ERC-20, ERC-721, and ERC-1155 are token standards for deploying smart contracts on a blockchain.
ERC-20 defines cryptocurrency and treats all assets as interchangeable (or fungible). Similarly to fiat money, fungible tokens are not unique. For instance, a bitcoin can be bought in small fractions such as 0.00000002 BTC and still comprise the same bitcoin.
ERC-721 is used for the creation of non-fungible tokens (NFTs). Probably, many web3 games-related assets are ERC-721. For example, unique heroes can’t be replicated.
Other important ERC-721 specifications include:
- Opportunity to transfer NFTs between accounts and trade NFTs for other currencies.
- Possibility to identify the total supply of the network's NFTs.
- Ability to request an owner of a specific asset.
ERC-1155 is a middle ground between ERC-20 and ERC-721 standards. It supports the creation of semi-fungible tokens commonly used in web3 games as gear or materials. For example, swords may have numerous copies with identical powers. Meanwhile, each of them will have unique designs, and their owners can manage them (sell, lend out, transfer, etc.) separately.