If you’ve been tiptoeing around the world of NFTs (non-fungible tokens) for a while, then now is the time to finally dip your toes in its powerful waters. In 2021, NFT sales volumes reached almost a staggering $25 billion, compared to only $94.9 million in 2020.
Both creators and buyers are increasingly aware of the immense power of NFTs. As “digital originals”, they take up a block on the blockchain that is tied to the unique data forever. They also have underlying smart contracts that offer endless possibilities.
Today, Ethereum remains the dominating network in the space – and whether it’s toilets in the metaverse or art to support refugees, NFTs enjoy a fast growth trajectory. But as a creator, it’s vital to be familiar with the different steps of your minting journey (publishing your art on a public ledger, making it unchangeable and temper-proof as a result).
Ethereum sets standards to guarantee that tokens created on its blockchain are usable within other ecosystems and meet specific user requirements. The token standards ERC-721 and ERC-1155 are a must-know in this sense – let’s take a closer look at both.
Understanding token standardization
But first, if ERC-721 and ERC-1155 are such popular token standards, shouldn't we know what ERC stands for? ERC refers to Ethereum Request for Comments, a term that is fully interchangeable with smart contract standards. In short, it represents a set of technical documents that define the methods and behaviors (from name registries to library themes) for those looking to leverage the Ethereum network to mint and manage tokens.
Ethereum’s smart contract programmers create these standards and suggest improvements for the future. They look at processes like token creation, transaction processing, spending, and more to ensure the Ethereum ecosystem is best equipped to reach its full potential.
The first-ever standard on Ethereum was ERC-20, first integrated in 2017. It introduced a standard for creating fungible tokens, known as the Ether cryptocurrency coins. But for NFTs that represent unique digital assets, it’s ERC-721 and ERC-1155 that truly matter.
The ERC-721 token standard
ERC-721 was the first token standard for NFTs introduced on Ethereum and remains the most popular one. Back in 2018, it was created with the aim to allow anyone to tokenize ownership of any arbitrary data – with each ERC-721 token representing a single unique and non-replicable asset. In other words, it was born to govern the management of tokens that can’t be exchanged for anything of equal value (unlike currency) as they are one-of-a-kind – be it a digital painting, a song, or a cool cap you can put on your avatar in the metaverse.
With each ERC-721 tied to one NFT only, transferability is indeed possible but slow and inefficient. Still, the most cited downside of ERC-721 is the high gas fees, meaning that a creator must spend a considerable amount to mint an NFT in Ethereum.
High gas fees are also a reason many creators increasingly consider other chains altogether, choosing Polygon, Flow, Tezos, Solana, Cardano, and others over Ethereum. Multichain NFTs are the future of many platforms, allowing both artists and collectors to mint across these and more.
This is how “hugelung”, a Reddit user, summarized gas fees for ERC-721: “Today, for my project flowerpatch.app, it costs about $75 to mint an NFT. Kind of funny, we minted 25k NFTs over time. By today's standard, it would cost $1.8 million to mint all those.”
The ERC-1155 token standard
Created in 2018, ERC-1155 was designed to tackle some of the issues ERC-721 wasn’t able to resolve. The most important differentiator is that ERC-1155 marries the capabilities of ERC-20 and ERC-721, allowing for the creation of fungible, non-fungible, and even semi-fungible tokens (such as tiered rewards in a PC game). This is why ERC-1155 is often referred to as “the next generation multi-token standard”.
What does it all mean? ERC-1155 proposes a uniform interface to address many different token development needs at the same time. Rather than creating a single NFT and tying it to a standard, you can harness entire NFT collections, making the process much more seamless and faster for creators out there. This also allows for fast batch transfers.
Therefore, what makes ERC-1155 different is that, for example, you can have all the same trees in a game tied to one NFT only. These can – but don’t have to – differ with a mint number.
The gas fees are said to be much lower too. It’s believed that with ERC-1155, gas fees are cut by up to 90%, representing a real game-changer for the NFT world. The only potential drawback of ERC-1155 is that ownership could be harder to track as it leverages less robust information logs.
While ERC-721 serves as “the golden standard”, we can’t ignore the fact that its operations are time-consuming and flood the blockchain networks with redundant code. ERC-1155 can be seen as a “lite” version, allowing multiple operations within a single transaction and bringing more efficiency and speed. The discourse keeps developing, but as a creator, it’s vital to listen to your community and choose a standard that best fits your specific needs and matches your values.