The technical standard for creating fungible tokens on the Ethereum blockchain, defining a common interface for token contracts.
Detailed Explanation
ERC-20 (Ethereum Request for Comment 20) establishes six mandatory functions that all compliant tokens must implement: totalSupply, balanceOf, transfer, transferFrom, approve, and allowance. This standardization means any ERC-20 token automatically works with all Ethereum wallets, exchanges, and DeFi protocols. Thousands of tokens including USDT, USDC, LINK, and UNI are ERC-20 tokens.
Why It Matters
ERC-20 created the foundation for the token economy. By standardizing how tokens behave, it enabled seamless interoperability across the entire Ethereum ecosystem. Any new token following the ERC-20 standard instantly works with MetaMask, Uniswap, Aave, and every other Ethereum application. This composability is why Ethereum became the dominant platform for token launches, DeFi, and DAOs.
Key Considerations
When interacting with ERC-20 tokens, always verify the correct contract address on the project's official channels or Etherscan. Fake tokens with similar names are a common scam vector. Token approvals grant smart contracts permission to spend your tokens, so regularly review and revoke unnecessary approvals using tools like Revoke.cash.
Example
A project launches a new governance token following the ERC-20 standard. Without any special integration, users can immediately store it in MetaMask, trade it on Uniswap, use it as collateral on Aave, and track it on portfolio apps like Zerion.
Related Terms
Frequently Asked Questions
The technical standard for creating fungible tokens on the Ethereum blockchain, defining a common interface for token contracts.
ERC-20 created the foundation for the token economy.
ERC-20 tokens are native to Ethereum but can be bridged to other EVM-compatible chains like Polygon, Arbitrum, and BNB Chain. The tokens become wrapped versions on the destination chain, maintaining their value peg through bridge smart contracts.