Introducing Ethereum’s New ERC721 Standard

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Background

Recently, the new Ethereum standard, ERC721, was officially confirmed and the news swept through the web like wildfire, attracting a lot of attention to Blockchain games such as CryptoKitties and Decentraland(MANA). The new 0xcert Protocol that supports ERC721 tokens also garnered a lot of attention, and is beginning its ICO for its token soon. At the end of this article, we will provide some friendly reminders about participating in the 0xcert ICO, so don’t forget to take a look.

The novelty of the ERC721 standard lies in its ability to represent “non-fungible tokens”, which means each token is unique and distinguishable. But how is this new standard related to the ERC20 standard? What are ERC721’s use cases and what future lies for it? We at Huobi Research will unveil this mystery.

What is ERC/EIP?

ERCs (Ethereum Requests for Comments) are a type of EIP (Ethereum Improvement Proposals). EIPs are design documents for features on the Ethereum network, which includes technical specifications on the feature and its uses. These are written by Ethereum developers to build consensus within the development community.

ERCs are similar to RFCs (Requests for Comments), which are publications from the Internet Engineering Task Force (IETF) that contains technical or structural proposals for new internet standards. ERCs on the other hand, are technical or structural proposals for new Ethereum standards.

EIPs function as uniform standards on the Ethereum platform, and include specifications for core protocols, user API standards, and smart contract standards. A finalized EIP provides a set of enforceable standards for Ethereum developers. Smart contracts can then be built to match the interface standards, like in object-oriented programming. A full list of EIPs can be found at https://eips.ethereum.org/all. EIP categories are shown in the figure below:

Standard Track and META EIPs are mandatory interfaces that must be satisfied, while Informational EIPs are for reference only, and are voluntary. Standard Track EIPs are the most important and usually covers the most major changes on Ethereum. Specific explanations for each category are pictured below:

To better understand the Standard Track EIPs, let’s take a look at the figure below showing the basic structure of a Blockchain platform.

ERC is an important component of EIP. The Ethereum community has standardized the EIP submission workflow, allowing developers from around the world to create and propose improvements to the Ethereum ecosystem. There is also a suggested template for submission, review and approval of new EIPs:

EIP Workflow: [Work in progress (WIP)] -> [DRAFT] -> [LAST CALL] -> [ ACCEPTED (Core EIPs only)] -> [FINAL]

Of course, this is the workflow for a successful EIP. There are many cases where the EIP is deferred, rejected, active, superseded, etc. Thus, it could be argued that EIP drafts represent the future direction of Ethereum, while final versions EIPs represent the officially recognized functions of Ethereum. As of now, the finalized ERC family is listed in the following figure:

It is clear that the ERC20 token standard, the ENS domains standard, and the hot ERC721 non-fungible token standard are among the more important proposals in the ERC family.

ERC721 Standard

Reading up until here, I hope everyone has gained some insight as to how the Ethereum community contributes to and improves the Ethereum network. Now, let’s take a closer look at the ERC721 standard specifically:

1. ERC721 tokens are non-fungible tokens (NFT), meaning that each token has a unique token_id number that can only belong to one owner at a time.
2. Unlike ERC20 tokens, which can be subdivided into 10¹⁸ pieces, the smallest unit for ERC721 tokens is 1, thus they are indivisible.
3. An owner can have many NFTs, but each NFT is distinguishable, meaning that the total balance of NFTs isn’t stored, rather it is stored as (token_id, owner_addr) pairs (as if every NFT was its own token).
4. The ERC721 interface defines functions such as approve, transfer, takeOwnership, etc. that allows ERC721 tokens to be circulated and transferred.

Thus, the ERC721 Standard will bring the ability to characterize unique digital assets on the Ethereum network. CryptoKitties is actually the first example of NFTs based on the ERC721 standard, which created value in collectible digital assets. As for future applications, ERC721 tokens can represent assets in the gaming industry, or represent physical items on chain, such as precious high-end products. The use cases are countless and the sky is the limit. Perhaps the standard will set off an explosion in the gaming industry, as using tokens to represent assets can allow uniqueness of items and true data ownership.

Lastly, we’d like to kindly remind our readers:

0xcert is an application protocol that supports the ERC721 standard. William Entriken, one of the developers of the ERC721 standard, is in fact an advisor of the project, as there are rumors falsely stating that William Entriken is the founder of 0xcert. As such, please keep this in mind when making an objective assessment of 0xcert before participating in its ICO.

References

https://eips.ethereum.org/ https://github.com/ethereum/EIPs/blob/master/EIPS/eip-1.md https://eips.ethereum.org/EIPS/eip-721 https://my.oschina.net/u/2275217/blog/1806367 https://0xcert.org/ https://bitshuo.com/topic/5abf364493163eb52a348b9c

Huobi Research

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