ERC-20

ERC-20 is a token standard used to create and manage cryptocurrencies on the Ethereum blockchain. Introduced in 2015, it stands for Ethereum Request for Comment #20 and outlines a set of rules that any new token must follow to function properly within the Ethereum ecosystem. These rules make it possible for different tokens, wallets, dApps, and exchanges to work together seamlessly — which is why ERC-20 is the most widely adopted token standard in the crypto world.

Why Was ERC-20 Created?

Before ERC-20, developers had no unified way to create tokens on Ethereum. Every new project had its own logic, making it difficult to integrate with wallets and platforms. ERC-20 fixed this by providing a common language and behavior for tokens, such as:

• How to transfer tokens between accounts
• How to get a token’s balance or total supply
• How smart contracts can interact with tokens
• How to approve someone else to spend tokens on your behalf

Thanks to ERC-20, creating a new cryptocurrency on Ethereum became as easy as deploying a smart contract.

What Are ERC-20 Tokens?

An ERC-20 token is any cryptocurrency built on Ethereum that follows the ERC-20 rules. These tokens don’t have their own blockchain — they use Ethereum’s infrastructure.

Popular ERC-20 tokens include:

• USDT (Tether)
• UNI (Uniswap)
• LINK (Chainlink)
• MKR (Maker)
• DAI (stablecoin)
• SHIB (Shiba Inu)

There are thousands of ERC-20 tokens, used for everything from governance and payments to gaming and DeFi.

How Do You Use ERC-20 Tokens?

ERC-20 tokens can be:

• Stored in Ethereum-compatible wallets like MetaMask, Ledger, or Trust Wallet
• Traded on DEXs like Uniswap and centralized exchanges like Coinbase
• Sent just like ETH, but with a small gas fee paid in ETH
• Used in DeFi apps for lending, staking, and liquidity

Their compatibility makes them incredibly flexible and useful across the Web3 ecosystem.

Limitations of ERC-20

Despite its success, ERC-20 has some limitations:

• Slow and expensive transactions during high network congestion
• No built-in support for NFTs or complex logic
• Possible approval bugs if not used carefully

Because of this, newer standards like ERC-777 or ERC-1155 have emerged to solve specific issues — but ERC-20 remains dominant for fungible tokens.

Final Thoughts

ERC-20 transformed Ethereum into more than just a blockchain — it became a platform for launching and managing digital assets. Whether you’re using DeFi, trading coins, or building a new project, ERC-20 is likely involved. It’s the backbone of many tokens and will continue to play a huge role in the crypto space.