Token Standards: A Primer

You might have seen the terms ERC-20 or ERC-721 used in crypto spaces, without knowing exactly what they refer to. Today, we want to clear up a bit of information surrounding them, and give readers some more information pertaining to their instantiation on the Seascape Network: namely, Crowns, and NFTs.

BACKGROUND

But first, let’s start with a bit of context. 2020 has seen a number of developments within the Crypto community, including the rise of the so-called Ethereum crypto game. These are games whose allocation of in-game tokens is stored on a distributed ledger atop the Ethereum cryptocurrency. These dApps — decentralized apps — will employ the use of smart contracts, transaction protocols that automatically handle legally relevant events according to an established contract.

THE FUNGIBLE STANDARD

So far, so basic. But how do these smart contracts handle the infinite variety that is possible within crypto games? A token, after all, can just be just about anything, serving a wide number of vastly different functions depending on the platform of their use. They can represent anything from skill points of a character to fiat currency, and must remain interoperable with other products and services.

For tokens with a wide berth of functions that must remain mutually interoperable, many developers use the ERC-20 standard. Dating back to 2015, this standard is used for fungible tokens like the examples listed above. This allows for a number of different functions, such as transferring tokens from one account to another or to providing the balance of tokens within a particular account. It can also be used for dealings with third parties, such as expenditure, debt, and other financial transactions.

On the Seascape Network, users can use Crowns for these tasks which require fungible assets, such as purchasing, staking, loans, in-game currency, the works. What allows Crowns, or any other token on Ethereum crypto-games, function the way they should is the ERC-20 standard, which does a lot of the heavy lifting.

Serving as the pillar of the Seascape Network, Crowns serve many key functions, and will flow through the economy of players. Totalling 10 million, this fungible token will see itself flowing out carefully over the course of the next year.

THE NON FUNGIBLE STANDARD

But what about tokens which cannot be exchanged freely for others? These may include tokens which have distinguishing attributes, or stats which can be altered over time. In this case, we need so-called non-fungible tokens (NFTs), which can be used to identify unique items.

Within a smart contract, NFTs may be, for instance, collectible items, or items that can be altered through levelling up (such as weapons). They might be randomly generated, or deliberately crafted, or even bred from earlier generations of NFTs. Importantly, they cannot be destroyed, and can always be traced back to their smart contract of origin. In order for this to take place, many devs use the ERC-721 standard in their smart contracts. This allows similar functions as those listed above on the ERC-20, however they work for unique items.

The Seascape Network aims to employ the use of both fungible and non fungible tokens at once throughout the network. Fungible tokens for financial endeavors, while non fungible tokens can be minted, staked, collected, and in the future levelled up, bred, and anything else imagined by future devs. These standards indicate that sky’s the limit in terms of how they may be implemented in time. But they remain in a delicate balance to ensure the stability of the Seascape economy. If NFTs are ever claimed, they are immediately burned. Minting or apprehending new NFTs will require the further use of Crowns. In this way, the waltz of fungibility proceeds ad infinitum.

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