ERC-20

What is ERC-20?

ERC-20 is a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. ERC stands for "Ethereum Request for Comment," and 20 is the number assigned to this request. The ERC-20 standard defines a common list of rules that an Ethereum token has to implement, allowing developers to accurately predict interaction between tokens.

Key Features

1. Standardization: Provides a uniform way to create tokens on Ethereum.

2. Fungibility: ERC-20 tokens are typically fungible, meaning each token is equivalent to another.

3. Interoperability: Allows easy integration with wallets, exchanges, and other smart contracts.

4. Defined Functions: Includes standard functions like transfer, balanceOf, approve, and transferFrom.

5. Events: Defines events that must be triggered during token transactions.

Required Functions

1. totalSupply(): Returns the total token supply.

2. balanceOf(address): Returns the account balance of an address.

3. transfer(address, uint256): Transfers tokens to a specified address.

4. transferFrom(address, address, uint256): Transfers tokens from one address to another.

5. approve(address, uint256): Allows a spender to withdraw tokens from your account.

6. allowance(address, address): Returns the amount of tokens approved for a spender.

Advantages

1. Wide Adoption: Most popular token standard on Ethereum.

2. Ease of Use: Simplifies the process of creating and managing tokens.

3. Liquidity: Easy to list on exchanges due to standardization.

4. Developer Friendly: Well-documented and widely supported in development tools.

Limitations

1. Limited Functionality: May not be suitable for more complex token structures.

2. Gas Inefficiency: Each token transfer requires a separate transaction.

3. Lack of Metadata: Does not inherently support metadata for tokens.

4. Accidental Burns: Tokens can be lost if sent to the contract address directly.

Similar Terms

• ERC-721: A standard for non-fungible tokens on Ethereum.

• ERC-1155: A multi-token standard that combines features of ERC-20 and ERC-721.

• Ethereum: The blockchain platform that EIPs are designed for.

• Smart Contract: The underlying technology that enables ERC-20 tokens.