Cryptocurrency has developed to the present day, with thousands of digital tokens for you to choose from, each with its advantages and uses. As the cryptocurrency community evolves, its technology and support continue to advance.
Among the many available token standards, ERC20 and TRC20 are the two most popular and widely used standards in the crypto industry. But why is that? What are the differences between them?
In this article, we aim to explore the main differences between TRC20 and ERC20, examine how tokens interact with smart contracts, and discuss their impact on the broader crypto ecosystem.
Whether you are an experienced trader or just entering the world of digital currencies, understanding these token standards will help you use cryptocurrencies more effectively.
What is TRC20?
TRC20 is a token standard used for developing and utilizing smart contracts on the Tron blockchain. This protocol underpins many digital tokens within the Tron network, which is known for its high transaction speed and low fees. Essentially, TRC20 is to the Tron network what ERC20 is to the Ethereum network, facilitating the seamless creation and management of tokens.
The TRC20 standard ensures compatibility among the numerous tokens and decentralized applications (dApps) developed and operated on the Tron blockchain. It provides developers with a set of predefined rules and functions, such as transferring tokens, retrieving token balances, managing token supply, and interacting with other tokens. By adhering to these rules, tokens can operate efficiently within the Tron ecosystem, enabling complex transactions and continuous interaction with other smart contracts and tokens.
TRC20 tokens typically run on the Tron Virtual Machine (TVM), which operates similarly to the Ethereum Virtual Machine (EVM) that we are familiar with. This similarity means that developers familiar with the Ethereum Solidity programming language can easily get started creating TRC20 tokens, as both platforms use the same smart contract language.
This cross-compatibility is a well-known design choice by the Tron team. Developers aim to position the Tron blockchain as a superior alternative to Ethereum, promising to attract developers with lower transaction costs and faster processing speeds.
In the cryptocurrency community, TRC20 tokens are widely recognized and used for their efficiency, particularly favored by investors and traders who prioritize fast transaction speeds and low fees. These features make TRC20 an ideal choice for developers, helping them deploy digital tokens or create new types of decentralized applications without incurring the high costs associated with other blockchain networks.
What is ERC20?
ERC20, or "Ethereum Request for Comments 20," is a technical standard for issuing and managing tokens on the Ethereum blockchain. It is one of the most widely adopted protocols in the crypto community for creating smart contracts on the Ethereum blockchain network, arguably the most popular token protocol.
The ERC20 standard provides a set of rules that all Ethereum-based tokens must follow, ensuring compatibility with a wide range of applications, such as wallets, exchanges, and decentralized applications (dApps).
This allows Ethereum to offer a complete ecosystem, providing crypto enthusiasts with everything they need to buy, sell, or transfer tokens, as well as complete many other crypto-related activities.
Essentially, the ERC20 standard defines a universal list of rules that Ethereum tokens must implement, enabling developers to program how new tokens operate within the Ethereum ecosystem.
This includes how tokens are transferred between addresses and how to access data within each token. By standardizing these methods, ERC20 greatly simplifies the process of integrating new tokens into existing systems and applications.
The ERC20 token standard has developed nine functions to help manage token balances, which developers should include when building smart contracts to generate ERC20 tokens, six of which are required, while three are optional. These functions include:
TotalSupply (required): Returns the total supply of tokens generated by the project;
BalanceOf (required): Returns the account balance held by a specific address;
Transfer (required): Allows one address to transfer tokens to another address;
Approve (required): One address can authorize another address to use tokens on its behalf;
TransferFrom (required): Allows one address to receive tokens from another approved address;
Allowance (required): Returns the amount of tokens that one address is allowed to spend on behalf of another address;
Name (optional): Returns the name of the token;
Symbol (optional): Returns the symbol of the token;
Decimals (optional): Returns the number of decimal places the token can be divided into.
ERC20 tokens are typically designed to support the creation of complex functionalities, such as voting rights and staking mechanisms. Implementing smart contracts using the ERC20 standard can facilitate decentralized governance systems, making ERC20 tokens crucial participants in the Ethereum ecosystem.
Through the ERC20 protocol, the Ethereum network has developed a complex environment for the crypto industry, giving rise to a wide variety of digital tokens, each serving different purposes and markets.
TRC20 vs. ERC20
Blockchain Network
ERC20 tokens operate on the Ethereum blockchain, which is known for its robust smart contract capabilities and extensive applications. The network is supported by the Ethereum Virtual Machine (EVM), enabling complex contract operations and various decentralized applications (dApps).
On the other hand, TRC20 tokens are based on the TRON blockchain, designed to optimize transaction speed and reduce transaction costs. The TRON blockchain uses the TRON Virtual Machine, a more efficient clone of the EVM, designed to be compatible with Ethereum's programming language, Solidity, while providing faster processing times.
Transaction Speed and Fees
One of the main challenges faced by ERC20 tokens relates to their transaction costs (often referred to as "Gas fees"). These fees can fluctuate and become quite high during network congestion. For example, at the time of writing, the average transaction fee on Ethereum is about $4.50. This can affect the number of users choosing to transact with ERC20 tokens.
Additionally, Ethereum has also faced situations where the network was too congested to support all transaction demands, leading to higher fees and transaction times.
In contrast, TRC20 tokens typically offer lower transaction fees and faster processing times compared to ERC20. For instance, at the time of writing, the network fee for transferring TRC20 tokens is slightly over $1. This makes Tron tokens the preferred choice for users seeking quicker and more economical token transfers, especially in high-volume trading situations.
Compatibility and Adoption Rate
ERC20 tokens have a significant advantage: they have a vast ecosystem and are supported by numerous wallets and exchanges. This broad compatibility contributes to an outstanding ecosystem composed of many tokens and projects. ERC20 tokens encompass thousands of crypto projects, and the number continues to grow.
While TRC20 tokens are catching up in terms of ecosystem support, they are often viewed as part of a network that is still expanding its coverage and adoption rate. The compatibility of TRC20 with the Ethereum Solidity language helps eliminate barriers for developers transitioning between the two platforms.
Use Cases and Community
The Ethereum community is larger and typically engages in a broader range of decentralized applications, financial solutions, and enterprise blockchain implementations. This diversity helps create a rich environment and fosters innovative use cases for ERC20 tokens.
In contrast, TRC20 tokens are primarily applied in applications that require fast and frequent transactions, such as some games and social media platforms developed on the TRON network. The TRON Foundation's focus on media and entertainment aligns with the practical use cases of TRC20.
Address Style
Of course, the addresses for ERC20 and TRC20 tokens differ. ERC20 follows the address format for all Ethereum tokens, starting with "0x."
On the other hand, Tron addresses differ slightly from those of Ethereum-based crypto projects, starting with "T."
Top TRC20 Tokens
The TRON network hosts a variety of TRC20 tokens that significantly contribute to its ecosystem. Below, we will explore five of the most well-known TRC20 tokens and discuss their utility, market impact, and unique features.
- USDT (Tether on Tron)
USDT is the Tether version based on Tron (TRON), primarily used to provide stability and address the volatility of the cryptocurrency market. USDT is pegged to the US dollar at a 1:1 ratio, offering a stable store of value and medium of exchange.
As a TRC20 token, USDT benefits from TRON's low transaction fees and fast processing times, making it a popular choice for traders needing quick and economical transfers.
- BitTorrent (BTT)
BTT is used within the BitTorrent ecosystem, one of the largest decentralized networks in the world. It incentivizes users to share bandwidth and resources, thereby enhancing the overall performance and speed of the network.
The token integrates blockchain technology into a mature peer-to-peer (P2P) file-sharing service, enhancing its functionality through a blockchain-driven incentive structure.
- WINkLink (WIN)
WIN is the native token of WINkLink, a decentralized oracle network on the Tron (TRON) blockchain. The project aims to provide reliable data feeds to support the execution of smart contracts. It allows developers to connect with each other and link real-world data, as well as connect smart contracts with real-world data-driven connections.
WINk leverages the capabilities of the TRON blockchain to provide a transparent environment where all transactions are recorded on the blockchain, ensuring the platform's decentralized nature.
- JUST (JST)
JST is the governance token of the JUST platform, which is a decentralized finance (DeFi) system based on the Tron TRON blockchain. It can be used to pay interest, participate in governance through voting, and for other functions within the JUST ecosystem.
JST allows users to directly utilize a range of DeFi products that offer lending, staking, and governance mechanisms, all benefiting from the low-cost and high-speed characteristics of the TRON network.
5. Sun (SUN)
SUN is a social experiment in the construction of the TRON DeFi ecosystem and is the main governance token of the SUN.io platform, which focuses on decentralized stablecoin exchanges, yield farming, lending, and other financial services.
As a governance token, SUN enables holders to participate in the decision-making process regarding the platform's development, including feature updates and protocol adjustments.
Top ERC20 Tokens
The Ethereum network, with its outstanding smart contract capabilities, has become a fertile ground for numerous ERC20 tokens. Each token leverages the features of the network to provide unique functionalities and solutions.
- Chainlink (LINK)
Chainlink is a decentralized oracle network that enables smart contracts on Ethereum to securely interact with external data sources, events, and payment methods. It is crucial in bridging the gap between blockchain and off-chain applications.
LINK is the token of this network, used to pay for services on the network, including data retrieval, formatting, and off-chain computation. It incentivizes data providers to act honestly and ensures the accuracy of the data used by smart contracts.
- USD Coin (USDC)
USDC is a stablecoin pegged to the US dollar at a 1:1 ratio, providing cryptocurrency users with a stable currency that is not affected by the volatility of the cryptocurrency market. USDC is widely used for trading, saving, and other financial transactions where currency stability is crucial.
As an ERC20 token, USDC benefits from the security and interoperability of the Ethereum network, allowing it to be easily integrated into wallets, exchanges, and other financial applications.
3. Uniswap (UNI)
Uniswap is one of the most popular and widely used decentralized cryptocurrency exchanges (DEX) in the market and has been a leader in the field for some time. It supports peer-to-peer (P2P) market-making, providing users with a convenient way to trade various cryptocurrencies without relying on centralized third parties.
The native token of the Uniswap ecosystem is UNI. UNI can be used for various purposes, including as a governance token (allowing you to participate in the voting process), liquidity mining, and community treasury.
- Basic Attention Token (BAT)
BAT is an essential component of the Brave browser's blockchain-based digital advertising platform, developed by Brendan Eich, co-founder of Mozilla and Firefox, aimed at enhancing the security, efficiency, and accountability of digital advertising through blockchain technology.
BAT is the native token of Brave, a web browser built on the Ethereum network. Users can earn BAT by watching ads and can use the tokens to directly support content creators, thereby creating a new way to interact with online content and advertising.
- Aave (AAVE)
Aave is a decentralized cryptocurrency platform that allows people to lend and borrow cryptocurrencies. It uses smart contracts to automate the lending process, specifying how funds are allocated, collateral is handled, and fees are charged. Lenders earn interest by depositing digital assets into specially created liquidity pools, while borrowers can use these liquidity pools to take out loans with cryptocurrencies as collateral.
The native token of the protocol, AAVE, provides holders with discounts on platform fees and serves as a governance token, giving holders a voice in the future development of the protocol.
Frequently Asked Questions
Which is better, TRC20 or ERC20?
Both token standards have their pros and cons. TRC20 is faster and cheaper, while ERC20 supports a wider variety of cryptocurrencies. Ultimately, your decision largely depends on your priorities.
Can I convert TRC20 to ERC20?
Yes, you can convert certain specific TRC20 tokens to ERC20 tokens. For example, USDT can be used on both token standards.
Are TRC and TRX the same?
No, TRC20 is a token standard based on the Tron blockchain, while TRX is the native token and governance token of the Tron ecosystem.
Are TRC and ERC the same?
No. TRC20 is a token standard developed on the Tron blockchain, while ERC20 is a token standard built on the Ethereum network. Each token standard has its own characteristics.
How can I tell if my USDT is ERC20 or TRC20?
You just need to look at the address. TRC20 addresses start with "T," while ERC20 addresses start with "0x," just like any Ethereum-based crypto project.
Both TRC20 and ERC20 are bright token standards, and they share similarities, especially considering that TRON was built as an alternative to Ethereum and uses the same programming language, Solidity, as ETH.
When it comes to comparing the two, you can easily see that Tron tends to be faster and offers lower transaction fees, but no network can surpass Ethereum in terms of the number of crypto projects, right?
Therefore, each token standard has its unique features and potential drawbacks, but you must carefully plan to choose the standard that best suits your funding.
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