What Is ERC-223?
Created by Reddit user and Ethereum developer ‘Dexaran’, the main goal of the ERC-223 token standard is to expand on the ERC-20 protocol and offer a solution for an ERC-20 bug. ERC-223 is functionally identical to ERC-20, but it has improvements that solve the latter token standard’s issues.
What Issues Does ERC-223 Solve?
Although extremely commonly used, the ERC-20 token standard has glaring issues that render it less than ideal at times. For example, when users accidentally send funds to the wrong address, they have no way to recover them. This is not the case with ERC-223, as users get their assets back if they send them to incompatible smart contracts.
The ERC-223 token standard allows transactions to flow seamlessly, as they are all powered by automated smart contracts. ERC-223’s rulesets ensure that the destination for a user’s assets is a compatible smart contract, with an encoded fallback function where funds are automatically returned to the sender’s account if they accidentally send it to an incompatible smart contract. Once that happens, tokens can then be transferred to the right smart contract.
ERC-223 also includes security measures to ensure a more protected token standard, with end-to-end encryption, HTTP authentication, and escrow protection. To learn more about today’s most common token standards, read What Are Token Standards? An Overview.