Ethereum tokens standard: ERC20, ERC223

Tokens are a way of defining values ​​in blockchain and are used to scale financial or digital assets. On Ethereum, tokens use the same standard, making it easy to exchange notes and DAPP support between tokens.

What is the ERC20 standard?

The ERC-20 standard, launched in November 2015, uses a token of this kind of rule to present a generic and predictable way. Simply put, any ERC-20 tokens are immediately compatible with Ethereum wallets ( almost all wallets that support Ether, including Jaxx, MEW, imToken, etc., also support erc-20 tokens) , as the exchange already knows these How tokens operate, they can easily integrate these tokens. This means that in many cases, these tokens are immediately tradable.

The ERC20 is the standard interface for each token. ERC20 tokens are just a subset of Ethereum tokens. To be fully compatible with ERC20, developers need to integrate a specific set of functions (interfaces) into their smart contracts in order to be able to do the following at a high level:
Obtain the total amount of tokens supplied
Get the account balance
Transfer tokens
Approve to spend token

The ERC20 seamlessly interacts with other smart contracts on Ethereum's blockchain and decentralized applications. Some tokens with some but not all of the ERC20 standard features are considered partially ERC20 compatible, depending on their specific missing functionality, but overall they are still very easy to interact with externally.

The ERC-20 standard still needs improvement. One of the hurdles is that smart contracts that send tokens directly to tokens will result in financial losses. This is because a tokens contract will only track and allocate funds. For example, when you send a token from another wallet to another user, the wallet will invoke the token's contract to update the database. So if you try to transfer the token directly to the token's contract, then the money is "lost" because the token's contract can not be responded to.

What is the primary problem to be solved by ERC223?

Since introducing the ERC20 token standard, almost all tokens based tokens have successfully accepted this new standard. However, its own shortcomings need to be promptly resolved, which is why the ERC223 token was born.


The ERC20 standard can not process incoming transactions through the recipient contract. This is the biggest problem with the token, and it's where developers always want to improve. ERC20 Tokens can not send tokens to a contract that is incompatible with these tokens, and as such, there is a risk that some funds will be lost.


An article in Reddit states that trapped about $ 400,000 worth of ERC20 tokens due to being sent to the "wrong" contract is a huge threat to the entire Ethereum ecosystem. Fortunately, the ERC223 token addresses this challenge, provided the token is approved and introduced.


The ERC223 token standard will introduce a new feature to the existing ERC20 standard to prevent accidental diversions. The ERC223 token standard prevents tokens from being lost on the ethernet network.

Assuming that the ERC223 token standard can replace ERC20 as the new standard, issuers of existing tokens need to make some difficult decisions. Because, from a realistic point of view, no matter how the conversion from ERC20 to ERC223 is impossible, the same, all ERC20 tokens need to be redeployed under the ERC223 standard. This also means that the listing of any trading platform needs to update their information and address. This is a painstaking process, which means that few existing tokens are effectively converted to ERC223 in the future.

As Alex van de Sande pointed out on Reddit, the "more convenient" process may be to create new tokens that are backed by contracts that hold old tokens. This may be the most reasonable option for most projects, but only time will determine which options will be implemented.


Source: Currency Exploration