ERC-20
Ethereum Request for Comment 20
Standard for creating fungible tokens on Ethereum
Definition
ERC-20 is a technical standard for fungible tokens on the Ethereum blockchain. It defines a common interface that allows tokens to be easily integrated with wallets, exchanges, and other applications.
ERC-20 (Ethereum Request for Comment 20) is a technical term used to understand Standard for creating fungible tokens on Ethereum. In practice, it matters because it affects how users evaluate protocols, compare opportunities, and avoid hidden assumptions.
Example
USDC, DAI, UNI, and most DeFi tokens are ERC-20 tokens that follow this standard.
How it works
In practice, the concept shows up like this: USDC, DAI, UNI, and most DeFi tokens are ERC-20 tokens that follow this standard.
Why it matters
ERC-20 matters because small misunderstandings in DeFi can turn into bad pricing, liquidation, governance, custody, or smart-contract risk. A good mental model helps you compare protocols without relying on marketing language.
What to check
Treat it as infrastructure: understand what it automates, what trust assumptions remain, and how failures propagate. The main checks are: Smart contract bugs; Token-specific risks; Approval exploits.
Risks to Consider
- Smart contract bugs
- Token-specific risks
- Approval exploits
Common Questions
Can I use ERC-20 tokens on other blockchains?
Not directly, but you can bridge them to other chains or use wrapped versions that follow other standards.
What does ERC-20 mean in DeFi?
ERC-20 means Standard for creating fungible tokens on Ethereum. The useful question is not only the definition, but how the mechanism changes risk, return, liquidity, or governance for the user.
How is ERC-20 used in practice?
A practical example: USDC, DAI, UNI, and most DeFi tokens are ERC-20 tokens that follow this standard.