NFT standards have quietly become one of the most important shifts in how we think about ownership. NFTs give digital assets something they never had before: verifiable, transferable identity backed by blockchain security. Instead of a file or record, an NFT is a cryptographically secure certificate that shows who owns what, when and what use that asset may have. NFTs opened the creation of another type of digital asset that can represent things in the real world as well as in the digital.
The rise of NFTs as blockchain’s breakthrough innovation and the foundation for asset tokenization
But NFTs were not invented out of thin air. Blockchain communities had been considering how to encode unique items for more than a decade before. According to sources such as Wikipedia, the earliest experiments with non-fungible (that is, not interchangeable) digital assets were colored coins and the first use of extensions to early protocols, which together formalized the idea of non-fungible tokens.
The introduction of smart contracts on Ethereum further spurred the development of NFTs, allowing software developers to attach identity, scarcity and ownership rules to any item, digital or otherwise. NFTs form the core of asset tokenization, the mechanism through which anything from digital art to financial assets can be represented on the blockchain.
What token standards are and why Ethereum’s ERC framework catalyzed global blockchain adoption
Token standards define how tokens behave on-chain. Ethereum’s ERC token standards made developing tokens easier, providing developers with a set of guidelines that made assets compatible with wallets, marketplaces, and applications. Platforms such as soma.finance show how ERC standards created an interoperable world that any developer could plug into.
Standardizing many of the parts of transfers, metadata and verification processes makes it easier for developers to adopt them and for users to rely on tokens behaving the same way across different applications and platforms instead of needing to learn a new system each time they interact with a token.
From digital art to real estate, supply chains, and identity: the power of programmable ownership
Where the NFT standards shine is that you can truly program your ownership. As Oodles Blockchain puts it, they are programmable contracts that define utility, access, and rights. This flexibility has pushed NFTs beyond mere pictures and collectibles.
They are now anchors of real world value:
- Real estate deeds as verifiable and on-chain assets
- Supply chain items with transparent, tamper-proof histories
- Identity credentials secured with cryptographic certainty
- Event passes and memberships delivered as transferable tokens
Using programmable logic, assets can evolve, grant other assets access, or authenticate users without a central arbiter.
Looking ahead: how understanding token standards is essential for builders, investors, and enterprises
Token standards are important for those joining the blockchain world as a builder, investor or enterprise leader. They describe what is possible, what can be built at scale, and how assets can be integrated into infrastructure. This decision affects everything from price and security, to the experience users have with the token and is often the basis for other regulatory decisions: token standards are foundational.
Token Standards Demystified – From Fungible to Non-Fungible to Multi-Asset
It may be worth reviewing the differences between ERC-721 and ERC-1155 before going deeper into the specifications, because each class has its own use cases, and using the wrong one can lead to poor performance and reduced functionality.
Fungible tokens: a quick comparison of ERC-20 and assets that interchange seamlessly
A fungible token requires all of its tokens to be the same, and Ledger describes ERC-20 as laying the groundwork for these tokens, which are perfect for a currency, reward point, or governance unit because you don’t care which exact token you hold, just what it’s worth. This same simplicity has made ERC-20 one of the most widely used standards in blockchain ecosystems.
Distinguishing non-fungible tokens (NFTs) — why uniqueness matters for digital value
NFTs are unique because each has a different identifier. The Wikipedia definition of an NFT is that it is a token that cannot be replaced on a one-for-one basis. This allows NFTs to represent specific ownership over a given piece of artwork, a plot of land, or even a single collectible within a video game. They are valuable not for what they have in common, but for what sets them apart.
Semi-fungible and hybrid tokens: bridging fungibility and uniqueness in modern use cases
Semi-fungible tokens are fungible at their creation with equal value. For instance, according to developer Alchemy, a ticket to a sports event or concert is a fungible token that becomes a non-fungible token when it is used or redeemed. Semi-fungible tokens can be used for gaming inventories, vouchers, access tokens, and multi-phase digital items that can transform.
How these distinctions impact markets, UX, legal status, and technical architecture
The kind of token you choose dictates nearly everything that follows, as markets deal differently with fungible, non-fungible, and hybrid tokens. User experience can be different, depending on the use case for the token, whether it is used per individual identity or on a per-unit basis. Legal classification depends on utility, scarcity, and transferability. Finally, the technical architecture, including metadata and storage models, has considerable dependence on whether the assets are identical, unique, or both.
The Origin Story: How ERC-721 Forged the First NFT Standard
Today, it seems obvious that NFTs were inevitable, but at the time the question was how to prove ownership of a thing whose only existence was as information? Ethereum’s answer, ERC-721, was the first widely-used NFT standard.
The genesis of ERC-721 in the Ethereum community and its formalization in 2018
According to Wikipedia, ERC-721 originated from a request by developers for creating non-fungible properties on the Ethereum blockchain. Via discussion, drafts, and improvements from the Ethereum community, the ERC-721 standard was published in 2018. This is the point when NFTs were given a standard that wallets, dApps, and marketplaces could understand.
CryptoKitties and early adoption — why unique token standards captured global attention
According to Wikipedia, CryptoKitties was a large motivator for the common use of the ERC-721 standard, allowing people to breed, buy, sell, and trade cats on the Ethereum blockchain using NFTs. The concept became very popular and showed the potential of digital scarcity, but it tested the Ethereum platform to the limits of its capacity and demonstrated how difficult it is to scale.
ERC-721 core mechanics: interfaces, token IDs, ownership tracking, and metadata pointers
ERC-721 works by associating a unique identifier to each asset. The standard specifies functions to track ownership, approve transfer of assets, and recover metadata. These rules give all tokens in the collection a uniform, predictable character regardless of who created the tokens, making NFTs safe and predictable for developers and users alike.
Real-world use cases that made ERC-721 a household name: art, collectibles, virtual land, passes
According to Oodles Blockchain, ERC-721 resulted in tokenization of digital assets by artists, exchange of rare in-game items by gamers, and sale of land parcels in virtual worlds. NFTs were also used for tickets and passes to events, and the standard ERC-721, which specifies NFTs, became synonymous with authenticity.
Limitations that emerged at scale: cost, batching, and contract sprawl
However, as the standard grew in popularity and ERC-721 tokens are each stored, processed, and transferred individually, inefficiencies and increasing costs per transaction or gas fees became one of the biggest disadvantages of the standard when dealing with large collections. These problems resulted in the creation of the ERC-1155 multi-asset standard.
The Need for a Better Standard – Market Forces and Practical Bottlenecks
Gaming, Metaverse Economies, and Multi-Asset Ecosystems Created Pressure on Older Standards
As blockchain games and metaverse worlds started to grow, vendors realized one hard truth, ERC-721 was not designed for high quantity worlds. How do you think a game looks with hundreds of swords, skins, potions, land parcels, and achievements in an inventory? ERC-721 requires its own contracts for operation. Each token must also have its own minting logic. This is like having to operate a cash register for each product in a store.
Multiplayer ecosystems, digital economies, and mixed inventory metaverse ecosystems could not afford to present on-chain workarounds to asset management where everything is ERC-721-reliable but works at a pace where items are minted and moved around faster than ERC-721 has the capacity to handle them. The industry needed something more flexible, scalable, and cost-effective.
Cost Inefficiencies: How Single Transfers and Multiple Contracts Drive Gas Costs Up
For environments where many types of assets are present, ERC-721 was inefficient because a transaction was required to be called every time a transfer occurred. Previously, there was often a contract per asset, raising multiply gas usage even for similar assets.
The platforms that used it were forced to bear this complexity: in order for an user to send ten items, ERC-721 would require ten different commands to be sent and each command was treated as a separate event, even if the items belonged to the same collection. It was only as gas fees began to rise that the inefficiencies became apparent to builders, who realized the token standard itself was the issue.
The Complexity of Inventories, Collections, and Mixed Fungible + Non-Fungible Environments
Developers who supported hybrid ecosystems (with fungible, non-fungible, and semi-fungible assets) had to implement multiple standards, multiple contracts, and somehow present all of these while making sure users have a smooth experience.
While collecting was tedious, organizing, balance checking, and batching interactions between contracts required workarounds and the implementation of custom logic. The problem with ERC-721 was not that it was a bad standard per se but rather that the world around it had evolved.
Why Developers and Platforms Needed a More Flexible Architecture
Developers wanted a standard that would let them:
- Issue multiple asset types from one contract
- Multiple transfers may be sent.
- Cut unnecessary use of gas
- Cleaner and more extensible architecture
The industry needed not just an upgrade, but a next-generation token model capable of powering multi-asset ecosystems, without impacting transaction costs or compromising the user experience. This is where ERC-1155 came in.
Want to tokenize assets with NFT standards?
ERC-1155 Explained – The Multi-Token Standard That Changed the Game
The Design Philosophy Behind ERC-1155: One Contract, Many Token Types
Having one contract per token was not efficient and ERC-1155 was designed to overcome that by creating a multi-token smart contract. The core idea was simple. Let developers manage multiple types of tokens under one contract and give them the ability to design specific behaviors for each type of token. This would dramatically reduce the technical overhead incurred by developers.
This changed everything. This was the moment creators thought about NFTs differently. They could also ease their own digital economies under a shared infrastructure rather than siloed.
Additional Insight: Unified Logic for Entire Collections
ERC-1155 also means that all the assets deployed by the contract follow the same logic, making it easier to maintain, update, add assets to and audit, compared to contracts without this feature.
Core Features: Batch Transfers, Token ID Structures, and Efficiency Optimizations
One of the signature features of ERC-1155 is batch transfer functionality: the ability to send more than one token in a single transaction, rather than sending them one at a time. This enables greater performance and reduces fees.
With the token ID system a contract can store unlimited fungible, unique non-fungible tokens, or tokens with distinct traits that depend on context. This is a meaningful improvement to the organization and the throughput of platforms that list thousands of tokens.
Handling Fungible, Non-Fungible, and Semi-Fungible Assets in One Model
ERC-1155 is an extension of ERC-20 and ERC-721 standards, allowing developers to create:
- Standard fungible tokens
- One-of-a-kind NFTs
- Semi-fungibles that are fungible at one time and non-fungible at another time (such as tickets, or redeemable passes)
Therefore, instead of trying to build multiple standards for different types of assets, everything can fit into one blockchain and developers will no longer need to juggle multiple standards.
How Safe Transfers and Batch Calls Reduce Gas and Boost Throughput
The ERC-1155 standard includes address checks to prevent token loss when sent to smart contracts without supporting code, which was an issue with earlier standards, and allows for batch calls to save on gas and improve efficiency.
As the number of assets on a platform increases, the effect of these optimizations is magnified. For many platforms, ERC-1155 will become a necessity.
Business-Ready Benefits: Lower Costs, Better Inventory Control, and Improved UX
From a business perspective, ERC-1155 can fix multiple issues at once. Companies that have hundreds or thousands of digital items can save a lot of money in deployment. Inventory management is simplified as all assets are acquired under one contract.
In addition, the user experience is improved. Wallets and marketplaces can better group items so browsing and transferring assets is less confusing. New technology tends to lead to greater adoption and that’s what ERC-1155 does.
Practical Comparison — When to Use ERC-721 vs ERC-1155
Architecture Differences: Single-Use Contracts vs Multi-Token Contracts
Since ERC-721 uses a one-contract-per-collection model, it is best suited to completely unique and separate tokens, such as expensive art or rare collectibles.
ERC-1155 is intended for use in cases where a large number of items contained in the contract share some logic. If your project has a store with a lot of different product lines, ERC-1155 is far better at that.
Transaction Efficiency and Gas Cost Differences for Large Asset Volumes
ERC-721 treats all transfers separately, which is fine for small sets. However, as volume grows, so does usage of gas.
ERC-1155 allows multiple transfers of tokens to be made in a single transaction, thus reducing gas fee costs for the platform as well as for all businesses that utilize very large batches (i.e. gaming studios, marketplaces, or other tokenized businesses).
Metadata Strategies and Interoperability Challenges
Both standards use metadata to describe the visual representation and characteristics of an asset. ERC-721 uses a simple tokenURI to reference metadata, whereas ERC-1155 has a higher degree of flexibility through directory-style metadata, where multiple assets can link to the same schema.
Interoperability may be an issue with all standards if platforms interpret metadata differently. Broadly, ERC-1155 provides a more abstract, flexible standard, but with less flexibility, wallets and applications must implement it consistently.
Security Tradeoffs: Simplicity vs Expanded Functionality
ERC-721 has a simpler architecture, a smaller attack surface, and fewer points of failure due to having fewer moving parts than ERC-1155.
While ERC-1155 can be more complex, and therefore more difficult to audit, than ERC-721, the tradeoffs made by ERC-1155 are generally more favorable for larger projects when adequately supported by security resources and tools.
Developer Ecosystems, Tooling, Wallet Support, and Marketplace Compatibility
ERC-721 is older and more widely supported by wallets and NFT marketplaces. It had all but become the default for customary NFTs because nearly all wallets and marketplaces support it.
ERC-1155 is increasingly being used by gaming, collectibles, and enterprise-wide tokenization platforms, and is being enabled by many wallet products and marketplaces. It is the technology of choice for developers building projects that involve multiple assets because of its natural fit with multi-asset architecture.
A Decision Matrix Based on Asset Type, Volume, and Business Goals
To simplify the choice:
- Use ERC-721 if each asset needs to be treated as an individual collectible or high-value item.
- Use ERC-1155 when dealing with mixed inventory, bulk lots, or fungible-like assets.
- Use both when you have premium unique items alongside any type of general inventory.
The right standard depends on your asset model, your scalability needs, and your business objectives.
Beyond Basics – Extended Standards and Emerging Protocol Enhancements
NFT standards are continuously being improved upon through developers’ growing need for more use cases, better efficiency, and more reliable monetization. ERC-721 and ERC-1155 were the defining NFT standards, but newer standards and additions to existing standards provide more potential uses for NFTs. These include predictable royalty structures, scalable token minting strategies and fungible versus non-fungible behavior of a crypto asset, and they allow creators, brands and enterprises to create more advanced token economies. As the ecosystem evolves, these developments are laying the groundwork for more advanced real-world and digital applications of tokenized assets.
Token royalty standards (like ERC-2981) and revenue flows for creators
Royalties have been a central concern for creators entering the NFT space. There was no single standard for retrieving royalty information across different marketplaces in the early days of NFTs. ERC-2981 solves this issue by providing a standard way to query a token contract for its royalty information, meaning that marketplaces no longer have to use custom integrations or agreements with a creator to know how much they earn from secondary sales. Continuing royalties embedded in the logic of a token allow creators to continually receive income through the life of the work, and for marketplaces to be consistent across them. The standard seeks to add greater clarity and consistency to revenue flows in the creator economy.
Optimized standards such as ERC-721A and how they reduce minting costs
In the original ERC-721 standard, every minting of each NFT costs gas. A project that wanted to mint 10,000 NFTs would have paid a great deal of gas. The ERC-721A standard allows for the minting of multiple NFTs in one transaction, as opposed to being minted and paid for individually. This made large-scale drops much cheaper and easier to navigate for all users, giving developers less overhead and collectors a much smoother minting process when high blockchain congestion is occurring. While ERC-721A does not change the way ERC-721 tokens work at their core, it does make the minting experience easier to navigate, keeping the standard competitive when there is heightened demand.
Extensions for dynamic NFTs, time-bound access, and usage rights
Increasingly, tokens are expected to behave as programmable digital assets with evolving properties. Dynamic NFT extensions allow token data to be updated when an event occurs, an expiry date is reached, or as a byproduct of an user’s behavior, among other conditions. These extensions enable many real world use-cases, such as access passes that expire at regular intervals, tickets that become invalid after the event has passed, membership point systems with periodic unlocks, and digital items that age and progress over time. The state transitions occur without burning and minting a new token, which leads to more creative and economic possibilities in NFTs that players are interacting with.
Cross-chain NFT standards and bridging interoperability
As the number of blockchains and supporting NFT technology increases, NFT creators and owners want the ability to move and interact with their NFTs across them without losing functionality and provenance, so cross-chain standards have emerged. The goal is to improve liquidity across NFT assets, to give access to bigger markets and to offer control to users over how and where to interact with certain assets. Additionally, it reduces the friction of building in silos, empowering developers to build experiences that can work across networks. Interoperability is a key building block for the next generation of NFTs and asset-tokenization protocols.
Deep Technical Considerations for Developers and Architects
Building a reliable NFT ecosystem involves more than simply building the NFTs. Architectural choices, serialization formats, smart contract patterns and project scaling all have meaningful implications for the reliability of the overall NFT ecosystem. Developers that attempt to create a strong NFT ecosystem should consider metadata storage, storage efficiency for indexing NFTs, which contracts are mutable, and the security of the entire system including both testing and auditing. Solving these technical problems would help to make an NFT ecosystem more scalable for enterprise use, where many users or many transactions would take place simultaneously.
Metadata best practices — on-chain vs off-chain storage strategies
The metadata describes the traits, images and core content of an NFT. Choosing where to store the metadata is a balance between cost, durability and transparency. Data permanence and immutability are the main reasons for on-chain storage, but they come at a high cost. Off-chain storage can provide updating for relatively low-cost, such as in distributed systems like the Interplanetary File System (IPFS) or Arweave. Many applications may choose to store only the information needed to use that asset on-chain, while storing content or media elsewhere. It is up to the application to decide which to use based on how the asset is to be used by an user.
Token indexing, off-chain search layers, and analytics systems
This is especially necessary if a platform wishes to accommodate large collections, ownership transfers, and real-time search. Additionally, applications built on blockchain platforms may find accessing the underlying data on-chain cumbersome. Instead, developers create indexing layers that read events on contracts and map them to a database, which allows for rapid searching, filtering, or analytics on user or asset activity. Without this, even the best-designed NFT system can often feel sluggish or cumbersome to use. Good indexing systems can provide users with a higher responsiveness.
Smart contract design patterns: factories, proxies, and upgradeability
Smart contracts consider upgradability, e.g. using factory patterns to deploy different collections or projects from the same pattern, to avoid redundancy and improve maintainability. Another pattern to address upgradability is the proxy pattern, where the logic of the contract is separate from its data storage. Such modular contracts can reduce risks and make audits easier, because each function or feature is encapsulated in its own contract. These patterns help ensure that NFT platforms are able to make changes in response to shifts in the market or new opportunities.
Testing frameworks, audit checklists, and security practices
Before assets are deployed, the creators and users of an asset may subject it to wide-ranging testing and auditing. Developers can use unit tests to test each piece of functionality, and integration tests to simulate how it would be used. Security reviews inspect transfer rules, approval patterns, batch transactions, and other common attack patterns like reentrancy. Specialized security audit teams carry out external audits to find issues internal teams may overlook. A consistent approach to testing and auditing helps to build trust and secure a platform’s long-term reputation.
Scaling with Layer-2s and sidechains for massive asset volumes
Layer 2 networks and sidechains stream high transaction volume at low cost, while the base chain may not be able to fulfill this kind of demand due to high transaction fees or congestion on Ethereum. The transaction load can be processed in a separate layer or sidechain and be finalized back on Ethereum, the layer 1 blockchain, allowing projects that deal with large transaction volumes, like NFT platforms, to scale up to thousands of users, while achieving lower costs and faster confirmation times.
Case Studies – Success, Failure, and Lessons Learned
In addition to the technical specifications of these standards, real-world projects can also be useful for understanding how each standard has played out in practice. This includes both the successful and unsuccessful projects that have been launched, which can show what does and does not contribute to the long-term success of an NFT project, as well as important technical decisions. Exploring key planned decisions from existing NFT collections, gaming universes, and RWA pilots can illuminate their decision-making path and trajectory.
Major “blue chip” NFT collections and their standard choices
Due to its simplicity, and the congruency of the concept of a non-fungible and unique digital asset, as well as its popularity and integration with a marketplace, ERC-721 became the most popular standard for all major NFT projects. However, these projects brought many issues, such as high minting gas fees, and those from large drops. Thus, developers had to create optimized standards without losing the advantages that ERC-721 had.
Gaming ecosystems that scaled with multi-token architectures
Because of the amount of assets and transactions a gaming application and game environment need to perform, game companies have always likely served as one of the most bullish use cases for blockchain technology. Because ERC-1155 allows for multiple items to be stored and traded through a single smart contract, it has been adopted by many gaming platforms. These systems enable the creation of complex in-game economies for developers and improved usability for consumers, with lower costs. These ecosystems represent the scalability potential of multi-token standards over single-asset standards.
Real-World Asset pilots and hybrid standards
Tokenizing RWAs requires some combination of technology, legal structure and business model. Most RWA platforms have experimented with ERC-721 for unique assets and ERC-1155 for a collection of assets, groups of assets or fractionalized assets. The hybrid approach, which can be adjusted to regulate or create flexible products, has been successfully piloted and in these cases token standards associated with asset types have created clarity around compliance and customer journeys.
What projects got wrong — pitfalls in architecture or economics
Not all projects are successful. Easy pitfalls to avoid include using inappropriate token standards for specific asset implementations, which results in costs incurred when the project needs to be revised. Some built unnecessarily complex contracts that added risk and were difficult to audit, while others failed to consider indexing strategies, security, and metadata handling, leading to a slow user experience or broken contract deployments. These mistakes are proof of the fact that planning, technical discipline and creativity must go hand in hand.
Conclusion
These improvements and iterations on earlier NFT standards have transformed the NFT landscape, allowing for tokenization of not just digital items but also virtual real estate and real-world assets. ERC-721 ensures uniqueness for each NFT, while ERC-1155 allows for mass scaling and efficient handling of multiple assets. With new royalty standards, metadata standards, and cross-chain developments emerging, NFTs are becoming more customizable, secure and better suited for enterprise-grade tokenization. For companies looking to explore bringing their assets on-chain-whether that be for gaming, memberships, luxury goods, or regulated RWA models-the choice of the right standard and architecture is critical to success. This evolution has not only set the stage for new technical innovations but also shaped new models of ownership, value, and accessibility. Blockchain App Factory offers ERC-721 and ERC-1155 tokenization for brands, startups, and institutions looking to build in this space with precision, compliance, and development practices tested in the market.
