What is ERC-20?

ERC-20, or Ethereum Request for Comments 20, is a technical standard that defines rules for creating tokens based on the Ethereum blockchain. The number 20 is the proposal's ordinal number, meaning ERC-20 is the 20th proposal to improve Ethereum.

This token standard sets basic rules, functions, and methods for the creation and circulation of tokens, ensuring their compatibility with various wallets, exchanges, and services.

ERC-20 tokens are represented by smart contracts—digital counterparts of regular contracts, where developers outline the operational rules of the tokens. This technology ensures the automation of digital asset transactions.

Interesting fact: The standard proved so effective and in demand that teams from other crypto projects tried to create their analogs. For example, Tron has the TRC-20 standard, and Solana has SPL.

Who Created the ERC-20 Standard?

The ERC-20 standard was proposed by developer Fabian Vogelsteller and Ethereum co-founder Vitalik Buterin in 2015. It was accepted by the project community and has since become the most common standard for creating Ethereum-based tokens.

Advantages and Disadvantages of the Standard

The main advantage of the ERC-20 standard is its versatility and broad support within the Ethereum ecosystem. These tokens are easy to exchange and integrate with various services.

Another advantage of ERC-20 is its relative simplicity. Developers can create their tokens using the Solidity programming language by following Ethereum's instructions.

Interesting fact: To create an ERC-20 token, you don't need to be a programmer or know how to code. There are automated platforms on the market that can do all the work for you.

Among the disadvantages of ERC-20 is its limited functionality. For example, the standard does not provide for the possibility of executing complex scenarios. Therefore, more functional and advanced token standards, such as ERC-1155, have started to appear on the market.

Despite its shortcomings, ERC-20 remains one of the most popular and widely used standards for creating Ethereum-based tokens.

Where to Store ERC-20 Tokens

ERC-20 tokens can be stored in various types of cryptocurrency wallets, including exchange, mobile, and hardware (cold) wallets. Before choosing a wallet, check if it supports the standard and coin you are interested in.

The Most Popular ERC-20 Tokens

As of the time of writing, there are over a thousand ERC-20 tokens on the market. The most capitalized among them is the stablecoin Tether (USDT), which also leads the group in the number of holders and daily trading volume.

ERC-20 tokens are widely used in various areas of the cryptocurrency market, including decentralized finance (DeFi). The demand for the standard and the simplicity of creating tokens following its rules are reasons for the constant growth in the number of such coins.

The Role of ERC-20 in the ICO Boom

ERC-20 played a major role in the ICO (initial coin offering) boom of 2017. Many startups used the standard to create and sell their tokens to investors, thereby raising funds for their projects. The ERC-20 standard proposed by Ethereum developers simplified the process of conducting ICOs—an analog of IPOs (initial public offerings) and investing in crypto projects.

Conclusion

The ERC-20 standard plays a key role in the Ethereum ecosystem. It ensures token standardization and compatibility and occupies an important place in the DeFi market.

Despite the presence of more modern analogs, ERC-20 remains one of the most widely used standards for creating tokens on the Ethereum blockchain.