“ERC” stands for Ethereum Request for Comments. It is a set of technical documents that propose, define and standardize improvements, new features or conventions for the Ethereum blockchain. The main purpose of ERCs is to ensure interoperability and compatibility across the Ethereum ecosystem.
How an ERC works
- Proposal: a developer or entity in the Ethereum community identifies a need for a new standard or enhancement and writes a formal proposal. This proposal describes the technical details of the standard, including the functions and events that a smart contract must implement in order to be compliant with that ERC.
- Discussion and review: the proposal is then subject to a period of intense discussion and review by the Ethereum community. Developers, researchers, and other ecosystem members provide feedback, identify potential issues, and propose changes. This collaborative process ensures that the final standard is robust and useful.
- Adoption: If the proposal receives sufficient consensus and is deemed beneficial to the ecosystem, it is approved and given a unique ERC number (e.g. ERC-20, ERC-721). Once adopted, it becomes an official standard that developers can use.
Why ERCs are important
- Interoperability: They allow different dApps, wallets and exchanges to interact seamlessly with tokens and smart contracts. Without ERCs, each developer would have to create their own rules, leading to fragmentation and inefficiency.
- Security: By following well-tested and reviewed standards, developers can reduce the risk of vulnerabilities in their smart contracts.
- Innovation: Provides a solid foundation on which developers can build, accelerating the creation of new apps and services in the Ethereum ecosystem.
- User Experience: Facilitates a more seamless user experience because users know that their wallets will support ERC-20 tokens, for example, regardless of the specific project that issued them.
Popular examples of ERC
- ERC-20: The most popular standard, used to create fungible tokens. This means that each token has the same value and properties as any other token of the same type. Examples include most utility and governance tokens, such as USDC, USDT, UNI, AAVE, etc.
- ERC-721: The standard for non-fungible tokens (NFTs). Each ERC-721 token is unique and cannot be replaced by another. It is used for digital art, collectibles, virtual properties, etc. Examples include CryptoPunks and most NFTs.
- ERC-1155: A multi-token standard that allows the creation and management of both fungible and non-fungible tokens within the same smart contract. It provides greater efficiency and flexibility and is often used in games and metaverses.
ERC vs. EIP (Ethereum Improvement Proposal)
It’s important to know that ERCs are a subcategory of EIPs (Ethereum Improvement Proposals), which are broader proposals that cover a much wider range of changes, from fundamental protocol updates (such as moving to Proof of Stake) to application standards. The ERCs focus strictly on application-level standards, i.e. how certain types of tokens or smart contract interactions should work. Virtually every ERC is a type of EIP, but not every EIP is an ERC.
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