ERC-20 is the token standard for fungible tokens on Ethereum. Learn what it is, how it works, and its impact on the crypto ecosystem.
Key Takeaways:
- ERC-20 is a technical standard for creating fungible tokens on the Ethereum blockchain, providing a framework for token creation, issuance, and usage.
- The token standard facilitates interoperability between smart contracts, ensuring newly minted tokens are compatible with third-party services like exchanges and wallets.
- ERC-20 empowered developers to build on Ethereum, creating network effects and driving the 2017 ICO boom that spawned hundreds of new tokens.
What Is ERC-20?
In the world of token standards, ERC-20 reigns supreme. Proposed in 2015 by Fabian Vogelsteller, an Ethereum co-founder, it’s a technical standard for creating fungible tokens on the Ethereum blockchain. "ERC" stands for "Ethereum Request for Comments," and "20" is the number assigned to this proposal, which defines a set of rules for how tokens should be created, issued, and used.
Fungible tokens are indistinguishable from one another and can be exchanged at any time. Thousands of tokens use the ERC-20 standard, which has become the driving force behind Ethereum’s ecosystem, powering hundreds of thousands of contracts on the network.
What Is a Token Standard?
A token standard is a category of smart contract parameters outlining application-level guidelines for how smart contracts function on the underlying blockchain. Token standards specifically address parameters like token supply, transaction approvals, and token data accessibility.
The purpose of a token standard is to facilitate interoperability, ensuring newly minted tokens can be exchanged with others of the same standard and are compatible with third-party services like exchanges and wallets. In other words, ERC-20 ensures users can buy, trade, and HODL many cryptocurrencies built on this standard. Without this framework, developers would create tokens using unique codebases and toolkits that couldn’t interact predictably.
👉 Learn more about other token standards, like ERC-721 for NFTs.
Top 10 ERC-20 Tokens to Know
While there are hundreds of thousands of ERC-20 tokens, some stand out more than others. Here are the most popular ones today:
| Token | Description |
|---|---|
| Tether (USDT) | Pegged to the US dollar, USDT is the most popular stablecoin. |
| USD Coin (USDC) | A fully collateralized US dollar stablecoin backed by Ethereum. |
| Polygon (MATIC) | A scaling platform enabling secure, scalable dApps with low fees. |
| Shiba Inu (SHIB) | A community-driven experiment with a deliberately abundant supply. |
| Uniswap (UNI) | The governance token for Uniswap, an automated liquidity protocol. |
| Cronos (CRO) | The native token of the Cronos blockchain, optimized for high-speed transactions. |
| Chainlink (LINK) | Powers Chainlink, enabling off-chain data integration into smart contracts. |
| Dai (DAI) | A decentralized stablecoin pegged to the US dollar. |
| ApeCoin (APE) | Supports decentralized community-led initiatives in the Metaverse. |
| Wrapped Bitcoin (WBTC) | An ERC-20 token backed 1:1 by Bitcoin, bringing BTC liquidity to Ethereum. |
Users can easily track all ERC-20 tokens on Crypto.com’s Price Page.
How Do ERC-20 Tokens Work?
For ERC-20 tokens, interoperability with each other and third-party services (like Crypto.com App and MetaMask) is achieved through API implementation. This allows developers to fetch on-chain token data and trigger specific smart contract functions.
The API outlines six key features an ERC-20 token must have:
- Total token supply data.
- Token balance data in Ethereum wallets.
- Functionality to transfer token ownership.
- Functionality for smart contracts to transfer tokens on behalf of owners.
- Functionality setting withdrawal limits for smart contracts.
- Functionality allowing external addresses to spend tokens from a specific balance.
How ERC-20 Became the Gold Standard for Crypto Tokens
Before ERC-20, developers lacked a common language when creating Ethereum tokens. This meant building projects from scratch and custom bridges for token swaps—both requiring technical expertise.
By lowering the entry barrier, ERC-20 empowered developers, ensuring projects interoperate with thousands of tokens and services, creating network effects.
Additionally, the fungible nature of ERC-20 tokens suits digital currencies, a prominent blockchain use case. These tokens can also include utility features like voting rights and reward mechanisms.
These factors propelled ERC-20 tokens into popularity, paving the way for the 2017 ICO boom, where billions were raised, launching many foundational crypto projects.
How to Buy ERC-20 Tokens on Crypto.com
On the Crypto.com App, users can easily buy ERC-20 tokens and 250+ other coins using credit/debit cards, Apple Pay, Google Pay, or 20+ fiat currencies via bank transfers. Tap "Buy" from the Home Screen, select the token, and payment method.
👉 Download the Crypto.com App here.
Conclusion – Will ERC-20 Retain Its Gold Standard Status?
Ethereum’s original token standard, ERC-20, has played a pivotal role in blockchain growth—not just for Ethereum but the entire crypto ecosystem. Its widespread adoption enabled developers to build DeFi products, games, exchanges, and more, expanding decentralized technology possibilities.
Since ERC-20’s introduction, other standards have emerged as alternatives or improvements, including:
- ERC-777: A fungible token standard with backward compatibility.
- ERC-721: The standard for non-fungible tokens (NFTs).
- ERC-1155: A multi-token standard combining ERC-20 and ERC-721 features.