What is ERC-20? Introducing the characteristics, relationship with Ethereum, and representative tokens

• Many of you may have seen the term "ERC-20" when sending virtual currency.

• ERC-20 is a standard for tokens related to Ethereum, and its influence extends to all virtual currencies.

• This article introduces the characteristics of ERC-20, its relationship with Ethereum, and representative tokens, so please use it as a reference.

What is ERC-20?

ERC-20 is a unified standard for creating virtual currencies that are compatible with the Ethereum blockchain. Many virtual currencies are created under the ERC-20 rules.

Virtual currencies created using this standard are collectively known as "ERC-20 tokens," and as of January 2023, more than 750,000 types of tokens have been issued.

The characteristics of such ERC20 token development will be explained in detail below.

Characteristics of ERC-20 tokens

The characteristics of ERC-20 tokens are as follows.

• Open source, anyone can develop

• You can set your own functions on the token.

• Equipped with smart contract

• Can be managed collectively with compatible wallets

• Swaps are possible on decentralized exchanges

  Let's take a look at each.

• Open source, anyone can develop

• ERC-20 is open source and anyone can develop it.

• Since you can create a token that complies with the ERC-20 standard without having to prepare from scratch, even individuals with limited financial resources can develop it.

However, most of the famous ERC-20 tokens are created by organizations and companies.

You can set your own functions on the token.

Developing with the ERC-20 standard allows you to set unique functions on your tokens.

There are various functions that can be configured, but it is possible to freely determine the unique performance of the token, such as crowdfunding and governance functions (voting rights).

Therefore, there are a wide variety of virtual currencies for ERC-20 tokens, and each has a different role.

Equipped with smart contract

ERC-20 tokens are equipped with smart contracts and are highly convenient.

A smart contract is a program that is automatically executed according to predetermined rules. The program runs using code written in Solidity and completes automatically.

Therefore, there is no need to use a third party as an intermediary when contracting or trading to create ERC20 token, and automatic contracts can be executed programmatically.

It is characterized by lower costs due to the lack of human intervention, as well as improved safety and transparency.

Can be managed collectively with compatible wallets

Since ERC-20 tokens belong to the same standard, they can be managed together in compatible wallets.

The main supported wallets are as follows.

• MetaMask

• MyEtherWallet

• Trust Wallet

Metamask in particular is perfect for managing ERC-20 tokens, as it can be used with a variety of services.

Swaps are possible on decentralized exchanges

Before the ERC-20 standard was created, each token had different specifications, and each token had to be traded each time it was exchanged for another token.

However, ERC-20 tokens are compatible, so you can swap them on a decentralized exchange without having to go through the trouble of trading.

The main decentralized exchanges (DEX) that support ERC-20 are as follows.

• Uniswap

• SushiSwap Curve

• Finance Balancer

• dYdX

If you want to swap ERC-20 tokens, please use the DEX mentioned above.

Representative examples of ERC-20 tokens

Here, we will introduce three representative ones among the many ERC-20 tokens.

• USDT (Tether)

• USDC (USD coin)

• Polygon

Let's look at them in order.

summary:

This time, we introduced an overview of ERC20 token development company and representative tokens. ERC-20 is a unified standard on the Ethereum blockchain that allows anyone to issue tokens. Additionally, ERC-20 tokens are equipped with smart contracts and have unique settings.