Understanding EIP and ERC: Ethereum Standards Explained

Table of content

• Key Takeaways
• What Are EIPs and ERCs?
• How EIPs Drive Ethereum's Evolution
• ERC Standards and Their Role
• The EIP and ERC Proposal Process
• EIPs vs ERCs: What's the Difference?
• The Community’s Role in Ethereum Standards
• The Impact of ERCs on Token Standards
• Participating in the Ethereum Standardization Process
• EIP and ERC Ethereum Standards Bottom Line
• FAQs on EIP and ERC Ethereum Standards

EIPs, or Ethereum Improvement Proposals, are the primary way new ideas and upgrades are suggested for the Ethereum network. Think of them as blueprints for changes to Ethereum’s structure, from fixing bugs to adding new features. EIPs allow developers to submit their proposals for review and discussion before they can be adopted into Ethereum’s system.

ERCs, or Ethereum Request for Comments, are a type of EIP that focuses specifically on tokens and smart contract interfaces. These proposals set the rules for how tokens work on Ethereum and ensure they are compatible with different apps and platforms across the network. Without these standards, creating tokens on Ethereum would be chaotic and fragmented.

EIPs help Ethereum grow by providing a structured way to suggest improvements. When a developer proposes an EIP, it’s reviewed by the Ethereum community, and if everyone agrees, the changes are implemented in future network upgrades. This process makes sure that the network remains up-to-date with new technologies, fixes bugs, and becomes more efficient.

When Ethereum shifted from Proof of Work (PoW) to Proof of Stake (PoS), this change was proposed through EIPs. The upgrade improved energy efficiency and helped Ethereum scale better, showcasing how EIPs can transform the network.

ERC standards have had a huge impact on Ethereum. They made sure that tokens can work well across the Ethereum ecosystem, meaning they can be used in wallets, exchanges, and decentralized applications (dApps). 

ERC-20, for example, is the most well-known standard for fungible tokens. It created a common framework that allows all ERC-20 tokens to follow the same set of rules, making it easier for developers to integrate them into different platforms.

Then there’s ERC-721, which is used for creating non-fungible tokens (NFTs). These tokens are unique, unlike ERC-20 tokens that are interchangeable. ERC-721 has helped launch the NFT market, where people can buy and sell unique digital items like art, collectibles, and gaming assets. 

There’s also ERC-1155, which combines both fungible and non-fungible tokens under one standard.

Creating an EIP or ERC is an open process that anyone in the Ethereum community can have access to. Developers can submit their ideas to Ethereum’s GitHub repository, where they’ll be reviewed by others. The proposal is integrated into Ethereum's future updates if the community likes and agrees with the idea.

ERCs work similarly but are more focused on token standards. The proposals must clearly explain how a token will function and interact with other contracts. The Ethereum community then reviews and discusses it to ensure it will work as expected.

EIPs and ERCs are related but serve different purposes. 

EIPs propose changes to the core Ethereum protocol itself. They can suggest anything from changes to Ethereum’s consensus mechanism to network optimizations. 

ERCs, however, are specifically concerned with the standards that govern tokens. While all ERCs are a type of EIP, not all EIPs are ERCs. ERCs are a subset of EIPs that deal with token behavior and smart contract interactions.

The Ethereum community plays a big part in deciding whether a proposal should be accepted. Once an EIP or ERC is submitted, it goes through a review process where community members can discuss it, ask questions, and provide feedback. If there’s enough support and the proposal meets Ethereum’s goals, it becomes part of the network.

The open-source nature of Ethereum means anyone can contribute to its development. Developers from all over the world can propose improvements, and through this process, Ethereum stays flexible and adaptable to new challenges.

ERCs, especially ERC-20, have revolutionized how tokens are created and used on Ethereum. Before ERC-20, creating a token was a more complex and inconsistent process. With ERC-20, a standard framework was established, allowing tokens to be created and easily integrated with apps and wallets across the Ethereum network. 

This led to the rise of Initial Coin Offerings (ICOs) and decentralized finance (DeFi) platforms that rely on ERC-20 tokens. ERC-721 and ERC-1155 also helped push the boundaries of token standards, especially with the rise of NFTs.

If you’re a developer interested in contributing to Ethereum’s evolution, submitting an EIP or ERC is a great way to get involved. The process is open to anyone in the community, and by submitting your ideas, you can help shape Ethereum’s future.

Once your proposal is submitted, you’ll need to gather support from the community. This can involve discussions, feedback, and even improvements to your proposal before it’s accepted. It’s a collaborative process that ensures Ethereum remains in line with the needs of developers and users.

EIPs and ERCs are at the heart of Ethereum’s development. EIPs help the network improve and adapt to new technologies and challenges, while ERCs provide the standards that make it possible to create and use tokens across the Ethereum ecosystem. The proposal and review process ensures that changes are carefully considered and aligned with the community’s goals.

Knowing how EIPs and ERCs work, developers can better navigate Ethereum’s landscape and contribute to its growth. Whether you’re proposing a protocol upgrade or a new token standard, getting involved in the process is a powerful way to influence the future of Ethereum.