ERC-20 is a token that commonly serves as a technical standard for token implementation using smart contracts on the Ethereum blockchain. ERC-20 essentially provides a common set of rules that all Ethereum tokens should adhere to, and those who adhere to these rules are considered ERC-20 tokens. As such, ERC-20 provides developers with assurance that newly created tokens will function as expected, simplifying the processes for the creation of and initial offerings for new tokens. This also allows most wallets (and frequently, exchanges) supporting Ethereum to support ERC-20 tokens as well. Currently, over 180,000 ERC-20 compatible tokens exist on Ethereum’s main network.
ERC-20 defines six different functions to ensure that tokens of different types will perform uniformly on the Ethereum network. These functions relate to token supply, balance, and transfer from a given address. While Ethereum’s native asset, Ether, is not an ERC-20 token, it can be converted to Wrapped ETH (WETH), which can then be used on ERC-20 platforms. The ERC-20 standard inspired several subsequent standards that modify or improve upon the ERC-20’s rules. Notable variants include ERC-223, ERC-721, and ERC-777.