Building Dapps Around ERC721 and ERC1155 Tokens

 

Introduction

ERC721 tokens are non-fungible tokens that can store information or represent physical items. Examples of these tokens include digital collectibles, property titles, and certificates of ownership or entitlement. Each ERC721 token is unique, completely different from any other token, (hence non-fungible). This allows individual tokens to be tracked and authenticated.

What are ERC721 and ERC1155 Tokens?

ERC721 and ERC1155 are two Ethereum-based token standards that allow tokens to be generated and transferred on the Ethereum blockchain. Both token standards allow the creation, exchange, and transfer of tokenized assets on the Ethereum blockchain.

ERC721 token standard is used to create non-fungible tokens (NFTs). Non-fungible tokens are unique tokens that cannot be divided or exchanged in parts. NFTs represent digital assets or collectibles such as artwork, in-game assets, and virtual goods. It is also often used in gaming and DeFi platforms. Examples of popular projects utilizing the ERC721 token standard are CryptoKitties, Chainbreakers, and Axie Infinity.

ERC1155 is a newer type of token standard, and it is used to create both fungible and non-fungible tokens. It is also a multi-token standard, meaning that multiple tokens can be created and exchanged on the same contract. ERC1155 tokens are often used to represent in-game assets, collectibles, and DeFi assets such as yield-bearing tokens. Popular projects utilizing the ERC1155 token standard include Enjin, Decentraland, and Gods Unchained.

The main difference between ERC721 and ERC1155 tokens is that ERC721 tokens are non-fungible tokens, meaning that they are unique and cannot be traded, while ERC1155 tokens are both fungible and non-fungible, meaning that they can be divided into smaller units and exchanged. Additionally, ERC1155 supports the creation of multiple tokens on the same contract, while ERC721 only supports one type of NFT.

Why Build Dapps Around ERC721 and ERC1155 Tokens?

1. Security: Decentralized applications are more secure as they are built on open-source code that all nodes on the network can trust. This means that even if one node is hacked, no other node can be affected, thus protecting the user’s data. Token standards like ERC721 and ERC1155 provide a secure platform for developers to build on.
2. Interoperability: Token standards like ERC721 and ERC1155 are universally compatible, enabling the development of new Dapps that can use assets from existing ones. For example, a collectibles Dapp can easily integrate assets from a gaming Dapp, allowing users to easily move between the two. This makes building Dapps much more efficient and allows users access to a much larger set of digital assets.
3. Affordability: Building a Dapp from scratch can be expensive, but token standards like ERC721 and ERC1155 allow developers to quickly and cheaply build on existing frameworks. This reduces the initial cost of development and allows developers to focus on building better user experiences.
4. Unique Digital Assets: Token standards like ERC721 and ERC1155 enable the creation of unique digital assets. This means that users can own assets that cannot be counterfeited or duplicated. This makes them much more valuable and allows developers to create innovative user experiences in gaming, collectibles, and other industries.
5. Flexibility: Token standards like ERC721 and ERC1155 are open source and highly customizable, allowing developers to easily change the functionality of their Dapps as their business needs evolve. This level of flexibility is invaluable in industries like gaming and collectibles where the demand for new and innovative experiences is constantly growing.

Getting Started with ERC721 and ERC1155 Tokens

Step 1: Install the required dev tools

Installing the required development tools for ERC721 and ERC1155 tokens is a necessary step to build and deploy such tokens on the Ethereum blockchain. To do this, you need to install node.js, npm, truffle, and web3.js.

Node.js is used for server-side programming, npm is the package manager for Node — enabling you to install and share modules of code, truffle is a development environment allowing you to compile and deploy smart contracts on Ethereum, and web3.js is an API for Ethereum which allows you to interact with the blockchain.

Step 2: Create the Token Smart Contracts

To create the token smart contracts, you will need to write their code in Solidity, the programming language supported by the Ethereum Virtual Machine (EVM). Solidity is an object-oriented language that is tailored for writing decentralized applications.

When creating token smart contracts, you must implement the ERC721 and ERC1155 standards. This includes adding relevant functionality such as minting tokens, transferring tokens, approving addresses, and burning tokens.

Step 3: Compile and Deploy the Token Smart Contracts

Once the token smart contracts have been written in Solidity, they must be compiled and deployed on the Ethereum blockchain. This can be done using the truffle development framework.

Truffle allows you to compile and deploy smart contracts on the blockchain by providing an abstraction layer on top of the web3.js API. This makes it easier to interact with the blockchain, as you don’t have to write any of the complex web3.js code required to do so.

Step 4: Test the Token Smart Contracts

Once the token smart contracts have been deployed on the Ethereum blockchain, they should be tested to make sure they work as expected. This can be done using a range of different testing tools, such as Mocha or Chai. These tools allow you to write automated tests for your smart contracts and also provide a framework for running the tests.

Step 5: Create a Front-End Dapp to Manage the Tokens

Finally, once the token smart contracts have been tested and deployed, a user interface needs to be created.

Design Considerations for Building Dapps

1. Evaluate token use cases: Start by understanding the purpose and core features of your token, which will guide user interface (UI) decisions. Consider creating actionable wireframes and a task flow that maps out how users would engage with the token, including expected actions and necessary inputs.
2. Make use of creative UI/UX: Once you have identified the use cases, find creative ways to integrate ERC721 and ERC1155 token features into the overall user experience. This could involve unique visualizations, animations, and clever visual metaphors.
3. Focus on trust and security: Transactions with ERC721 and ERC1155 tokens are trustless, meaning users must feel confident in their financial security. Incorporate security features such as password/pin protection and two-factor authentication into your user experience to create a more secure environment.
4. Invest in accessible design: Designing for accessibility features can help ensure that users of all types can access tokens. Invest in accessible design measures, such as voice control integration, text-to-speech, and contrast options.

Security Considerations and Recommended Solutions to Prevent Vulnerabilities:

1. Isolate your smart contracts: It’s important to keep smart contracts and other sensitive data isolated from the user interface. By doing this, any vulnerabilities that exist in the smart contracts will not be exposed and vulnerable to malicious actors.
2. Use secure-auth methods: When authenticating a user to interact with a token, it is important to use a secure method such as a blockchain-based authentication method, public-key cryptography, or digital signatures.
3. Monitor changes to the blockchain: Keeping an eye on any changes to the blockchain will help ensure that malicious actors have not exploited any vulnerabilities within the ERC721 or ERC1155 token system.
4. Utilize blockchain analytics tools: Utilizing analytics tools to monitor potential attacks and suspicious behavior can help address any security issues or exploit attempts rapidly.