ERC-20 stands for Ethereum Request for Comment 20, a standard interface for tokens on the Ethereum blockchain.
This standard outlines rules and functions that a token contract on the Ethereum network should follow to allow it to interact with other tokens and applications seamlessly.
ERC-20 tokens have become the most widely used standard for creating and issuing tokens on the Ethereum blockchain.
Key features and characteristics of ERC-20 tokens
- Compatibility: ERC-20 tokens are compatible with any application or platform on the Ethereum blockchain that supports the ERC-20 standard. This interoperability allows for easy integration with decentralized exchanges, wallets, and other token-related services.
- Basic Functions: ERC-20 tokens must implement a set of basic functions, including the ability to transfer tokens between addresses, check the balance of tokens in an account, and approve the transfer of tokens by a third party.
- Name, Symbol, and Decimals: Each ERC-20 token has a name, a symbol (ticker), and a specified number of decimal places. These parameters help users identify and interact with the token accurately.
- Total Supply: The total supply of an ERC-20 token is fixed when the token contract is created. The total supply represents the maximum number of tokens that can ever exist.
- Events: ERC-20 tokens often use events to notify other applications on the Ethereum network about certain activities, such as a successful token transfer.
- Standard Interface: The ERC-20 standard defines a set of functions and events that must be present in the token’s smart contract, ensuring a common interface for developers and applications.
- Smart Contracts: ERC-20 tokens are implemented as smart contracts on the Ethereum blockchain. These smart contracts dictate how the token behaves and interacts with the Ethereum network.
- Decentralized Exchanges (DEXs): Many decentralized exchanges, like Uniswap and Sushiswap, support ERC-20 tokens, allowing users to trade them directly from their Ethereum wallets.
Examples of ERC-20 Tokens
Popular tokens, such as USDC (USD Coin), DAI, and Chainlink (LINK), are examples of ERC-20 tokens. The ERC-20 standard has played a significant role in the growth of the Ethereum ecosystem by enabling the creation and widespread use of various tokens for different purposes.