Tokenized Items With ERC-1155

Colloquially referred to as the gaming token, there is more to the new ERC-1155 token standard than meets the eye.

The below article was our first introduction to ERC-1155. It was written by the author of EIP#1155 (The Ethereum Improvement Proposal repository’s Issue #1155) and CTO of Enjin, Witek Radomski.

When you read the article you will see that game theory and the trading of in-game resources are the driving force behind the design concepts of this new standard. But while gaming was the inspiration for defining the ins-and-outs of this Multi-Token Multi-Transaction smart contract, the design has far-reaching benefits for the crypto community as a whole.

Let’s dive deeper into Radomski’s thesis…

One Item Per Transaction

ERC-20 Fungible Tokens (FTs) and ERC-721 Non-Fungible Tokens (NFTs) currently support a wide variety of use cases in an ever-growing community of dapps and games.

Swiping your credit card, bagging a single loaf of bread, receiving a small receipt, before continuing with the apples, getting another receipt, and so on. This is how ERC-20 and ERC-721 token transfers work, it’s just not efficient.

The above comment stood out to me, particularly because a number of whitepapers I have seen recently want to employ similar concepts to their game theory or product marketplace.

Users, especially game players, are used to making multiple item transactions. While the ERC-20 and ERC-721 standards are versatile, their compatibility and interoperability are limited. The crypto item standard defined in ERC-1155 will allow full-spectrum trades and transactions.

One Token Per Transaction

The idea of making payments using multiple fungible tokens is actually quite common, we do it with cash all the time. We are comfortable trading different denominations of the same currency for cash transactions. ERC-1155 will allow for multiple denominations (1¢-$100) or even multiple currencies (💷💶💵💴) to be transacted atomically.

Asset-Backed Tokens

There are a number of interesting real-world Asset Backed Tokens coming to the market.

Cannabium’s CNAB token, as an example, is backed by 10mg CBD. But what if they wanted to provide a token backed by another fungible asset, such as 10mg THC? Based on their current smart contract architecture, they would have to manage a separate smart contract to accommodate this. This would be a great use case for the ERC-1155.

There is also an index listing gold backed tokens. It brings to mind a quote featured in Radomski’s article:

For example, since one kilogram of pure gold is equivalent to any other kilogram of pure gold, whether in the form of coins, ingots, or in other states, gold is fungible — https://en.wikipedia.org/wiki/Fungibility

These 1kg bars are valued at around $39K USD

Multi-Token Smart Contracts

If the gold-backed token provider were interested in also providing a token backed by 1g silver they’d need an additional smart contract of the same exact nature as their gold token contract.

With the new standards defined in ERC-1155, Crypto Items can now be minted and transacted in fungible and non-fungible variations and combinations. So a single ERC-1155 smart contract could mint a series of fungible gold tokens, silver tokens, and palladium tokens, all in one ERC-1155 smart contract.

Multi-Token Multi-Item Transactions

Let’s say 1 gold token is worth 0.1 ETH (gold is about $40 per gram) - 10 silver tokens would be worth 2 palladium tokens, or 1 gold token.

Traditionally coins were stamped tokens of precious metals used in varieties of sizes and weights for daily transactions

You can perhaps imagine a scenario where you’d want to purchase a set of non-fungible items (NTFs — 😼👽😽🤖🙀👻😹👹😻👾😾) valued at 1.15 ETH, or 11.5 gold tokens. You could pay for that with any combination of the three tokens. For example, you can pay with 10 gold tokens, 1 palladium token, and 10 silver tokens to purchase any number of NFTs or FTs as just one transaction under ERC-1155.

Crypto Casinos & Video Arcades

Token-Activated Gameplay & Casino Chips

Arcades are the most nostalgic and classic example of an application of 1155.

Pay-to-play used to mean you would insert a token or two worth 25¢ and get to play until you lost your life. What we have seen over the past decade is the decline in gaming innovations in favor of in-app purchases. With Battle-royal and Permadeath as all the rage lately, it really makes me wonder if retro pay-to-play gaming might make a comeback.

These three arcade game tokens are a few of the ones that I saved from the early 1980’s — Lisa Zins on Flickr

Casinos offer one of the most prevalent forms of fungible physical currency with poker chips. Poker chips are tokens that will grant gain access to anything in the house. Casino chips are the fungible points of risk and reward in all of the games, so at the end of the night the fungible tokens can be tallied and cashed out.

Blackjack is a classic example of tokenized gaming.

A deck of cards can even be considered a set of NFTs, where each player card has a face value (1–14) and a suit (♠️♣️♥️♦️). Using the casino’s poker chips as FTs, players wager chips and risk losing them to the house or other players. The combination of the NFTs (the cards) and the FTs (the chips) wagered on each hand are a transaction that ultimately decides who takes the pot (Fungible Token Reward).

Arcade tokens and casino chips are fungible currency designed to be used by players to engage in gaming or gambling with the risk of fungible tokens and the reward for chips or tickets. This is a great video demo-ing an ETH-powered slot machine that I came across while writing this article:

I thought it was a fun example to share demonstrating an ERC-20 fungible risk-reward game

Tokenized Prize Systems

Arcade tokens and the prizes exchanged for tickets won playing games are a real world example of a multi-token economy coming full circle. Money is turned into tokens to activate machines, then points are rendered in tickets and subsequently transacted for prizes. Tickets used to purchase prizes are an interesting example of using FTs to purchase NFTs.

You can only use tickets to buy prizes, you cannot go to the prize counter with arcade tokens or fiat to purchase prizes. ERC-721 defines collectable non-fungible tokens with values unique to each item. This token standard allows for uniquely valued tokens, as popularized by CryptoKitties.

CryptoKitties each have unique attributes that distinguish characteristics and ownerships of a digital cat. But what if you wanted items with different characteristics and features alongside the kitties in your marketplace? With the current smart contract structure you would have to define multiple smart contracts to allow for each item specification.

Crypto Itemized Marketplaces

Artified is developing an iOS dapp that uses a fungible risk-reward game theory to engage users (which my team at Sea Foam Media is designing and building).

Players of the Artified game will compete to win non-fungible assets. Future iterations of the game will also capture the magic of coin and rarity collecting for the crypto era and new generations of numismatists. Players will be able to stake the prizes they’ve won for auction or trades in combinations of the fungible tokens and non-fungible assets. This will engage digital collectors as well as enable the purchasing of real-world art, rare coins, antiquities, or even tickets to conferences and museum events. These represent Multi-token Mutli-Item transactions.

Redeem Tokens for Prizes

These unique rare tokenized assets will be available as prizes in contests as well as in exchange for tokens. Vendors will be able to tokenize their physical assets so users can compile digital collections of tradable NFT assets. Venues can offer event tickets and digital assets to attract users to their real-world competitions to win Art Coin FTs and rare collectable NFTs, which they can use at auction.

These assets are not all rare coins, and some coins will have a variety of characteristics depending on the era. ERC-1155 will enable Artified to continue to mint both fungible tokens for competition and marketplace transactions, as well as multiple classes of non-fungibles for prizes and collections.

With many interesting applications for ERC-1155, it’s clear that this smart contract standard will have uses for tokenized ecosystems far beyond the world of gaming. I believe it will have a huge impact on the way we design and develop dapps and tokens in the coming year.

What do you think of ERC-1155? Will you be using it? Share with me in the comments.

—

Sea Foam Media is a blockchain, ICO & STO agency headquartered in San Francisco, with representation in New York and London. I work in our San Francisco office as a partner and CTO.

Sea Foam Media provides end-to-end services for our clients, including whitepaper development, technology vision and architecture, token economics, digital marketing, PR, web and mobile app development, private blockchain network development, and smart contracts.

Find out more at www.seafoam.media!