What is ERC-20 token standard?
The most popular token standard on Ethereum and other EVM compatible chains.
Wondering what the ERC-20 standard actually is? It is a smart contract API proposed in 2015 that defines fungible tokens on Ethereum and any EVM-compatible chain, enabling transfers, balance checks, and third-party spending approvals. You will come away understanding how ERC-20 tokens differ from native cryptocurrencies, what functions the standard exposes, and where to find OpenZeppelin libraries for developers.
There are many token standards out there. But the most popular and arguably the most useful standard is the ERC-20. The standard was proposed in November 2015 by Fabian Vogelsteller. ERC-20 represents a smart contracts API for tokens. This token is a smart contract itself.
ERC-20 token is similar in some respects to Bitcoin and any other cryptocurrency. ERC-20 tokens are blockchain-based assets, that have their value. They can be sent and received. The most important difference is that instead of running on their own blockchains, ERC-20 tokens can be issued on the network which supports smart contracts, for example, Ethereum.
An ERC20 token contract manages the ledger of fungible tokens. These tokens are alike, and each of them is exactly equal to any other token. These tokens can be thought of as money or shares of a particular class. No tokens have special rights or unique behavior associated with them. This makes ERC20 tokens very useful as a medium of value exchange, voting rights, staking, loyalty points, etc.
When it comes down to API protocols, it is mainly about the functionality which is available via these API calls. So with no exception, the ERC-20 standard provides very specific functions which can be called by a user or by another smart contract. The main functions are:
- transfer tokens from one account to another
- get the current token balance of an account
- get the total supply of the token available on the network
- approve whether an amount of token from an account can be spent by a third-party account
A full list of the available functional methods can be found directly in the ERC-20 specification.
Compatible wallets
It is very important to know, that not all wallets support ERC-20 tokens. Make sure you are using an ERC-20 compatible wallet. As long as you control the private key for an address, you can import it into compatible software and reach your tokens. The real risk of permanent loss comes from sending to the wrong address or network, or depositing to a custodial exchange that does not support the token.
Notable ERC-20 projects
As it was mentioned before, this token standard is the most popular. It also means there are already great projects which are empowered by the standard. Stablecoins like USDC and USDT, Chainlink's LINK, and Uniswap's UNI are all ERC-20 tokens. Between them, they carry a large share of the value moving on Ethereum every day.
ERC-20 for developers
OpenZeppelin solidity libraries provide many ERC20-related contracts. On the API reference, you’ll find detailed information on their properties and usage.