ERC-20

What is ERC-20?

ERC-20 is a widely adopted technical standard that defines how tokens are created, issued, and managed on the Ethereum blockchain. As a standardized protocol, ERC-20 ensures that tokens built using this format behave consistently and are fully compatible with Ethereum-based infrastructure, including wallets, exchanges, and decentralized applications (dApps). This standardization enables developers to create tokens that can seamlessly integrate into the broader Ethereum ecosystem without having to write custom code for basic functionality like transfers, approvals, or balance checks.

At its core, the ERC-20 standard outlines a set of essential functions and events that a smart contract must implement to be considered ERC-20 compliant. These include totalSupply, which defines the total number of tokens in circulation; balanceOf, which allows anyone to view the token balance of a specific address; transfer and transferFrom, which enable direct or delegated token transfers; and approve and allowance, which manage how much a third party is allowed to spend on behalf of a token holder. These shared rules allow for reliable interaction between different tokens and decentralized services, streamlining the process of integration across platforms.

ERC-20 tokens are used to represent a variety of digital assets, including utility tokens, governance tokens, stablecoins, and even tokenized securities. Because of its flexibility and ease of implementation, the ERC-20 standard has become the foundation for many prominent decentralized finance (DeFi) applications, initial coin offerings (ICOs), and tokenized business models. It continues to play a critical role in expanding Ethereum’s functionality and encouraging widespread adoption of blockchain-based services.