What is ERC-20?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
ERC-20 is the standard interface for fungible tokens on Ethereum. Because balance and transfer functions share the same names, wallets and exchanges can support any such token without custom work. Most Ethereum tokens follow it.
Key points
- The common standard for fungible tokens on Ethereum
- Uniform function names let wallets support them automatically
- Units are interchangeable — that is what fungible means
- Introduces the approve mechanism for delegated spending
Definition
An Ethereum interface standard for fungible tokens, specifying the functions for balances, transfers and delegated spending.
The standard fixes function names and behaviour: balanceOf returns a balance, transfer moves tokens. Because those are shared, wallets need no per-token code — which is why adding a token to a wallet only requires pasting its contract address.
'Fungible' means units are not individually distinguishable: your 1 USDC and someone else's 1 USDC are interchangeable. Assets that are individually distinct — NFTs — use a different standard, ERC-721.
The usual stumbling block is approve, the step that grants a contract such as a DEX permission to move your tokens. It typically costs an extra transaction before your first swap, and the permission persists until revoked — so it is worth periodically reviewing approvals for services you no longer use.
Watch out for
- · Leaving unlimited approvals live enlarges the damage if that contract is later compromised
- · Following the standard does not make a contract's own behaviour safe