Token standards are sets of rules and protocols that define how digital assets are created, managed, and transferred on blockchain networks. Three prominent token standards on the Ethereum blockchain are ERC-20, ERC-721, and ERC-1155, each serving different purposes and use cases.

ERC-20 tokens are fungible tokens that represent interchangeable units of value, similar to traditional currencies or cryptocurrencies like Bitcoin. They are widely used for fundraising through Initial Coin Offerings (ICOs), creating utility tokens for decentralized applications (dApps), and facilitating peer-to-peer transfers of value.

ERC-721 tokens, also known as non-fungible tokens (NFTs), are unique digital assets that represent ownership of distinct and indivisible items, such as digital art, collectibles, or virtual real estate. Each ERC-721 token is unique and cannot be replicated, making them ideal for representing ownership of rare or one-of-a-kind assets.

ERC-1155 tokens are a hybrid token standard that combines the features of both ERC-20 and ERC-721. They allow for the creation of both fungible and non-fungible tokens within the same contract, offering flexibility and efficiency for managing diverse sets of digital assets, such as gaming items, rewards, and in-game currency.

Overall, token standards play a crucial role in standardizing tokenization on blockchain networks, enabling interoperability, compatibility, and innovation in the emerging digital economy.