ERC-777

What Is ERC-777?

ERC-777 is a token standard for fungible tokens introduced on the Ethereum network that is fully compatible with existing decentralized exchanges.

The ERC-777 tokenization standard refers to Ethereum’s blockchain protocol that specifies the type of tokens compatible with ETH.

It simplifies token trade interactions and addresses issues related to decimals, minting, and burning. It incorporates a unique feature known as a hook.

When tokens are sent to a computer-based analytical contract, it triggers a hook mechanism that streamlines communication between accounts and contracts during token receipt. Additionally, ERC-777 tokens are less prone to getting stuck in a contract, which is a common problem with ERC-20 tokens.

ERC777, similar to ERC20, is a standard for creating tokens on the Ethereum Blockchain. The standard includes programmed hooks. Unlike ERC20 tokens, if you transfer ETH to a smart contract, the contract will be notified about the incoming ETH through the hooks. The following are the advantages of this standard:

• It functions similarly to Ether, as tokens are sent using the send (dest, value, data) function.
• A tokensReceived code is specified in a contract or ordinary addresses, which is activated upon receiving tokens. This is not the case with ERC20 tokens. For example, when transferring from one smart contract to another, only the owner of the ERC20 tokens is changed within the smart contract, which is the issuer of ERC20. This duplicate call is prevented using ERC-777.
• Furthermore, ERC-777 incorporates the new ERC-820 standard, which allows for the registration of meta-data for contracts, enabling basic introspection. This ensures backward compatibility and allows for additional functionality expansions. Contracts in the ERC-777 protocol interact in the same way as contracts in the ERC-20 protocol.
• A new transfer function is introduced in ERC-777, which includes a field called bytes. This field allows for the addition of identification information to the transfer and instantly notifies the recipient contract about the transfer.
• ERC-777 enables the addition of extra functionality to tokens, such as a mixer contract for enhanced transaction confidentiality or an emergency recovery feature to assist in case of lost private keys.

Although ERC-777 initially had some security issues, which have been resolved, it may still have certain drawbacks like any other token. This is why updated versions, such as ERC-820, have been introduced.

Tokens can be sent to any Ethereum address, even to contracts that do not support them, resulting in the tokens being locked forever.

One potential issue is that, while the tokens can be manually moved, it can be difficult to determine the origin and sender of the tokens.