The Origin Story of ERC-1155

In 2018, Philippe Castonguay was living in a world of Eye Spiders and Phoenixes and spells.

Castonguay is the Director of Product at Horizon Blockchain Games, and the team was designing a trading card game called Skyweaver. Like Magic the Gathering, players could collect cards and use the deck to battle. Unlike Magic, the cards were not printed on cardboard. The cards were digital; they were NFTs.

But Horizon Games had a problem: NFTs were too special.

"Back then, if we made the cards NFTs, each card would have a unique number," says Castonguay. "So if you wanted a fire-dragon card, players would need to choose not just that they want a fire dragon, but which one. It was a choice overload."

The premise of NFTs is that each NFT is unique. But Castonguay didn't want each and every card to be unique. He wanted each Eye Spider to be interchangeable. He wanted every Phoenix card to be the same as every other.

This was one of several technical obstacles the team faced when creating games on the blockchain. And Horizon wasn't alone. That year, Castonguay learned that other Web3 gaming companies had similar frustrations with NFTs.

Luckily, the way Ethereum and NFTs operate is not set in stone. The rules are written in code, with an agreed-on process for how to tweak those rules and create a new standard. So Castonguay teamed up with other gaming developers to propose a new Ethereum standard flexible enough for trading fire-dragon cards and building blockchain-based games.

That standard, ERC-1155, is now in use. It's powering blockchain games, but also finding uses beyond gaming.

Game On

Castonguay joined Horizon Games because he sees blockchain-based games as a Trojan Horse—a sneaky way to introduce millions of people to the benefits of crypto.

"Gamers understand that digital assets have value," he says.

Many people balk at the idea that a NFT could be worth thousands of dollars—especially since many NFTs represent ownership of a JPEG that anyone can see and download. But gamers in World of Warcraft regularly pay real money for virtual horses and winged steeds. Players in the sci-fi game Eve Online will put in hours of in-game work to buy a powerful spaceship.

World of Warcraft and Eve Online were not built on blockchains. But Castonguay sees three big benefits of powering games like these with crypto:

1. If you run a large game, the millions of dollars of player money on your servers will be a tempting target to hackers and scammers. By using Ethereum, game developers get a mature and secure currency and financial system for free.
2. While some developers want to build games with limited economies—perhaps even limited to bartering—players in massive online worlds such as Eve often want to put their gold or Inter-Stellar Kredit into sophisticated banks or take out loans by staking their spaceship as collateral. It's challenging for developers to build all this into a game. But in blockchain-based games, players can financially wheel and deal with all the tools of the Ethereum ecosystem. Gaming communities can now build incredibly complex and secure financial infrastructures from their living room.
3. Players of popular games may "own" thousands of dollars worth of armor, railguns, and spells. But they don't really own them. The games' executives can, for example, ban players from selling the items for dollars or Euros and confiscate items from anyone who breaks those rules. When game items are NFTs, players truly own them. (As long as developers don't add these banning mechanisms to their games' NFT contracts.)

At Horizon, though, it wasn't working well to make Skyweaver cards NFTs. And they weren't the only frustrated crypto gaming company. At Enjin, a NFT company that works on many blockchain games, developers faced similar problems.

"None of the [existing Ethereum] standards would enable you to create a game with hundreds of thousands of different assets with varying supplies and different parameters for each asset type," said co-founder and CTO Witek Radomski.

So, in 2018, Castonguay, Radomski, and four other game developers teamed up to propose a new Ethereum standard.

ERC-20 vs ERC-721 vs ERC-1155

When a group headed by Vitalik Buterin launched Ethereum in 2014-2015, the goal was to allow blockchains to support applications beyond money, and for the community to propose and develop those applications and standards.

The first notable standard was ERC-20. Developed in 2015, it allows anyone to create a fungible (interchangeable) coin or token—essentially your own cryptocurrency. This powered a boom of Initial Coin Offerings and stablecoins like Tether.

The other major Ethereum standard is ERC-721, which allows developers to create non-fungible tokens, aka NFTs. Thanks to ERC-721, people can own unique digital assets like Bored Apes or the collage created by the artist Beeple (that dominated headlines by selling at a Christie's auction for $69 million).

In 2018, Castonguay, Radomski, and co. published an Ethereum Improvement Proposal, which is the GitHub equivalent of lighting a bat signal for anyone interested in tweaking the rules governing Ethereum or, in this case, creating a new Ethereum standard.

"Creating a new standard is pretty messy because you have a lot of different people that want different things," says Castonguay. "There were Twitter DMs, Discord groups, GitHub threads, phone calls. It's difficult to coordinate people."

But the hodgepodge of people involved introduced valuable ideas. Castonguay points to people in the NFT world who stressed the importance of on-chain metadata—which was not a priority for gamers but was ultimately important for the standard's adoption.

That said, Castonguay is clear that the biggest challenge was "scope creep." Contributors suggested adding more and more features. But Castonguay sees this as the reason many Ethereum proposals fail—by trying to solve everything, their utility is unclear and no one uses them.

"I think it was good that the main collaborators were from gaming companies," he says. "It allowed us to focus." So, like Steve Jobs stripping out superfluous features, they had long conversations about keeping the list of new functionalities modest and focused on the needs of blockchain games.

Ultimately the new standard, ERC-1155, differed from ERC-20 and ERC-721 in three important ways:

1. As fungible as you want: 1155 tokens can be fungible (like cryptocurrencies) or nonfungible (like NFTs) or somewhere in between (like a set number of identical Eye Spider cards in Skyweaver).
2. Batch transfers: Exchanging or selling many 721 NFTs typically requires a separate transfer for each, with a gas fee for every transfer that adds up quickly in cases like Horizon's trading-card game. But ERC-1155 allows multiple tokens to be sent in a single transaction.
3. One and done contracts: Since ERC-1155 can support tokens of varying fungibility, someone running a fantasy-world game can use one contract to create a currency, to create items like swords and spells, and to create unique items like a mythic weapon—rather than using ERC20 for the currency and 721 for the mythic weapon and creating a new contract for every new item in the game.

In 2019, after one year of work and development, ERC-1155 was accepted by the Ethereum community. It powers Horizon's Skyweaver trading cards, among other games. And thanks to the new standard, players can easily choose and trade their Eye Spiders and Phoenixes.

Beyond Gaming

Castonguay credits their focus on gaming with getting ERC-1155 out into the world. But it's attracted attention beyond games, with some crypto writers suggesting it should replace ERC-721 for NFTs and NFT marketplaces.

But that has yet to happen. ERC-1155 has seen solid adoption in gaming, but ERC-721 remains popular and dominant for NFTs.

One reason for that is path dependency—since ERC-721 isn't broken, there's no reason to fix it.

Cameron Armstrong runs a startup whose goal is to use NFTs to kill transaction fees, and his first product offers escrow for private sales of NFTs. But he doesn't plan to support ERC-1155 on his platform until he sees the demand for it.

"I basically subscribe to this philosophy of Worse is Better for software," he says. "The majority of users don't care [about switching to 1155], and removing the need for one approval isn't worth the hassle of updating every interface in Web3."

But it's not shocking that most NFTs still use the standard designed specifically for NFTs. What's more interesting is the new possibilities enabled by ERC-1155.

The popular Azuki NFT collection, for example, has experimented with fractionalizing ownership of (or technically governance of) one of their NFTs into shares, each of which is an ERC-1155 token and offers perks like access to Azuki's Discord.

Meanwhile, Adidas's Into the Metaverse project primarily used ERC-1155 to sell and give away NFTs (some perhaps better described as semi-fungible tokens!) whose benefits included the ability to order limited-edition clothing (some digital and some physical).

Here at Center—as a company whose mission is to provide the tools and APIs that allow companies to build great NFT experiences—we've also seen increased interest from customers who want to support and use ERC-1155. The newly-released Center API V2 offers full support for ERC-1155 tokens, making it easy to integrate these powerful tokens into any application.

There is a famous maxim in tech that many inventions that will one day change the world (planes, phones, personal computers) initially look like toys. For ERC-1155, being developed to power games puts it in illustrious company.