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ERC-20

ERC-20 stands for Ethereum Request for Comment 20 and refers to a technical standard used for smart contracts on the Ethereum blockchain for implementing tokens. It is the most common standard for creating and issuing tokens on the Ethereum network.

Key Features:

  1. Standardized Functions: ERC-20 defines a set of standard functions that a token contract on Ethereum must implement. These include methods related to token transfers, obtaining token balances, and getting information about the token.
  2. Interoperability: Due to its standardized set of functions, ERC-20 tokens can be easily integrated into various Ethereum wallets, exchanges, and dApps.
  3. Fixed Supply: Most ERC-20 tokens have a fixed supply, meaning there’s a maximum number of tokens that can ever exist.

Standard Functions:

  • totalSupply(): Returns the total supply of the token.
  • balanceOf(address _owner): Returns the token balance of a specific address.
  • transfer(address _to, uint256 _value): Transfers a number of tokens directly from the message sender to another address.
  • transferFrom(address _from, address _to, uint256 _value): Transfers tokens from one address to another, typically used to allow smart contracts to transfer tokens on one’s behalf.
  • approve(address _spender, uint256 _value): Approves another address to spend a certain amount of tokens.
  • allowance(address _owner, address _spender): Returns the amount of tokens approved by one address for another to spend.

Benefits:

  • Uniformity: ERC-20 provides a consistent interface that allows developers to interact with tokens in a standardized way.
  • Adoption: Due to its standardization, ERC-20 has been widely adopted by developers, leading to a proliferation of tokens on the Ethereum network.
  • Compatibility: ERC-20 tokens can be easily exchanged, used as collateral, or integrated into decentralized applications.

Challenges:

  • Lack of Customization: While the standardization of ERC-20 is its strength, it can also be a limitation for projects that need more customized token functionalities.
  • Lost Tokens: If an ERC-20 token is sent to a smart contract that is not designed to handle it, the token can be irretrievably lost.

Examples:

Many of the top tokens by market capitalization, such as Chainlink (LINK), USD Coin (USDC), and Binance USD (BUSD), started as or are ERC-20 tokens.

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CryptoCurrencyUSDChange 1hChange 24hChange 7d
Bitcoin67,860 0.31 % 2.11 % 3.77 %
Litecoin85.72 0.05 % 0.92 % 4.23 %
XRP0.5305 0.02 % 0.49 % 2.68 %
Ethereum2,197.2 0.23 % 0.67 % 2.46 %
Dogecoin0.1548 0.37 % 0.09 % 7.69 %
Solana171.99 0.11 % 3.46 % 7.32 %
USDC1.000 0.10 % 0.02 % 0.08 %
Cardano0.2543 0.15 % 1.68 % 3.38 %
Tether0.9990 0.10 % 0.04 % 0.02 %
Binance Coin (Wormhole)222.47 0.38 % 4.71 % 3.08 %