A technical standard for fungible tokens on the Ethereum blockchain.
ERC-20 is the technical standard used to create fungible tokens on the Ethereum blockchain. Fungible means each token is identical and interchangeable — similar to traditional currencies or commodities.
ERC-20 defines a set of rules that all compliant tokens must follow, enabling seamless interaction with wallets, exchanges, and smart contracts across the Ethereum ecosystem.
Why the ERC-20 Standard Exists
Before ERC-20, token implementations were inconsistent, making it difficult for applications to support multiple assets. The standard introduced a unified framework that ensures:
Consistent token behavior
Smooth integration with DeFi platforms
Compatibility with Ethereum wallets
Secure transfers and approvals
Predictable smart contract interactions
ERC-20 quickly became the foundation of Ethereum’s token economy.
Core Functions of ERC-20
The standard includes required functions such as:
totalSupply: Total number of tokens
balanceOf: View a user’s balance
transfer: Send tokens directly
approve / allowance: Give permission for contracts to spend tokens
transferFrom: Move tokens on behalf of a user
These functions allow tokens to operate reliably across decentralized applications.
Use Cases for ERC-20 Tokens
Utility tokens
Governance tokens
Stablecoins (USDT, USDC, DAI)
DeFi assets (AAVE, UNI, LINK)
Reward and staking tokens
Wrapped assets (wBTC, wETH)
ERC-20 remains the most widely adopted token standard in crypto.
Benefits of ERC-20
Broadest ecosystem support
High liquidity and exchange compatibility
Strong developer tooling
Predictable smart contract interactions
Interoperability across Ethereum-based dApps
Summary
ERC-20 is the standard for fungible tokens on Ethereum, enabling secure, compatible, and widely supported digital assets throughout the Web3 ecosystem.
