ERC-20

ERC-20 tokens are interchangeable and operate within smart contracts on the Ethereum network. They have standardized functionalities that facilitate transfers, approvals, and balances, making them the foundation for DeFi, ICOs, and tokenized assets.

💡 Key Features of ERC-20 Tokens

• Fungibility – Every ERC-20 token of the same type has the same value and properties.
• Smart Contract Compatibility – Enables automation of transactions and interactions with DApps.
• Wide Adoption – Used for stablecoins, governance tokens, utility tokens, and DeFi protocols.
• Standardized Functions – Includes transfer(), approve(), balanceOf(), totalSupply(), and allowance() functions.

🏛 Example 1: USDC Stablecoin

USDC is an ERC-20 stablecoin pegged to the U.S. dollar, widely used in DeFi and crypto payments.

🏛 Example 2: Uniswap (UNI) Token

The UNI governance token, built on ERC-20, allows users to participate in Uniswap’s decentralized exchange governance.

📚 References

• Ethereum.org – ERC-20 Token Standard
• Etherscan – ERC-20 Token Tracker
• Binance Academy – What is ERC-20?

⚠️ Controversies & Misconceptions

• "All Ethereum tokens are ERC-20" – Ethereum supports multiple standards, including ERC-721 for NFTs and ERC-1155 for multi-token assets.
• "ERC-20 transactions are free" – Transactions require gas fees, which fluctuate based on network congestion.

🚀 Conclusion

ERC-20 tokens play a crucial role in the Ethereum ecosystem, powering DeFi, gaming, and tokenized assets. Their standardized nature ensures broad compatibility, though users must be aware of gas fees and potential contract vulnerabilities.