<h3 id="token-standards">Token Standards</h3><p>Token standards are essentially a set of agreed-upon rules that outline the design, development, behavior, and operation of cryptocurrency tokens on a specific blockchain protocol. For these standards to be effective, they must gain wide adoption. Without broad acceptance, these rules cannot be considered &#34;standards&#34; since standards are rules generally followed by a large community.</p><h3 id="why-are-token-standards-needed">Why Are Token Standards Needed?</h3><ol><li><strong>Compatibility</strong>: Token standards ensure that all products built using that standard can work together seamlessly.</li><li><strong>Composability</strong>: In programming, a composable system allows developers to reuse existing components to create new products, which is also applicable to token creation.</li><li><strong>Efficiency</strong>: Token standards enhance interoperability between smart contracts. When smart contracts follow token standards, they can manage all tokens on the network effectively.</li></ol><h3 id="common-token-standards">Common Token Standards</h3><ol><li><strong>ERC-20</strong>: The most popular token standard on Ethereum, allowing for the creation of fungible tokens. Examples include Shiba Inu, Tether, Uniswap, and ApeCoin.</li><li><strong>BEP-20</strong>: A token standard on the Binance Smart Chain (BSC), sharing similar properties with ERC-20 due to their architectural similarities.</li><li><strong>ERC-721</strong>: This standard allows for the creation of non-fungible tokens (NFTs) on Ethereum, used by many popular NFTs.</li><li><strong>ERC-777</strong>: An improved fungible token standard over ERC-20, providing enhanced privacy and addressing certain issues with ERC-20 tokens.</li><li><strong>ERC-1155</strong>: This standard helps reduce costs by allowing transactions to be grouped, and can be used for both fungible tokens like the Basic Attention Token and non-fungible tokens like CryptoPunks.</li></ol><h3 id="wrapped-tokens">Wrapped Tokens</h3><p>Tokens on different blockchains typically cannot interact with each other. Wrapped tokens address this issue by representing assets on one blockchain in a form that can be used on another. For example, Wrapped Bitcoin (WBTC) on the Ethereum blockchain is an ERC-20 token backed 1:1 by real Bitcoin. This allows WBTC holders to use Bitcoin within the Ethereum network for trading, farming, staking, and interacting with other ERC-20 tokens.</p><p>Token standards enable the use of diverse assets within the same blockchain, solving the problem of asset incompatibility and providing flexibility for the network.</p>

Why Are Token Standards Needed?

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