What are ERC-20 tokens?
ERC (Ethereum Request for Comments) – the name of the official protocol for making proposals for improving the Ethereum network. “20” – serial number of the proposal.
How and when ERC-20 appeared?
The proposal for the implementation of a single standard for user tokens was first published in November 2015. Its authors became the creator of Ethereum Vitalik Buterin and developer Fabian Vogelsteller.
ERC-20 became a guide to create replaced tokens (Orig. Fungible tokens) – identical tokens that can be exchanged for each other.
Despite the fact that the ERC-20 tokens operate within the framework of the Ethereum command, this framework is quite wide, providing developers with greater flexibility when they create them.
Why did the ERC-20 standard need?
Bitcoin set the paradigm for other crypto projects: to release any digital currency, you must first start a separate blockchain.
Ethereum broke this rule. With the help of smart contracts, any developer got the opportunity to release his token and give it unique useful functions as part of his application.
However, before the emergence of the ERC-20, there was a problem of compatibility between various tokens, because each of them had a unique smart contract. In other words, in order for the exchange or wallet to support the token, its creators each time need to write a completely new code.
Thus, the support of the growing number of tokens became more and more problematic, taking too much time. To solve this problem, a standard protocol was created for all tokens.
ERC-20 greatly simplified and unified the release of tokens within the framework of one network. This standard, along with smart contracts, has become a universal way to create and monetize applications using blockchain. So Ethereum was the first blockchain platform in the history.
What tokens have the ERC-20 standard?
The ERC-20 standard has many popular cryptocurrencies. It is especially common in the field of decentralized finance (Defi) and in adjacent directions. In addition, ERC-20 is used for control tokens in popular crypto projects. Here are just some examples:
- Maker (MKR)
- Tether (USDT)
- Chainlink (Link)
- The Sandbox (Sand)
- The Graph (GRT)
- Uniswap (UNI)
- Axie Infinity (AXS)
- AAVE (AAVE)
- APECOIN (APE)
- BASIC ATTENION TOKEN (BAT)
- Compound (Comp)
- Omg Network (OMG)
- YEARN.Finance (YFI)
- 1inch (1inch)
- Enjin Coin (enj)
Where to store ERC-20 tokens?
Popular wallets for the ERC-20 standard tokens-Metamask, Trust Wallet, Exodus, Myetherwallet. The interface of some wallets shows only ETH balance, although ERC-20 can also be stored at the address. In this case, you just How long does it need to export it to the wallet with the full support of the required asset.
Where to see the details of the translation ERC-20?
Details of transactions with any ERC-20 token can be viewed in the column of Ethereum blocks, for example in Etherscan. There, in a separate section, there are onchain-data about all the assets of this standard. The Token page shows the number of holders, the distribution of tokens for each of the addresses, and also a link to the Asset smart contract is indicated.
What are the main characteristics of the ERC-20 protocol?
This standard provides for six mandatory and three optional (but recommended) parameters for any smart contract.
Among the mandatory parameters:
- The TotalsUpply function, which is responsible for the general issue of tokens, ensuring the impossibility of creating new tokens upon reaching the maximum number.
- Balance0f determines the original number of tokens assigned to a specific address. This is usually the address belonging to the issuer.
The standard also describes two methods of moving tokens. The Transfer function provides tokens to transmit tokens, and Transferfrom is necessary for asset transactions.
Two more functions are needed to verify the two previous methods of moving tokens:
- Approve serves to verify that the smart contract, based on the general issue, can distribute tokens;
- Allowance is necessary to check the availability of sufficient balance to send tokens to another address.
Among the optional parameters is the name of the token and its ticker, as well as the determination of the maximum number of fractional numbers after a decimalum (for example, bitcoin has eight of these numbers – 1.000000 0000 BTC).
The set of these parameters simple in the implementation of the parameters allows you to maintain a single code base interacting with any ERC-20 smart contract.
What are the risks of using ERC-20 tokens?
Since the ERC-20 tokens are actually smart contracts, they, despite all their effectiveness, have certain risks. For example, a smart contract cannot be changed after it has been initiated. It can also be bugs and vulnerability in it.
One of the most famous cases of this kind is the hacking of the project The DAO, as a result of which investors in the amount of $ 50 million stolen and the consequences of which had to be eliminated using the Ethereum hard fork.
In rare cases, this standard is used by scamers: they intentionally include such parameters in the smart contract code with which they then steal the means of holders or implement the PUMP scheme & DUMP.
Answers to frequent questions
What is the ERC-20 wallet?
This is a special application for storage and cryptocurrency transactions in which you can conduct operations with the ERC-20 standard tokens. This is usually any wallet with the declared support of the Ethereum network.
What is the difference between ERC-20 and TRC-20?
ERC-20 is a standard for tokens produced in the Ethereum blockchain, while the TRC-20 is cryptocurrencies that are created in the TRON blockchain. The most famous TRC-20 token is Tether Stablecoin (USDT), which is also produced in other blockchains.
What is the difference between ERC-20 and BEP-20?
BEP-20 is a standard for tokens in the BNB Chain blockchain (Binance Smart Chain), and the ERC-20 standard can only have cryptocurrencies in the Ethereum network.
That this is ERC?
ERC is an abbreviation of Ethereum Request for Comment, a standard for code updates in Ethereum protocol. Each update has its own serial number. The ERC-20 update was accepted in 2017, and it was it that introduced today the standard for tokens on the Ethereum network.