PepeDapp, a platform for trading digital collectible cards on the Ethereum blockchain, has announced its plans to launch a new token standard, labeled ERC-420. In the past, most decentralized applications have used either the ERC-20 or 721 protocol depending on their specific use case.
ERC-420 Launching Soon
The company announced its standard in response to specific inquiries about why PepeDapp is not compliant with any other existing token protocol.
It went on to explain that the app is not a non-fungible token like other similar ERC-721 projects since cards belonging to the same type are fungible with each other. Typically, ERC-721 compliant tokens are not fungible.
PepeDapp’s post explained their issue with the ERC-712 approach as follows:
“The issue with this approach is that different tokens of the same card type are distinguishable and perhaps could have different market values. For example, say that token ID 1 and token ID 10 both corresponded to a Satoshi card. Then, users might decide that Satoshi 1 is more valuable than Satoshi 10 because it has an ‘earlier’ ID (or vice-versa). In general, different token IDs means collectors have a way to mentally distinguish between different instances of the card.”
Since there is no current ERC protocol in place that permits specific unit tokens of the same category to be fungible with each other, PepeDapp is set to employ the new standard it has developed, ERC-420.
It remains to be seen how many wallet companies will announce support for this new protocol though. Up until now, only an announcement for the standard has been made, with details regarding its development or potential public rollout still not completely outlined yet.
What is ERC?
Ethereum is a smart contract platform where decentralized applications issue tokens to their users for use. Each token has a specific value and smart contract attached to it. Companies issue tokens to investors that participated in the ICO as a means of investment.
CryptoKitties, the most popular decentralized game built on the Ethereum platform, allows players to trade and interact with digital kittens and cats using these tokens. Every virtual pet on the platform is unique and represented as a smart contract written on the Ethereum blockchain. The ownership of these tokens can be transferred from one user to another for a specific price.
In the case of CryptoKitties and most other ICOs, tokens are dissimilar and not fungible. For a token to be fungible, it must be able to be exchanged with another similar unit. In the case of CryptoKitties, its tokens needed to be differentiated from a standard ICO-based token. Because of this need, the CryptoKitties development team had to introduce their own protocol.
ICO tokens, on the other hand, have the same value and possess no unique characteristic, making them fungible. A token can also be interchanged with any other, provided they both belong to the same decentralized app. Such tokens follow a common set of rules, referred to as ERC-20.
ERC-20, ERC-721, and ERC-223
ERC stands for Ethereum Request for Commands; it is the common set of rules that tokens follow. Since ERC-20 tokens are fungible, the CryptoKitties team proposed a new, competing protocol that came to be known as the ERC-721 standard. ERC-721 tokens are not fungible with each other as every token has a different value. The value of any specific ERC-721 token could vary according to demand for it.
ERC-20 and ERC-721 are the two most widely used protocols and are now supported by most cryptocurrency exchanges and wallets. Another standard, referred to as the ERC-223 protocol, was also proposed by a developer. The main feature of this standard was that it helped prevent the accidental loss of tokens.
Moving forward, PepeDapp will further develop and define the ERC-420 standard and submit it an Ethereum Improvement Proposal (EIP).