ERC-20
Quick Definition
A technical standard on the Ethereum blockchain that defines a common set of rules for creating fungible tokens, enabling interoperability across wallets, exchanges, and DeFi protocols.
What Is ERC-20?
ERC-20 (Ethereum Request for Comment 20) is the most widely adopted token standard on the Ethereum blockchain, defining a set of six mandatory functions and two optional functions that all compliant tokens must implement. Proposed by Fabian Vogelsteller in November 2015, this standard revolutionized token creation by establishing interoperability — any ERC-20 token works automatically with any ERC-20-compatible wallet, exchange, or smart contract.
The standard specifies functions including: totalSupply (total tokens in existence), balanceOf (tokens held by an address), transfer (send tokens), approve (authorize another address to spend tokens), and transferFrom (used for authorized transfers). This uniformity means that when Coinbase or MetaMask adds support for one ERC-20 token, they automatically support all ERC-20 tokens.
ERC-20's impact on the crypto ecosystem is immense — it enabled the 2017 ICO boom by making token creation accessible to any developer with basic Solidity knowledge. Today, the majority of tokens on Ethereum (including USDT, USDC, LINK, UNI, and thousands more) follow this standard. Other blockchains have adopted similar standards: BEP-20 on BNB Chain, SPL on Solana, and TRC-20 on Tron. Later Ethereum standards like ERC-721 (NFTs) and ERC-1155 (multi-token) built upon the foundation ERC-20 established.
ERC-20 Example
- 1A DeFi startup creates a governance token by deploying an ERC-20 smart contract with a supply of 100 million tokens. Because it follows the standard, the token is immediately compatible with MetaMask, Uniswap, Aave, and every other Ethereum application — no custom integration needed.
- 2An investor notices that USDT exists as an ERC-20 token on Ethereum, a BEP-20 token on BNB Chain, and a TRC-20 token on Tron. While functionally identical, each version has different transaction fees and speeds. Sending USDT via Tron (TRC-20) costs ~$1, while Ethereum (ERC-20) might cost $5-15 depending on gas prices.
Related Terms
Ethereum
A decentralized blockchain platform that enables smart contracts and decentralized applications (dApps), powered by its native cryptocurrency Ether (ETH).
Token (Crypto)
A digital asset created on an existing blockchain platform, representing value, utility, or ownership rights within a specific ecosystem or application.
Smart Contract
Self-executing code stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met, without intermediaries.
Gas Fee
The transaction fee paid to blockchain validators for processing and validating transactions, denominated in the network's native cryptocurrency.
NFT (Non-Fungible Token)
A unique digital asset stored on a blockchain that represents ownership of a specific item such as art, music, collectibles, or virtual real estate.
Bitcoin
The first and largest cryptocurrency by market capitalization, operating on a decentralized peer-to-peer network using proof-of-work consensus.
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