Understanding the Architecture of ERC-20 Tokens

ERC-20 tokens are fungible digital tokens that exist on the Ethereum blockchain. "Fungible" means that individual tokens are not different from one another within the set, similar to traditional fiat currency like the US dollar.

What is ERC-20?

ERC-20 is a technical standard that defines a set of rules for how tokens are transferred, how transactions are approved, and the total supply of tokens. The ERC-20 standard was introduced in 2015 through EIP-20.

In this article, we will take a deep dive into the structure and architecture of the code that constitutes an ERC-20 token.

ERC-20 Token Contract Overview

The ERC-20 token contract inherits from one abstract contracts and three interfaces, as explained below:

• IERC20: This is an interface that contains function and event definitions without implementation.

• IERC20Metadata: This is an interface that also contains function definitions without implementation.

• Context: This is an abstract contract that contains functions that return either msg.sender, msg.data, or _contextSuffixLength, which is 0.

• IERC20Errors: This is an interface that contains implementations of custom errors.

Functions in the ERC-20 Contract

Let’s take a closer look at the various functions that make up the logic of the ERC-20 contract:

• Constructor Function: This function takes two parameters: the name and symbol of the token.

• name Function: This function returns the name of the token.

• symbol Function: This function returns the symbol of the token.

• decimal Function: This function returns the number of decimals used to get user data. Most tokens use a value of 18 to reflect the relationship between Ether and Wei.

• totalSupply Function: This function returns the total supply of the token.

• balanceOf Function: This function returns the balance of every account address using a mapping that uses addresses as keys to keep track of balances in uint256.

• transfer Function: This function handles the transfer of tokens from a from address to a to address, specifying the value to be transferred.

• allowance Function: This function returns the number of tokens a spender is allowed to spend on behalf of the owner. By default, it is zero.

• approve Function: This function sets the value amount of tokens as the allowance of the spender and returns a boolean value to indicate whether the transaction succeeded.

• transferFrom Function: This function sends an amount of tokens from the from address to the to address using the allowance mechanism.

• _update Function: This function transfers tokens between the from address and the to address, and also alternatively mints or burns tokens if the to or from address is the zero address.

• _mint Function: This function creates a specified amount of tokens and assigns them to an account by transferring the tokens from address 0.

• _burn Function: This function destroys a specified amount of tokens from an account, thereby reducing the total supply.

• _spendAllowance Function: This function updates the owner’s allowance for the spender according to the value that has already been spent by the spender.

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This is a high-level overview of the functions in an ERC-20 token contract. However, there are other layers of complexity in the logic that have not been fully covered in this article.

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