A token standard is a published technical specification that defines the minimum set of functions, events and behaviour a token must implement on a particular blockchain. If a token follows the standard, any wallet, exchange, decentralized exchange or lending application that supports the standard can hold, display and transfer it without custom work. Developers, token issuers, custodians and auditors all rely on standards to know what a token will do.
The best-known standards come from Ethereum, where they are published as Ethereum Improvement Proposals and those for applications are labelled ERC (Ethereum Request for Comments). Other chains have their own: BNB Chain's BEP-20, Tron's TRC-20 and Solana's SPL Token programs. A standard is not a law or a licence; it describes code behaviour, not the legal nature of what a token represents.
Token standards in plain terms
A token standard is like the agreed shape of an electrical plug. Because every lamp in a country uses the same plug, any lamp works in any socket. Without the agreement, every house would need a different adapter for every appliance.
In the same way, a wallet app does not need to know anything special about a new token. If the token "plugs in" the standard way, the wallet can ask the usual questions, such as "what is my balance?" and "send five to this address", and get the usual answers. The standard says nothing about whether the lamp is any good; it only guarantees that it fits.
How a standard works: the ERC-20 example
ERC-20 was proposed in November 2015 by Fabian Vogelsteller and Vitalik Buterin and is the basis for most fungible tokens on Ethereum and Ethereum-compatible blockchains, including major stablecoins. It requires a smart contract to expose a small set of functions:
| Function or event | What it does |
|---|---|
totalSupply | Returns how many tokens exist. |
balanceOf | Returns the balance of an address. |
transfer | Moves tokens from the caller to another address. |
approve and allowance | Let an owner authorise another address, such as an exchange contract, to spend up to a set amount. |
transferFrom | Lets the authorised address move the owner's tokens within that allowance. |
Transfer and Approval events | Log each movement and authorisation so explorers and apps can track them. |
The approve-then-transferFrom pattern is what allows composability: a lending protocol or exchange can pull tokens from a user's wallet once the user has approved it. It is also a common source of losses, because an unlimited approval granted to a malicious contract can be used later to drain the wallet. The standard is described in more detail in ERC-20 token.
Main families of standards
- Fungible tokens. ERC-20, BEP-20 and TRC-20 define interchangeable units, used for currencies, stablecoin smart contracts, governance tokens and wrapped tokens.
- Non-fungible tokens. ERC-721, finalised in 2018, gives each token a unique identifier, the basis of NFTs.
- Multi-token contracts. ERC-1155 lets one contract manage many fungible and non-fungible token types, which saves fees in games and marketplaces.
- Permissioned tokens. ERC-3643 and the earlier ERC-1400 family add identity checks and transfer restrictions so that only eligible, verified holders can receive a token, a requirement for many a security token.
- Vaults. ERC-4626 standardises yield-bearing vaults, so deposit shares in a decentralized lending protocol or yield product behave predictably.
- Solana. Solana uses shared programs rather than one contract per token; the newer Token-2022 program adds optional features such as transfer fees and confidential transfers, described under Solana token extensions.
How standards are made and adopted
On Ethereum, anyone can write an Ethereum Improvement Proposal. It moves through draft, review and last-call stages before being marked final by EIP editors. Final status means the text is stable; it does not mean the standard is widely used. Adoption depends on whether wallet makers, exchanges and developers build for it. Some standards that are not about tokens, such as ERC-4337 for smart accounts, still change how tokens are held and paid for.
Standards are also copied across networks. Because many chains run the Ethereum Virtual Machine, an ERC-20 contract can be deployed almost unchanged on them, which is why the same stablecoin often exists on many chains.
Limits and risks
- A standard is an interface, not a guarantee. A contract can follow ERC-20 and still contain hidden mint functions, blacklists or transfer taxes. Audits and reading the code are still needed.
- Early flaws persist. ERC-20 has no built-in way to reject tokens sent to the wrong contract, and many tokens have been stuck that way.
- Legal status is separate. Two tokens built to the same standard can be a payment token in one case and a security in another; regulators look at rights and economics, not code format.
- Fragmentation. Different chains' standards are not interchangeable, so moving a token between them needs a crypto bridge or the issuer's own cross-chain mechanism, with added risk.
Users holding tokens of any standard still secure them the same way, through a software wallet or a hardware wallet that supports the network.