How important are Tokens & Standard Ethereum Protocol Tokens
The main function of tokens is to be an incentive and give governance to “holders ” . Having governance tokens makes you an effective part of the future of the protocol, that is, the decentralization of projects is reflected in the distribution ofgovernance tokensand the variety of addresses that hold these tokens in their wallets.erc20 token creator The more diverse the addresses they “hold”, the more decentralized the application is.
The main function of tokens is to be an incentive and give governance to “holders ” . Having governance tokens makes you an effective part of the future of the protocol, that is, the decentralization of projects is reflected in the distribution ofgovernance tokensand the variety of addresses that hold these tokens in their wallets. The more diverse the addresses they “hold”, the more decentralized the application is.
Decentralized applications can create tokens according to their business model to encourage users to interact with the network and then generate rewards that will be shared with all token holders.
To clarify, let’s use an example: let’s say that Goblockchain creates a token called Gotoken . As the user interacts with the network, he starts to be rewarded with the Gotoken , when sharing a post, taking a course, and this token also has governance functions, this means that alldigital walletswho own the Gotokkens will be entitled to participate in decisions about the future of the Goblockchain, so decentralized applications are seen as collaborative.
In “play to earn” games, the player is rewarded according to his performance in the game and in some games just the fact of playing is enough to earn the tokens , for example in cryptobombs when destroying the chests, the player receives BCOINs which is the game token, which can be exchanged for USDT or other tokens inDExfrom Binance Smartchain.in DeFi ecosystems, tokens are distributed to erc20 token generator LPs as a way of attracting users to provide liquidity in the pools. This type of reward distribution allows protocol users to be part of the ecosystem and generate more value for the token.
Standard Ethereum Protocol Tokens
ERC-20: Standard fusible token from the ethereum network that implements API for tokens within a smart contract. Examples of functions characteristic of the ERC-20:
*Token transfer between accounts
*Show the current balance of an account
*Show the total token available on the network
*approving how much of a checking account can be spent by a third party
*If a smart contract implements these functions and events it can be called an ERC-20 Token contract, and when it is sent to the blockchain network (deploy) it will keep the traceability of the token created on Ethereum.
ERC -721: The ERC721 token is well known by the acronyms NFT (Non-Fungible Token) being used to uniquely identify something or someone. Unlike ERC20 which gives us identical tokens, the ERC721 token offers us exclusivity, so no token is the same.
Today, its application is best known for its collectibles, such as the “ Word of Women — WOW ” project, which features a collection of 10,000 figurines where each one has distinct characteristics and its exclusive contract. We say that they are non-fungible tokens because they cannot be added like the ERC20 case: 1 Eth + 1 Eth = 2 Ethers, 1 WOW + 1 WOW = 1 WOW + 1 WOW, they cannot be added as they are totally different smart contracts.
ERC-721 introduces the standard for NFT tokens, where this token type is unique and can have different values from another token of the same smart contract, all NFT’s have a uint256 type variable called tokenId , so for any create erc20 token the contract address pair, uint246 tokenId is globally unique , so dApps can have a converter that takes the tokenId as input and returns an image, as in the case of the WOW Token shown above.
ERC721is a non-fusable token standard that implements APIs within a smart contract. Its main functions are:
*Transferring tokens from one account to another account
*View the current account balance
*See the owner of a specific token
*Total tokens available on the network
*Functionality that allows approval of the movement of a certain amount of tokens from an account by a third party.
