ERCs AND EIPs EXPLAINED

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ERCs and EIPs Explained


INTRODUCTION

Did you know that despite the size of the Ethereum blockchain, even you can modify the system to redesign areas that you believe require modifications?

Decentralised applications (dApps), particularly those for banking, continue to run on Ethereum (ETH), the most popular platform (DeFis). As a result, every change made to its programming will likely impact the cryptocurrency experiences of millions of users.

The technical design of Ethereum (ETH) is being upgraded with the help of a class of suggestions known as “Ethereum Improvement Proposals,” or EIPs, to make it more resourceful and attack-resistant as well as provide new functionality.

This article aims to help readers understand EIPs, how they relate to ERCs, and how they might modify the Ethereum blockchain.

Here’s an outline of what this article covers:

    • What are EIPs and ERCs

    • Relationship between EIPs and ERCs

    • Importance of EIPS: Why They Are Needed

    • Types of Ethereum Improvement Proposals (EIPs)

    • Importance of ERCs: Why They Are Needed

    • Types of ERCs standards: Token Standards 

    • How can I create an EIP or ERC?

WHAT ARE EIPs 

 

The EIP process flow

Ever questioned how the Ethereum community functions? How the changes and improvements are made and put into practice. 

There is undoubtedly no middle-aged nerdy expert somewhere working nonstop at his computer. 

Everyone, including you, has the opportunity to have an influence, and that is precisely what EIPs are used for.

EIP is an acronym that stands for Ethereum Improvement Proposals.

EIP provides the Ethereum Community with design or knowledge, new components, and environmental procedures. 

EIPs were created as a valuable mechanism to monitor the advancement of design modifications to Ethereum. These days, they are used to describe how Ethereum is designed. 

EIPs, which also contain ERCs, serve as the primary organisational hub around which decisions are made and are recorded on Ethereum. They are the means through which anyone can put forth, discuss, and implement changes as a part of a decentralised ecosystem. 

WHAT ARE ERCs?

ERC Process

Having established that ERCs are a part of EIPs in the previous paragraph, it is now essential to know and understand what ERCs are. 

ERC stands for Ethereum Request (for) Comments, a document that smart contract programmers using the Ethereum blockchain platform write. 

They describe rules in these documents that Ethereum-based tokens must comply with

The Ethereum community uses the process mentioned earlier in this article called the ‘Ethereum Improvement Proposal’ to review these documents. Then, they comment on it, and as a result, the developer that created the document may revise it.

THE RELATIONSHIP BETWEEN EIPs and ERCs

Relationship between EIPs and ERCs

For starters, EIPs and ERCs are both standards. 

The term “standard” refers to a document that unifies design practices and promotes the creation of products that uphold consensus, justice, transparency, and quality. 

Standards define and standardize code operations inside the Ethereum ecosystem, unifying how functionalities of code work.

Typically, W3C and its members develop standards for the Web2 environment.

EIPs are categorized into Core, Interface, Networking, Meta, Informational, and ERCs.

The most widely utilized EIPs are ERCs, which is why they are the most popular and frequently discussed EIPs while being just one of many EIP categories.

To put it simply, anyone can submit their suggestions as an EIP. A typical EIP would include contract standards as well as protocol requirements. 

Following this, the Ethereum community would assess these EIPs, and the ones approved would become ERCs. 

The Ethereum development community now has a set of standards that may be put into practice once an EIP turns into an ERC.

In other words, ERCs originate as EIPs and could address different areas, e.g., tokens, registration names, etc.

IMPORTANCE OF EIPs: WHY THEY ARE NEEDED 

Here are the importance of EIPs:

Importance of EIPs

The existence of EIPs indicates that the Ethereum community needs modification to guard its operations and protocol and operate effectively. 

New features for Ethereum and EIPs are designed to act as the primary mechanisms for these ideas, and members of the Ethereum community are given the ability to offer blockchain network updates or changes. 

With EIPs, technical community input on an issue is solicited, and design decisions for Ethereum are explained.

EIPs help people learn how different coins and features of Ethereum work in addition to making suggestions for and implementing changes on the Ethereum network. 

This relates to the smart contract, regardless of whether it is included as a standard or part of a more comprehensive network upgrade. 

To preserve consensus with one another throughout any network upgrade, each Ethereum client is required to implement a predetermined set of EIPs.

TYPES OF ETHEREUM IMPROVEMENT PROPOSALS (EIPs)

TYPES OF ERC STANDARDS

The following are the types of ERC standards that exist:

ERC 20 STANDARD

The majority of ICOs use this as the most widely used token standard. It enables the integration of NFT standard APIs into smart contracts. It is also a fungible token standard. 

This indicates that two coins of any token based on it are equal in value at any given time. For example, consider LockChain, a decentralised, zero-commission travel marketplace. One LOC token has precisely the same value as another LOC token at a particular time since its LOC token adheres to ERC 20.

If you are an Ethereum developer, you can write smart contracts knowing that ERC-20 tokens can simply be incorporated into their code. 

The same goes for wallet developers—they don’t need to know any more about that token than Ethereum engineers do. 

To ensure the token functions with their wallet app, they don’t need to perform any additional development or integration tasks.

ERC 223 

The ERC 20 tokens will be burned if you transfer them to a smart contract that is unable to handle them; you will not be able to get your money back. To avoid this, ERC 223 offers a solution. 

Developers can accept or reject tokens when they arrive at their intelligent contract addresses. It outlines the features that can be programmed into a contract to ensure that the transfer will not succeed if it cannot take tokens.

Sadly, this standard still needs to be implemented despite its solution to the loss of wealth, even as crypto exchanges don’t seem ready for it.

ERC 621 

This standard, an extension of ERC 20, uses the functions “increaseSupply” and “decreaseSupply” to increase or reduce the overall token supply. According to the plan, only the contract owner or trustworthy users should utilise them. 

Contrary to conventional currencies, where central banks can increase or decrease the supply, cryptocurrencies are digital money. 

One of the numerous variables influencing a token’s value and affecting its economics is its total supply.

Eyes are still on the Ethereum community to implement this proposal, given its broad implications.

ERC 827 

It is a further development of ERC 20; however, it aims to address the issue more effectively than ERC 223. 

If this standard is adopted, token holders can transfer their tokens while permitting a third party to use them. 

Due to mutual agreement on particular requirements for a third party to spend a dynamic amount, wallets and exchanges implementing the ERC standard can reuse tokens. However, it still needs to be put into practice by the Ethereum community.

ERC 721

Do you want to create a CryptoKitties-like Ethereum DApp game?

It was released in the final week of November 2017 by the Vancouver, British Columbia, Canada-based company Axiom Zen, and by the first week of December, it had gone viral! Within a week, players had spent millions of dollars worth of Ether on it. 

Players can buy, sell, and breed adorable digital kittens in this game. Since everyone can observe the game regulations thanks to the openness of the Ethereum blockchain network, the competition is fair. You can charge more for digital kittens if you breed a rare breed.

You cannot spend ERC 20 for the kittens because each one commands a different price. ERC 721 is the non-fungible token standard that is required. 

Non-fungible tokens can also be used in other situations, such as the power distribution industry. 

The ERC 165 standard must be adhered to by a smart contract that will deal with ERC 721 tokens because it requires the implementation of a different interface.

IMPORTANCE OF ERCs: WHY THEY ARE NEEDED

The Ethereum community may absorb new improvements and develop over time thanks to ERC standards, which are crucial.

The Ethereum community depends on the EIPs and ERCs that result from them, just like any other open-source community that deals with request-approval methods for implementing changes.

Due to their ability to hasten the implementation of intelligent contracts, ERC standards are also quite significant. 

ERC standards not only support interoperability across diverse DApps built on shared standards but also do so.

TYPES OF ERC STANDARDS

The following are the types of ERC standards that exist:

ERC 20 STANDARD

The majority of ICOs use this as the most widely used token standard. It enables the integration of NFT standard APIs into smart contracts. It is also a fungible token standard. 

This indicates that two coins of any token based on it are equal in value at any given time. For example, consider LockChain, a decentralised, zero-commission travel marketplace. One LOC token has precisely the same value as another LOC token at a particular time since its LOC token adheres to ERC 20.

If you are an Ethereum developer, you can write smart contracts knowing that ERC-20 tokens can simply be incorporated into their code. 

The same goes for wallet developers—they don’t need to know any more about that token than Ethereum engineers do. 

To ensure the token functions with their wallet app, they don’t need to perform any additional development or integration tasks.

ERC 223 

The ERC 20 tokens will be burned if you transfer them to a smart contract that is unable to handle them; you will not be able to get your money back. To avoid this, ERC 223 offers a solution. 

Developers can accept or reject tokens when they arrive at their intelligent contract addresses. It outlines the features that can be programmed into a contract to ensure that the transfer will not succeed if it cannot take tokens.

Sadly, this standard still needs to be implemented despite its solution to the loss of wealth, even as crypto exchanges don’t seem ready for it.

ERC 621 

This standard, an extension of ERC 20, uses the functions “increaseSupply” and “decreaseSupply” to increase or reduce the overall token supply. According to the plan, only the contract owner or trustworthy users should utilise them. 

Contrary to conventional currencies, where central banks can increase or decrease the supply, cryptocurrencies are digital money. 

One of the numerous variables influencing a token’s value and affecting its economics is its total supply.

Eyes are still on the Ethereum community to implement this proposal, given its broad implications.

ERC 827 

It is a further development of ERC 20; however, it aims to address the issue more effectively than ERC 223. 

If this standard is adopted, token holders can transfer their tokens while permitting a third party to use them. 

Due to mutual agreement on particular requirements for a third party to spend a dynamic amount, wallets and exchanges implementing the ERC standard can reuse tokens. However, it still needs to be put into practice by the Ethereum community.

ERC 721

Do you want to create a CryptoKitties-like Ethereum DApp game?

It was released in the final week of November 2017 by the Vancouver, British Columbia, Canada-based company Axiom Zen, and by the first week of December, it had gone viral! Within a week, players had spent millions of dollars worth of Ether on it. 

Players can buy, sell, and breed adorable digital kittens in this game. Since everyone can observe the game regulations thanks to the openness of the Ethereum blockchain network, the competition is fair. You can charge more for digital kittens if you breed a rare breed.

You cannot spend ERC 20 for the kittens because each one commands a different price. ERC 721 is the non-fungible token standard that is required. 

Non-fungible tokens can also be used in other situations, such as the power distribution industry. 

The ERC 165 standard must be adhered to by a smart contract that will deal with ERC 721 tokens because it requires the implementation of a different interface.

HOW CAN I CREATE AN EIP OR ERC

If you decide to give it a shot, creating an EIP or ERC can be relatively simple. 

The first thing you need to do is define a new feature in your new EIP that can be used throughout the ecosystem and is simple and specialised.

The only component that can be difficult is facilitation; as the author, you must help people come together behind your EIP and understand it.

You would also have to get input, create articles outlining the issues it addresses, and work with other initiatives to put it into practice. 

A successful EIP or ERC is not required to be in the “Final” stage. To be successful, a project must apply the EIP; however, this requirement only applies to ERCs, not core EIPs deployed to maintain the network’s health.

CONCLUSION

EIPs are initiatives to enhance or add to the Ethereum (ETH) protocol proposed by its contributors and supporters. ERCs are a part of a multi-phase peer review process that ends with either the implementation or abandonment of EIPs. 

Important EIPs concentrate on a better developer experience, token standardisation, an advanced instrument stack for Ethereum (ETH), and preparing its ecosystem for sharding after Ethereum (ETH) activation Merge on the mainnet.

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