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Glossary: ERC20

ERC20 is a token standard on Ethereum that defines the basic rules for creating fungible tokens, meaning each token is interchangeable with another token of the same type.

What is ERC20?

ERC20 is a token standard on Ethereum that defines the basic rules for creating fungible tokens, meaning each token is interchangeable with another token of the same type.

ERC20 Explained

ERC20 is a rulebook for making tokens on Ethereum.

These tokens are like regular coins or dollars. One token is the same as another token from the same project.

For example, one USDC token is meant to work like any other USDC token, just like one $1 bill has the same value as another $1 bill.

Because ERC20 tokens follow the same rules, wallets, exchanges, and apps can support many different tokens more easily.

What ERC20 Means For

Audience	Use Case
Token issuers and protocols	Create fungible tokens for governance, payments, rewards, or utility within an ecosystem.
Developers	Build apps, wallets, exchanges, or smart contracts that can interact with standard Ethereum tokens.
Crypto users and investors	Understand how common Ethereum-based tokens work, move, and trade across wallets and apps.

Examples

A stablecoin project issues USDC as an ERC20 token so users can send, receive, and trade it across Ethereum apps.
A DeFi protocol creates an ERC20 governance token that lets holders vote on protocol decisions.
A crypto app rewards users with an ERC20 token for completing actions such as staking, referring friends, or providing liquidity.
A decentralized exchange supports ERC20 tokens because they follow a shared standard for balances, transfers, and approvals.

FAQs

What does ERC20 mean?

ERC20 is an Ethereum standard for creating fungible tokens.

Is ERC20 the same as Ethereum?

No. Ethereum is the blockchain. ERC20 is a token standard used on Ethereum.

How is ERC20 different from ERC721?

ERC20 tokens are interchangeable. ERC721 tokens are unique and used for NFTs.

What are ERC20 tokens used for?

They are used for stablecoins, governance tokens, rewards, payments, and DeFi assets.

Can ERC20 tokens be traded?

Yes. ERC20 tokens can be transferred, traded, and used across compatible Ethereum apps.

Related Terms

A/B Testing

An experiment that compares two versions of a page, feature, or campaign to see which performs better.

Account Abstraction

Account abstraction is an approach that turns blockchain accounts into programmable smart contract wallets, enabling features like gasless transactions, social recovery, session keys, and paying fees in any token.

Activation Rate

Activation rate is the percentage of new users or wallets that complete a key activation milestone, such as a first transaction, out of all users who signed up or connected within a given period.