With the rapid development of blockchain technology, decentralized applications (DApps) have gradually become an important component of the blockchain ecosystem. In the development of DApps, smart contracts, as their core component, undertake the crucial responsibilities of implementing decentralized logic and ensuring transaction security. Smart contracts can not only automatically execute preset code on the blockchain but also manage assets, facilitate transactions, and more.

In the development of smart contracts, different standards provide developers with various frameworks, enabling more efficient and standardized development. Among them, ERC-20 and ERC-721 are two of the most common and important smart contract standards, representing the development specifications for tokens and non-fungible tokens (NFTs), respectively. These two standards are widely used in decentralized finance (DeFi), gaming, art, collectibles, and many other fields, becoming key components in DApp development.

This article will explore the definitions, characteristics, and application scenarios of ERC-20 and ERC-721, further analyzing their important roles in practical DApp development.

I. Overview of the ERC-20 Standard

ERC-20 (Ethereum Request for Comments 20) is a token standard on the Ethereum platform. It provides a unified set of rules and interfaces for tokens on the Ethereum blockchain, enabling interoperability between different tokens across various DApps and trading platforms. The ERC-20 standard was proposed in 2015 and specifies the implementation methods for token issuance, transactions, balance queries, and other functions.

Key Features of ERC-20:

1. Unified Interface: ERC-20 defines six basic function interfaces, including totalSupply, balanceOf, transfer, approve, allowance, and transferFrom. These interfaces ensure basic token operations such as querying balances, transferring tokens, and approving token usage.

2. Interoperability: Tokens issued based on the ERC-20 standard can circulate across various platforms within the Ethereum ecosystem. For example, ERC-20 tokens can be traded on decentralized exchanges (DEXs) or used as assets in smart contracts.

3. Wide Application: The ERC-20 standard is widely used in ICOs (Initial Coin Offerings), DeFi protocols, decentralized financial products, and many other fields. Almost all tokens based on Ethereum adhere to this standard.

Application Scenarios of ERC-20:

1. Decentralized Finance (DeFi): In the DeFi ecosystem, ERC-20 tokens are the most common type of asset. For example, USDT, DAI, and UNI are all ERC-20 tokens that circulate on decentralized exchanges (such as Uniswap) and are used in DeFi protocols for lending, trading, yield farming, and more.

2. ICOs and Token Issuance: In the early stages of blockchain projects, many projects raise funds through ICOs by issuing ERC-20 tokens as the project's native assets. Through ERC-20 tokens, investors can invest and trade on the Ethereum platform.

3. Rewards and Points Systems: In some DApps, ERC-20 tokens are used as the basis for reward or points systems. For example, in decentralized gaming platforms, players can earn ERC-20 tokens as rewards for participating in games and use them for spending or trading within the platform.

4. Stablecoins: Many stablecoins, such as Tether (USDT) and USD Coin (USDC), adhere to the ERC-20 standard. By being pegged to fiat currencies, they provide a stable digital currency, offering a reliable store of value for lending, trading, and other scenarios in DeFi protocols.

II. Overview of the ERC-721 Standard

Unlike the ERC-20 standard, the ERC-721 standard is designed for non-fungible tokens (NFTs). NFTs are unique, non-interchangeable digital assets, each with distinct attributes that make them unique on the blockchain. The ERC-721 standard defines the basic behavior and interfaces for NFTs, enabling their creation, trading, and transfer on the Ethereum network.

Key Features of ERC-721:

1. Uniqueness: ERC-721 tokens are non-fungible, with each token having a unique identifier (ID). This makes them ideal for representing unique digital assets such as artworks, in-game items, domain names, and more.

2. Flexibility: The ERC-721 standard allows developers to assign different attributes and metadata to each NFT. This metadata can include information about the creator of an artwork, the rarity of a game item, and more, giving each NFT its unique value.

3. Standardized Interface: The ERC-721 standard defines multiple function interfaces, such as ownerOf, transferFrom, approve, etc., for querying NFT ownership, transferring NFTs, approving other addresses to use NFTs, and other operations.

Application Scenarios of ERC-721:

1. Digital Art and Collectibles: One of the most famous applications of the ERC-721 standard is the issuance of digital art and collectibles. Through ERC-721, artists can issue unique digital artworks on the blockchain, which can be bought and sold on the market. For example, NFT art platforms like OpenSea and Rarible use the ERC-721 standard to trade artworks.

2. In-Game Items: In decentralized games, ERC-721 tokens are used to represent unique in-game items, characters, or equipment. These items are non-fungible and can be traded both within and outside the game. For example, "CryptoKitties" is a well-known ERC-721 application where players buy, breed, and trade virtual cats to earn profits.

3. Virtual Land and Real Estate: Some virtual worlds, such as Decentraland and The Sandbox, use ERC-721 tokens to represent virtual land or real estate. Players can buy, sell, or develop these virtual lands, forming a decentralized virtual real estate market.

4. Identity Authentication and Certificates: ERC-721 can also be used for identity authentication and certifying qualifications or credentials. For example, some educational institutions use ERC-721 tokens to issue digital certificates, proving that students have completed specific courses or achieved certain academic accomplishments.

III. Comparison and Integration of ERC-20 and ERC-721

Although both ERC-20 and ERC-721 are smart contract standards on Ethereum, they have fundamental differences. ERC-20 tokens are fungible, with each token being identical, making them suitable for managing and trading tokenized assets. In contrast, ERC-721 tokens are non-fungible, with each token having a unique identifier, making them ideal for representing unique assets.

Comparison:

1. Fungible vs. Non-Fungible: ERC-20 tokens are interchangeable and have the same value and attributes; ERC-721 tokens are non-interchangeable, with each token having different values and attributes.

2. Usage: ERC-20 tokens are primarily used for digital currencies, reward mechanisms, DeFi protocols, and other scenarios; ERC-721 tokens are mainly used for digital art, in-game items, virtual real estate, and other scenarios.

3. Trading Methods: ERC-20 tokens can be freely traded on decentralized exchanges; ERC-721 tokens are typically traded through specialized NFT marketplaces like OpenSea and Rarible.

Although these two standards differ in application scenarios and characteristics, they can also be integrated to create richer DApps. For example, some gaming projects may use ERC-20 tokens as in-game currency while using ERC-721 tokens to represent virtual items or characters in the game. Additionally, DeFi projects can combine ERC-20 tokens with ERC-721 tokens to design innovative financial products.

IV. Summary

As smart contract standards, ERC-20 and ERC-721 play crucial roles in the development of decentralized applications (DApps). The ERC-20 standard provides a unified token standard for digital currencies, DeFi protocols, and more, while ERC-721 offers a non-fungible token standard for digital art, in-game items, and other applications. Both have unique advantages and are widely used in different scenarios.

With the further development of blockchain technology, the application scenarios of ERC-20 and ERC-721 will continue to expand. In the future, we may see more innovative DApps that combine these two standards to provide users with richer and more diverse decentralized experiences.