These tokens can represent items of value, such as gold, stocks, or property, and they can be exchanged with other users on the Ethereum network. ERC-20 was proposed by developer Fabian Vogelsteller in 2015 to address the need for a standard within smart contracts on the Ethereum blockchain. Vogelsteller submitted the proposal via the project’s Github page as an Ethereum Request for Comment (ERC). As it was the twentieth comment, it was assigned the designation ERC-20. Smart contracts were becoming more popular in 2015, but several issues needed to be addressed. One of the most pressing was that anyone could make a token, but they were not always interoperable with other tokens.
Lido Staked Ether (stETH)
ERC-20 is a protocol standard that defines certain rules and standards for issuing tokens on Ethereum’s network. In ‘ERC-20’, ERC stands for Ethereum Request For Comments and 20 stands for a unique ID number to distinguish this standard from others. Creating and deploying a custom smart contract is a complex task, requiring extensive coding expertise. To streamline this process and ensure interoperability within the Ethereum network, standardized token formats like ERC20 were introduced.
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Individuals with Bitcoin holdings can turn their BTC into WBTC by swapping them on centralized exchanges (CEXs) or a decentralized cross-chain bridge. For investors who believe in Bitcoin but want access to Ethereum’s DeFi infrastructure, WBTC provides the most practical and secure solution. The information provided on Inside Bitcoins is for educational and informational purposes only and should not be considered financial, investment, or trading advice. Cryptocurrency markets are highly volatile, and investing in digital assets carries significant risk. No profits are guaranteed, and you may lose some or all of your investment.
Over a Million Crypto Tokens Vanished in Q1 2025 as Hype Outpaces Substance
As a result, it is one of the most influential blockchain protocols. If you ever trade on a crypto exchange, there’s a good chance that you will encounter an Ethereum-based token. The Ethereum network is the second-biggest blockchain after bitcoin, and it is home to thousands of ERC-20 tokens. This simplifies the task for developers; they can proceed with their work, knowing that every existing project won’t need to be redone every time a new token is released. Additionally, new projects won’t need to worry about compatibility with old projects as long as the token follows the rules. Building a token with the ERC-20 standard is useful for a number of reasons.
A token standard more specifically addresses parameters like token supply, transaction approval, and accessibility of the token’s data. Proposed in 2015 by Fabian Vogelsteller, one of the founders of Ethereum, it is a technical standard for building fungible tokens on the Ethereum blockchain. ‘ERC’ stands for ‘Ethereum Request for Comments’ and ‘20’ is the number assigned to this particular proposal, which defines a set of rules for how tokens should be created, issued, and deployed. Aave is a decentralized crypto platform that allows people to lend and borrow crypto. It uses smart contracts to automate the lending or borrowing process, dictating how funds are distributed, collateral is handled, and fees are required.
The ERC20 token standard
Shiba Inu (SHIB) now has its own ecosystem of tokens and DeFi applications. The standardized interface simplifies Ethereum-based token development, auditing, and integration. Token standards like ERC-20 also help to reduce the barrier to entry for developers and promote innovation. ERC-20 tokens can be easily traded, exchanged, and integrated into various Ethereum-based applications, enhancing usability and interoperability between dApps. Many blockchain platforms have been hyped as the next “Ethereum killer,” but Ethereum has managed to keep its No. 2 ranking just behind Bitcoin.
In other words, ERC-20 is what ensures that users can buy, swap, and HODL the many cryptocurrencies built on this standard. Without this framework, developers would create tokens using unique codebases and toolkits that could not interact with one another or protocols in predictable ways. While other Ethereum token standards do exist, ERC-20 gives wallets, exchanges, and app developers a simplified entryway into the blockchain ecosystem.
- As of December 2020, there are 829 projects based on the ERC-20 token standard and over 350,000 token contracts, according to a dynamic list from Ethereum data provider, Etherscan.
- Using Ethereum, you can create a contract that will hold a contributor’s money until any given date or goal is reached.
- That way, holders can use their BTC for activities such as staking and lending, which are impossible on its native blockchain.
- It enables messaging, and this crucial function has created its value as a token.
Introduced in 2017, Binance Coin (BNB) is the native token of the Binance exchange and was initially launched as an ERC-20 token. BNB eventually migrated to Binance’s own blockchain in 2019, which is now known as the BNB Chain and follows the BEP-20 token standard. BEP-20 was directly modeled after ERC-20, sharing similar functions and DeFi compatibility. Since its launch in 2015, Ethereum has become one of the driving forces behind the growth of cryptocurrency. Initial coin offerings (ICOs) have raised billions of dollars in funding for crypto projects from all around the world, and most of these ICOs are based on the Ethereum platform.
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