What Are ERC-20 Tokens?

Key Takeaways

ERC-20 is a technical standard for creating fungible tokens on the Ethereum blockchain, facilitating interoperability and ensuring compatibility with exchanges and wallets.
Introduced in 2015, it has become a foundational element in the Ethereum ecosystem, contributing significantly to the ICO boom of 2017.

What Does ERC-20 Mean?

ERC-20 stands for “Ethereum Request for Comments 20” and is a proposal defining how fungible tokens should be created, issued, and deployed on the Ethereum blockchain. This standard ensures tokens are interchangeable and compatible with third-party services.

Token Standards

Token standards define how a smart contract functions on its blockchain. They ensure new tokens can interact seamlessly with others and third-party services, enabling a unified ecosystem for token exchange and wallet compatibility.

How Do ERC-20 Tokens Work?

ERC-20 tokens use an API to ensure interoperability, defining key functions like total supply, balance inquiries, transfers, and permissions. This standard makes it easier for developers to create and manage tokens within the Ethereum network.

Top ERC-20 Tokens

Some notable ERC-20 tokens include:

Tether (USDT): A popular stablecoin pegged to the US dollar.
USD Coin (USDC): Another stablecoin fully backed by US dollars.
Polygon (MATIC): Used for securing Polygon’s PoS network.
Shiba Inu (SHIB): Known for its large supply and community-driven approach.
Uniswap (UNI): Governance token for the Uniswap exchange.
Cronos (CRO): Native token of the Cronos blockchain.
Chainlink (LINK): Powers the Chainlink network for off-chain data integration.
Dai (DAI): A decentralized stablecoin soft-pegged to the US dollar.
Render Token (RNDR): Used for paying for rendering services on the Render Network.
Arbitrum (ARB): Governance token for the Arbitrum blockchain.

Future of ERC-20

ERC-20 has set a strong foundation for blockchain projects, promoting the growth of DeFi, games, and exchanges. While new standards like ERC-777, ERC-721, and ERC-1155 have emerged, ERC-20 remains a crucial element of the crypto ecosystem.

Conclusion

ERC-20 tokens have revolutionized the Ethereum network by standardizing token creation and interaction. Their widespread adoption has driven significant developments in the crypto space, making them an integral part of blockchain technology.