There has been a major influx of new Ethereum-based tokens over the past 18 months. Although most of these tokens adhere to the ERC20 standard, that may come to change fairly soon. Enj now lets users mint their “custom crypto tokens” using the ERC-1155 standard, which offers a few key benefits worth looking into.
The ERC-1155 Standard Explained
What makes this particular token standard stand out compared to ERC20 and others is how it is cross-chain compatible. Until now, most assets can only be used on the Ethereum blockchain, yet the ERC-1155 standard makes them compatible by other ecosystems as well. These tokens are also supported by the Enjin Wallet, though it remains unclear if other service providers will implement support over time.
How Does it Work?
Unlike what most people may expect, this particular concept uses the native Enjin Coin to back these custom tokens. This ensures there is a guaranteed value for all created assets through this method. This value can be obtained by using the native “melt” feature within the Enjin Wallet, making the acquisition of tangible value a lot more straightforward.
This is very different from more traditional tokens, which cannot be destroyed directly. Instead, they often remain in circulation unless the original developers buy back tokens at regular intervals. ERC-1155 wants to position itself as the more tangible token standard simply because any asset can be created and destroyed at any given time.
Another bonus effect of this approach is how it affects scarcity. With ERC20 tokens, scarcity is almost impossible to come by these days. By utilizing ERC-155, the destruction of assets can improve overall scarcity, as their circulation is reduced as a result. While this method may not necessarily be appealing to all business models, it certainly offers something different compared to more traditional options.
What Comes Next?
The big question is whether or not the minting of custom crypto items will ever become successful. While there are clearly opportunities to explore, it is not necessarily something most people are willing to explore right now. The cross-network compatibility of the ERC-1155 standard certainly offers something the cryptocurrency industry direly needs right now. Being able to operate across multiple blockchains appears to be the only way forward.