Introduction to ERC-20
ERC-20 is the technical standard used for creating and implementing tokens on the Ethereum blockchain. Proposed by Ethereum developer Fabian Vogelsteller in November 2015, this framework defines a set of rules that ensure interoperability between tokens within the Ethereum ecosystem. Unlike standalone software, ERC-20 functions as a technical specification or guideline for developers.
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Why ERC-20 Matters
- Interoperability: Predictable interactions between tokens and applications.
- Uniformity: Standardized methods for transferring tokens and recording balances.
- Adoption: Supported by most decentralized applications (DApps), wallets, and exchanges.
How ERC-20 Works
Core Functions
The ERC-20 standard outlines six mandatory functions:
- Transfer: Moves tokens between addresses.
- BalanceOf: Checks an address’s token balance.
- TotalSupply: Tracks the token’s circulating supply.
- Approve: Authorizes third-party spending (e.g., for DEX trades).
- Allowance: Limits delegated token access.
- TransferFrom: Enables automated transfers (e.g., payroll).
Optional Metadata
- Token name (e.g., "Chainlink").
- Symbol (e.g., "LINK").
- Decimal places (typically 18).
Use Cases of ERC-20 Tokens
| Application | Example |
|----------------------|----------------------------------|
| Crowdfunding | ICOs for startup capital. |
| Voting Systems | Tokenized governance in DAOs. |
| Loyalty Programs | Reward points for customers. |
| Asset Representation | Gold-backed tokens or real estate.|
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The Impact of ERC-20
Growth Statistics
- 2017: ~5,500 ERC-20 contracts.
- 2018: 40,000+ contracts.
- 2025: Exceeds 160,000 contracts.
Exceptions to the Rule
Ether (ETH) predates ERC-20, leading to the creation of Wrapped Ether (WETH)—a 1:1 ERC-20 representation of ETH for DeFi compatibility.
FAQs
1. What’s the difference between ERC-20 and Ether?
ERC-20 is a token standard, while Ether is Ethereum’s native currency. WETH bridges this gap.
2. Can ERC-20 tokens be mined?
No. They’re created via smart contracts and distributed according to predefined rules.
3. Are ERC-20 tokens secure?
Yes, but vulnerabilities depend on contract implementation (e.g., the 2016 DAO hack).
4. How do I store ERC-20 tokens?
Any Ethereum-compatible wallet (e.g., MetaMask, Ledger).
5. What’s gas got to do with ERC-20?
Ethereum’s gas fees apply to all ERC-20 transactions.
6. Can ERC-20 tokens expire?
Only if programmed to (e.g., time-locked promotions).
Conclusion
ERC-20’s flexibility and simplicity have made it the backbone of Ethereum’s token economy, fueling innovations from DeFi to NFTs. As blockchain adoption grows, understanding this standard is essential for developers and investors alike.
### Keywords:
1. ERC-20
2. Ethereum
3. Token Standard
4. Smart Contract
5. DeFi
6. WETH
7. DApp