serves as the native gas token for BNB Chain, used for transaction fees, staking, governance, and more. The token also follows a deflationary burn mechanism, where a portion of the supply is periodically burned to reduce its total circulating supply.

Purpose and Benefits

• EVM Compatibility: BEP-20 mirrors the ERC-20 standard, enabling Ethereum developers to easily port their smart contracts to BNB Chain with minimal changes. This compatibility simplifies development and accelerates adoption by providing a familiar environment. Additionally, it enables cross-chain compatibility via bridges (e.g. Binance Bridge), allowing assets to move between Ethereum and BNB Chain with ease.
• Lower Transaction Fees: Transactions on BNB Chain are much faster and cost a fraction of what they would on Ethereum, thanks to lower gas fees. This makes BNB Chain an ideal platform for high-frequency applications, microtransactions, and DeFi protocols, where low-cost transactions are essential for user experience and protocol efficiency.
• Faster Block Times: BNB  Smart Chain (now BNB Chain) has reduced its block time via the Maxwell hard fork. As of 30 June 2025, the average block time is roughly 0.75 seconds, down from 1.5 seconds.
• Flexible Token Design: BEP-20 tokens support optional features like minting (creating new tokens) and burning (permanently removing tokens), giving developers full control over the token’s supply dynamics. This flexibility makes BEP-20 ideal for a wide range of use cases, including utility tokens, stablecoins, governance tokens, reward tokens, and more.
• Robust Ecosystem Support: BEP-20 tokens are widely integrated across the BNB Chain ecosystem, with native support on DEXs, wallets (e.g. Trust Wallet, MetaMask), and centralized exchanges (e.g. Binance). This broad support enables easy access to liquidity, staking, yield farming, and other DeFi services, making it simple for users and developers to engage with the BNB Chain ecosystem.

Limitations and Known Issues

Despite its strengths, BEP‑20 tokens also come with trade-offs and some risks you should understand.

1. Centralization Concerns

• BNB Chain uses a Proof‑of‑Staked Authority (PoSA) consensus mechanism. Every 24 hours, 45 validators are elected based on staking—21 top stakers become Cabinets and the rest are Candidates. In each epoch, 21 validators (18 from Cabinets and 3 from Candidates) are selected to produce blocks, making the system more efficient while being less decentralized than large‑PoS networks.

2. Security Risks

• While BNB Chain supports many of the same smart contracts as Ethereum thanks to its EVM compatibility, copies or ports that don’t account for differences in consensus assumptions, proof/verification libraries, gas behaviour, or external infrastructure (e.g. bridges) can introduce serious vulnerabilities. Developers who assume identical behaviour may accidentally leave gaps in input validation, proof verification, or cross‑chain logic.
• Because DEXs like PancakeSwap operates on BNB Chain with relatively low gas and transaction costs, it’s inexpensive for anyone to deploy and list tokens. This low barrier attracts many spam or scam tokens—especially the kinds of tokens whose contracts are lightweight, cloned or poorly audited—meaning users on DEXs like PancakeSwap need to be particularly cautious.

3. Bridge Risks

• Many BEP‑20 tokens on BNB Chain are bridged or wrapped versions of tokens from other chains (especially ERC‑20 assets like USDT or USDC). These bridges lock or lock‑up the original asset, then issue a pegged BEP‑20 token on BNB Chain. However, some stablecoins or tokens are also issued natively on BNB Chain, not all are bridged, and bridging introduces additional trust / security considerations.
• Cross‑chain bridges can serve as a single point of failure. Many of them rely on centralized key‑management, smart‑contracts that hold large locked funds, or few validators. As seen with major exploits (e.g. Poly Network, Multichain), vulnerabilities in these components have allowed attackers to drain or mint large amounts of assets.

4. Fragmented Liquidity

• Some tokens exist in both ERC-20 and BEP-20 versions, which can lead to liquidity fragmentation between the Ethereum and BNB Chain ecosystems. This can confuse users, especially when transferring tokens, as they may accidentally send tokens to the wrong network (e.g. sending ERC-20 USDT to a BEP-20 address). If the wallet or exchange doesn't support the token’s network, the funds can be lost. To mitigate this, wrapped tokens and cross-chain bridges are often used to facilitate safe transfers between networks.

5. Reputation Risks

• Due to the relative ease of launching BEP-20 tokens, combined with less stringent scrutiny than on Ethereum, there are more scams, rug pulls, and fraudulent projects in the BNB Chain ecosystem. This situation negatively impacts user trust, especially when dealing with unknown or unaudited tokens. While some projects in the space are legitimate, others may disappear with users’ funds, highlighting the need for caution and due diligence before interacting with new or unverified tokens.

ERC‑20 vs BEP‑20: Comparative Analysis

Other Token Standards

While ERC-20 and BEP-20 are the most commonly used token standards, especially for fungible tokens (tokens with equal value and interchangeability), there are other important standards tailored to different use cases—such as non-fungible tokens (NFTs), multi-token functionality, or optimized performance on alternative blockchains.

ERC-721: The Non-Fungible Token (NFT) Standard

What is ERC-721?

ERC-721 is a token standard on the Ethereum blockchain designed for non-fungible tokens (NFTs)—tokens that are unique and not interchangeable. Unlike ERC-20, where each token is identical and has the same value, each ERC-721 token represents a distinct asset.

It was proposed in EIP-721 (Ethereum Improvement Proposal) and has become the foundational standard for NFTs.

Key Features of ERC-721

• Uniqueness: Each ERC-721 token has a unique identifier (called token ID) that distinguishes it from any other token. This ensures that each token is non-fungible and can represent one-of-a-kind assets like artwork, music, or in-game items.
• Ownership: ERC-721 tokens enable the identification and verification of the token’s owner. The blockchain keeps a public record of the ownership, ensuring provable authenticity of the asset.
• Metadata: Each token can have associated metadata (often in the form of a URL) that links to a digital file or a JavaScript Object Notation (JSON) object. This metadata contains descriptive attributes such as the token’s image, creator info, and other defining features. The metadata can be static or dynamic, depending on how the token is implemented.
• Interoperability: ERC-721 tokens are widely supported by NFT marketplaces like OpenSea and Rarible, making it easy to list, buy, and sell these unique assets. This ensures that the NFTs can be transferred across platforms and interact with various decentralized applications (dApps).

How ERC-721 Tokens Operate

1. Minting: Each NFT is individually minted with its own metadata.
2. Transfer: Users can send NFTs to other users using the transferFrom or safeTransferFrom functions.
3. Ownership Tracking: The smart contract records which address owns which token.

Key Functions

• ownerOf(tokenId): Returns the address that owns a given token.
• tokenURI(tokenId): Returns the metadata URI of the token.
• transferFrom(from, to, tokenId): Transfers a token between addresses.

Real-World Examples:

• CryptoPunks: One of the earliest NFT collections.
• Bored Ape Yacht Club (BAYC): Highly valued NFT avatars.
• Decentraland Land Parcels: Virtual land NFTs used in a metaverse environment.

ERC-1155: The Multi-Token Standard

What is ERC-1155?

ERC-1155 is a versatile Ethereum token standard introduced through EIP-1155. It allows a single smart contract to manage multiple types of tokens — both fungible tokens (like ERC-20) and non-fungible tokens (like ERC-721). This means developers can handle different token types within one contract, significantly reducing the complexity and gas costs associated with managing multiple token standards.

Originally developed by Enjin, a blockchain gaming platform, ERC-1155 was designed to improve efficiency and reduce redundancy, especially for use cases in gaming and digital collectibles. It allows for the creation of multidimensional assets, enabling in-game items or NFTs to represent both unique collectibles and fungible items (e.g. currencies or resources) in a single contract.

Key Features of ERC-1155

• Multi-token support: One contract can represent various token types.
• Batch transfers: Multiple tokens can be transferred in a single transaction, reducing gas costs.
• Metadata flexibility: Each token ID can have separate metadata definitions.
• Efficiency: Better suited for blockchain games or apps that require handling many tokens at once.

How ERC-1155 Tokens Operate

1. Minting: Developers can mint a batch of tokens with different token IDs.
2. Transfer: Tokens can be transferred individually or in batches.
3. Identification: Each token ID has associated metadata indicating if it’s fungible or non-fungible.

Key Functions

• balanceOf(address, id): Checks how many of a particular token type a user owns.
• safeBatchTransferFrom(...): Transfers multiple token types in one transaction.
• uri(id): Returns metadata URI for the specified token ID.

Real-World Examples

• Gods Unchained: A blockchain trading card game using ERC-1155 cards.
• Enjin Marketplace: Digital items for games and collectibles.
• The Sandbox (SAND): Virtual assets like land and in-game items.

TRC-20: The Fungible Token Standard on TRON

What is TRC-20?

TRC-20 is the technical standard used for fungible tokens on the TRON blockchain, offering a similar structure to Ethereum's ERC-20. It defines how tokens should be issued, transferred, and approved.

TRC-20 tokens operate on TRON’s smart contract system and offer fast, low-fee transactions—making them attractive for applications with high transaction volumes.

Key Features of TRC-20

• Speed and Low Fees: One of the standout features of TRC-20 tokens is their ability to handle high transaction throughput (over 2,000 transactions per second), making them ideal for high-volume applications. TRON also boasts extremely low transaction fees, which are particularly useful for microtransactions or applications that require frequent token transfers.
• TRON Ecosystem Integration: TRC-20 tokens are seamlessly integrated into the broader TRON ecosystem, supporting wallets (like TronLink), decentralized exchanges (like JustSwap), and staking platforms. This standardization allows developers and users to easily interact with TRC-20 tokens across different applications and services within the TRON blockchain.

How TRC-20 Tokens Operate

1. Deployment: A TRC-20 smart contract is deployed on the TRON blockchain.
2. Token Interaction: Users can send, receive, and approve TRC-20 tokens using compatible wallets.
3. Ecosystem Integration: TRC-20 tokens are compatible with TRON-based dApps and exchanges like JustSwap.

Real-World Examples

• USDT (on TRON): The TRC-20 version of Tether (USDT) is used for fast and low-cost stablecoin transactions within the TRON ecosystem. USDT on TRON offers a convenient option for users who want to leverage stablecoins while benefiting from TRON’s high-speed transactions and minimal fees. It’s commonly used for DeFi applications, trading, and remittances.
• JUST (JST): JST is the governance and utility token of the JUST DeFi ecosystem on the TRON blockchain. It enables users to participate in staking, voting, and governance of the platform. The token is integral to the ecosystem’s DeFi services, which include lending, borrowing, and other decentralized finance activities, providing low-cost and high-speed solutions for users.
• WINkLink (WIN): WINkLink is a decentralized gaming and betting platform that utilizes the WIN token to enable users to earn rewards, stake tokens, and participate in governance within the platform. The WIN token powers games, betting, and other entertainment features on the WINkLink ecosystem, making it a great example of a TRC-20 token in the gaming and gambling sector.

SPL Tokens: Token Standard on Solana

What is an SPL Token?

The Solana Program Library (SPL) is the standard for creating fungible and non-fungible tokens on the Solana blockchain, which is renowned for its ultra-fast performance and low transaction costs. SPL tokens follow a standardized format that makes it easy to create and interact with tokens across the Solana ecosystem.

Key Features of SPL Tokens

• Token Types: SPL tokens can be both fungible (e.g. stablecoins like USDT or USDC on Solana) and non-fungible (NFTs). This flexibility allows SPL to be used across a variety of use cases, from DeFi and gaming to NFT platforms and enterprise applications.
• Programmatic Management: SPL tokens are governed by programs (smart contracts) written in Rust or C. These programs are compiled into BPF bytecode and run on Solana’s high-performance runtime, enabling extremely fast transaction processing. Solana’s architecture provides significant scalability, processing up to 65,000 transactions per second (TPS), with near-zero transaction fees.
• Solana’s Speed and Cost Advantage: Solana’s design enables low-latency and high-throughput operations, which makes it ideal for applications with high transaction volumes like DeFi, NFTs, and gaming. Solana’s network can handle vast amounts of data while keeping costs extremely low (around $0.00025 per transaction).

How SPL Tokens Operate

1. Creation: Developers use Solana CLI or platforms like Solana Explorer or Phantom Wallet to create SPL tokens.
2. Distribution: Tokens can be airdropped, traded, or integrated into dApps.
3. Integration: Used in DeFi platforms like Raydium, Serum, and NFT platforms like Magic Eden.

Real-World Examples

• USDC (on Solana): The Solana version of USDC is a stablecoin pegged to the US dollar, enabling near-instant transfers with low fees. By leveraging Solana’s high transaction throughput (65,000+ transactions per second) and low costs, USDC on Solana is widely used in DeFi, exchanges, and for remittances in the Solana ecosystem. This version allows users to transact more efficiently and at a lower cost compared to USDC on Ethereum.
• RAY (Raydium): RAY is the governance and utility token of Raydium, a decentralized exchange (DEX) built on Solana. Raydium is known for providing liquidity pools, AMM (Automated Market Maker) functionality, and integration with Serum’s centralized order book. The RAY token is used for staking, governance, and incentivizing liquidity providers. Raydium is one of the key players in the Solana DeFi ecosystem, and the RAY token plays a central role in its decentralized governance and protocol rewards.
• SOL-based NFTs via Metaplex: NFTs on Solana are primarily powered by the Metaplex protocol, which provides a standardized framework for creating, minting, and managing NFTs on the blockchain. The Metaplex NFT standard is built on SPL tokens, offering faster and cheaper transactions compared to Ethereum-based NFTs. This makes Solana an attractive platform for NFT creators and collectors looking for lower transaction fees and quicker minting times. Metaplex has become the go-to tool for creating NFT marketplaces and NFT projects within Solana’s growing ecosystem.

Summary Comparison Table

Final Thoughts

The evolution of token standards mirrors the dynamic growth and specialization of the blockchain ecosystem. While ERC-20 and BEP-20 remain foundational for fungible tokens, innovations like ERC-721, ERC-1155, TRC-20, and SPL have expanded the use cases of blockchain, supporting everything from gaming and digital collectibles to high-speed, low-cost financial applications.

As the blockchain space continues to mature, these standards enable more tailored, optimized solutions for a wide range of industries. Whether you’re developing on blockchains, evaluating projects, or participating in decentralized ecosystems, understanding these token standards gives you the framework to navigate the rapidly changing landscape of the blockchain world.