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Why does P2E Games use ERC-1155 tokens?

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ERC-1155 is an Ethereum token standard that combines two others: ERC-20 and ERC-721.

ERC-20 is used for fungible assets like cryptocurrencies. It allows developers to create their own currency on Ethereum. For example, stablecoin USDC, Binance Coin (BNB), or Uniswap (UNI) are ERC-20 tokens. You can exchange these fungible tokens for other identical coins of the same value. In P2E games, governance and utility tokens used for value transfer are established by ERC-20. An example is the SAND token used in the sandbox game ecosystem.

ERC-721 is the standard used for most non-fungible assets (NFTs). It is implemented to create unique assets that are indivisible and not equally exchangeable unlike ERC-20 tokens. Game assets such as heroes, skins, accessories, and metaverse virtual lands are represented by ERC-721 tokens. For example, Sandbox Lands uses this value.

Why do blockchain games need another standard?

It was blockchain company Enjin that introduced the new ERC-1155 standard. The goal was to address the shortcomings of ERC-20 and ERC-721, especially in the game industry.

These standards are not ideal for play-to-earn games as each asset requires its own dedicated smart contract. Blockchain games involve hundreds, if not thousands, of assets. Moreover, many players play the game simultaneously. As a result, transactions become very slow and expensive.

A single contract deals with multiple token types.

One solution to the transaction problem is to use a value that can represent multiple token types at the same time. This way, you can wrap different asset types in a single contract. Consequently, the number of transactions, Hence the costcan be reduced.

You cannot bundle ERC-20 or ERC-721 assets together into a single contract. In other words, you must make separate transactions for each asset. In a P2E game, For exampleYou cannot sell an NFT asset and pay using the game’s local currency within the same transaction.

ERC-1155 makes this possible, eliminating the need for multiple transactions because its smart contracts can represent multiple token types, such as Fungal and non-fungal.

Batch transfer of multiple assets is possible.

It is worth emphasizing that ERC-1155 also enables transactions of multiple assets of the same type. As an asset owner, you can bring together multiple NFT assets and sell them using a single contract, thanks to ERC-1155’s batch transfer capabilities. This also reduces transaction costs.

For example, sandbox asset designers can mint any number of copies of the same digital asset using the ERC-1155 standard. This allows them to build collections of items that they can sell to others.

Semi-fungible tokens

An ERC-1155 contract can include any combination of non-fungible and fungible tokens. As a result, new token functionalities emerged, such as semi-fungible tokens (SFT).

Like SFT event tickets. Your tickets are exchangeable before the event takes place; It is fungible. But after the event, the ticket can only serve as a collectible; it is Non-fungal.

One application is the Decentraland-backed Fanz, which is an NFT event ticketing platform. It allows users to create secure Metaverse events where tickets are represented with ERC-1155.

Safe transfer function

ERC-1155 helps solve another problem that goes hand in hand with ERC-721 and ERC-20 tokens. For example, when you send an ERC-721 NFT to the wrong address, you cannot get your token back. However, with ERC-1155, you can recover it for a secure transfer function.

Bottom line

Although NFTs have enjoyed widespread use among gamers and gained public attention in recent years, they have a long way to go, especially when it comes to NFT usage.

By introducing different standards, developers are exploring new ways to deal with the shortcomings of current methods. In this regard, ERC-1155 serves as a versatile and flexible standard where the simultaneous use of fungible, non-fungible and semi-fungible tokens is applicable where desired.



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