2026-05-01

PiRC1 vs ERC-20: How Does Pi's Token Standard Compare to Ethereum's?

In the world of cryptocurrency, most people don't pay attention to token standards—until something goes wrong, and then they regret it. Ethereum's ERC-20 is currently the most widely used token standard, with almost all DeFi projects you've heard of built upon it. Pi Network's PiRC1 is a brand new standard, officially taking effect in April 2026 with V22. The design philosophies behind these two standards are fundamentally different. Frankly, understanding this difference will help you assess the long-term value of the Pi ecosystem more than any price analysis. --- ## First, What is a Token Standard? Before diving into the differences, let's quickly explain what a 'token standard' is for. Simply put, a token standard is the 'rulebook for issuing tokens on a blockchain.' It defines what a token can do, how it's transferred, and how it interacts with other applications. With a unified standard, different applications can recognize each other's tokens; otherwise, if every project invented its own format, the entire ecosystem would become fragmented. --- ## ERC-20: Freedom, But No Guardrails Ethereum's ERC-20 has been in use since 2015, and thousands of tokens have been issued based on it. Its core design is simple: it defines basic token functionalities (transfers, balance checks, approvals, etc.) and places almost no restrictions on what you can do. Anyone can deploy an ERC-20 token in minutes. This last point is ERC-20's greatest strength and its biggest problem. **SQUID Token** is a textbook example. This token leveraged the popularity of the hit Netflix series 'Squid Game,' skyrocketing from $0.01 to over $2,800 in a short period, attracting a large number of retail investors. However, the smart contract was designed as a honeypot: investors could only buy, not sell. The developers dumped a large amount at the peak, drained liquidity, profited approximately $3.38 million, and then disappeared, leaving the token worthless. Another case is **ANKH Token**: with almost no website or whitepaper, relying only on a DOGE-style logo and anonymous developers, it raised nearly $60 million in 20 hours through Balancer's liquidity bootstrapping protocol. The developers immediately cashed out all their pre-held LP tokens, draining almost all funds from the pool, their Twitter account disappeared, and ANKH became worthless. Honestly, ERC-20's 'freedom' has been severely abused. You can issue a token without any product, withdraw all liquidity after launch, and operate an entire project completely anonymously. These loopholes have led to countless rug pull tragedies in the crypto space. --- ## PiRC1: Building Guardrails into the Standard Pi's PiRC1 framework requires projects to have a truly functional application before they can issue tokens—in other words, no live app, no eligibility for token issuance. This single rule directly plugs ERC-20's biggest loophole. ### 1. Product-First Token Issuance Project teams cannot create something out of nothing—they cannot just have a vague idea, build a token, and then start hyping it up and painting a rosy picture of the future. Instead, they must first deliver results, allowing interested parties to see the project's actual content and potential, letting the market judge whether the product is truly attractive, and ultimately reflecting this in the token price. This reversal of order fundamentally changes the incentive structure for project teams. ### 2. Funds Go into the Liquidity Pool, Not Project Team Pockets When a project issues tokens on Pi Launchpad, the Pi committed by miners does not directly flow to the project team—instead, it enters a permanent liquidity pool, with Pi Coin serving as the base liquidity for the entire ecosystem. This means funds are held in a public place, not accessible at will by the project team. Compared to the ERC-20 ecosystem where liquidity can be withdrawn at any time, this design significantly protects participants' asset security. This design fundamentally eliminates the most common rug pull tactic. ### 3. Engage-to-Earn: Engagement Determines Allocation Priority The Engage-to-Earn algorithm continuously monitors activity within Pi ecosystem applications, quantifying user contributions and translating them into priority for participating in new token issuances. This is completely different from the common 'holding amount determines everything' in the ERC-20 ecosystem. Pi Network's principle from the start has been: those who participate earlier and contribute more should receive greater rewards. For every miner, the starting line is relatively fair, and rewards are not determined by the capital they can deploy. ### 4. KYC Account Accountability Mechanism Pi's KYC verification network adds an extra layer of accountability to the entire system—developers and users operate under verified identities, rather than anonymously. This means all participants are identified by their real names, minimizing opaque operations. For users who want to understand the involvement of large institutions, this increases transparency and confidence; of course, for individual users who value privacy, this is a trade-off that needs to be considered. --- ## Direct Comparison Across Four Dimensions | Comparison Dimension | ERC-20 (Ethereum) | PiRC1 (Pi Network) | | -------------------------- | ------------------------------ | ---------------------------------- | | Token Issuance Threshold | Almost no restrictions | Requires a functional application | | Fund Flow | Directly to project team | Enters permanent liquidity pool | | Liquidity Protection | No mandatory mechanism | Locked, cannot be withdrawn | | Token Distribution | Usually based on holding amount or whitelist | Based on actual engagement (Engage-to-Earn) | | Identity Requirement | Anonymous | KYC verified | | Issuance Speed | Minutes | Requires an approval process | | Flexibility | Very high | Lower (restricted by design) | From this comparison table, it's clear that PiRC1's design more closely resembles the logic of real-world business operations: first a product, then customers. As for how long the approval process will take, what documents are needed, and how rigorous it will be—the official details have not yet been fully disclosed. This is the area where PiRC1 currently needs the most clarification. However, the overall direction is clear: PiRC1 is designed with user protection in mind. --- ## The Cost of PiRC1: What Was Sacrificed? Every design involves trade-offs, and PiRC1 is no exception. ERC-20's extreme freedom allowed the Ethereum ecosystem to grow explosively within a few years. Applications like Uniswap, Aave, and Compound, which transformed the financial world, rapidly iterated in an environment with almost no restrictions. PiRC1's strict thresholds mean: **Greater pressure on developers.** They must first create a functional product before issuing tokens, meaning there's no funding support during the development phase. For independent developers with limited resources, this threshold is not low. **Timing uncertainty.** The approval process takes time, and developers might miss optimal market timing as a result. **But it's protection for users.** The very purpose of the design is to prevent developers from creating illusions to deceive participants. Curiously, this 'slowness' might actually be what the Pi ecosystem needs most at this stage. Just like Pi Network's strategy from the beginning—first focusing on building infrastructure, gradually enriching the entire framework and ecosystem, rather than rushing to make the token price soar. Only after reaching a certain scale will the market provide feedback. --- ## OrbitWatch's On-Chain Observations PiRC1 officially went live on-chain on April 30 (protocol_version switched to 22). According to OrbitWatch's Horizon API monitoring data, there hasn't been significant change in on-chain data since V22 took effect. This is actually within expectations. While the PiRC1 framework is now active at the protocol layer, related ecosystem projects have not yet launched on the mainnet, and Pi Launchpad is still in the testnet phase. Additionally, the overall market sentiment in the crypto space is currently conservative, so short-term data changes may be limited. Truly meaningful on-chain activity is expected to begin only after V23 smart contracts go live (targeted for May 11) and Pi Launchpad officially operates on the mainnet. Data from that period will be the primary basis for judging whether PiRC1 is truly effective. --- ## Conclusion: Different Philosophies, Different Bets ERC-20 bets on 'the free market will weed out bad projects on its own.' PiRC1 bets on 'setting thresholds before entry is better than fixing problems after they occur.' Neither philosophy is absolutely right or wrong, but in the 2026 cryptocurrency market, users' tolerance for rug pulls and scam projects is increasingly low. Pi's choice to launch PiRC1 at this time is a clear signal in itself. As for whether PiRC1 will ultimately succeed, the answer isn't in the whitepaper—it lies in how many truly useful applications are built under this framework in the coming months. Pi Network has not yet announced the first batch of mainnet projects approved under PiRC1. OrbitWatch will continue to monitor relevant developments, including which projects apply, their approval progress, and on-chain activity after Pi Launchpad officially opens on the mainnet. That day should mark the true beginning of a new chapter for the Pi ecosystem. --- **Further Reading** - [Full Analysis of PiRC1](/en/protocol/pirc1) - [Confirmation: Pi Network On-Chain Protocol Officially Switched to v22](/en/updates/2026-04-30) --- *Data sources: Pi Network Horizon API, crypto.news, CoinPedia, official GitHub. All analyses do not constitute investment advice.* *OrbitWatch is an independent Pi Network ecosystem observatory and is not affiliated with Pi Network official.*

• •PiRC1, Pi Network's new token standard, fundamentally differs from Ethereum's ERC-20 by prioritizing user protection and a product-first approach to token issuance.
• •Unlike ERC-20's 'freedom' which has led to numerous rug pulls, PiRC1 mandates functional applications, locks committed funds into permanent liquidity pools, and utilizes KYC for enhanced accountability, aiming to prevent scams.