ERC-20 is a technical standard used for fungible tokens on the Ethereum blockchain. It defines a common set of rules for how tokens are created, transferred, stored, and interacted with by wallets, exchanges, and smart contracts.
ERC-20 stands for “Ethereum Request for Comment 20,” and it is based on the EIP-20 specification. In simple terms, it gives developers a shared framework for building tokens that can work across the Ethereum ecosystem without custom integrations for every asset.
Key aspects of ERC-20
The ERC-20 token standard was introduced to make token behavior predictable across decentralized applications and crypto infrastructure. Before standards like this, each token could function differently, which created friction for wallets, exchanges, and developers. With ERC-20, tokens follow the same interface, which makes them easier to support and use.
An ERC-20 token is not the same as a separate blockchain coin. Instead, it is a token created through a smart contract deployed on Ethereum. That contract manages balances, transfers, and permissions according to defined functions and events. Because of this, ERC-20 tokens rely on Ethereum’s network and security model rather than operating independently.
The standard is widely used for utility tokens, governance tokens, wrapped assets, and many stablecoins. It became one of the core building blocks of the Ethereum token economy because it allowed interoperability between many different services.
Popular examples
Many well-known crypto assets have used the ERC-20 token standard. These include USDT on Ethereum, USDC on Ethereum, Chainlink (LINK), Uniswap (UNI), and Shiba Inu (SHIB). While some projects also exist on other networks, their Ethereum-based versions often follow the ERC-20 standard.
These examples help explain ERC-20 tokens in practice: they can represent payment assets, governance rights, utility within a protocol, or tokenized exposure to another asset.
Common use cases
ERC-20 tokens are used across a wide range of crypto applications. In payments, they can represent stablecoins used for settlements, treasury operations, and merchant transactions. In decentralized finance, they are used in lending, borrowing, trading, and liquidity pools. In blockchain-based services, they can grant access to products, voting rights, or rewards.
For businesses, ERC-20 tokens are often relevant because many crypto payment flows, treasury tools, and settlement systems support Ethereum-based stablecoins. This makes the ERC-20 standard important not only for developers, but also for companies exploring crypto operations.
ERC-20 vs. ETH
A common point of confusion is the difference between ERC-20 and ETH. ETH is the native cryptocurrency of Ethereum. It is used to pay network gas fees and secure the blockchain. ERC-20 tokens, by contrast, are assets created on top of Ethereum through smart contracts.
This means ETH is not an ERC-20 token. It exists at the protocol level, while ERC-20 tokens exist at the smart contract level. Even though both operate on Ethereum, they serve different roles. ETH powers the network, while ERC-20 tokens represent transferable assets built within that network.
What is the difference between ERC-20 and TRC-20?
ERC-20 and TRC-20 are similar in purpose, but they belong to different blockchains. ERC-20 is the token standard for Ethereum, while TRC-20 is used on the TRON blockchain.
From a user perspective, both standards can support fungible tokens such as stablecoins. The main difference is the underlying network. ERC-20 transactions are processed on Ethereum and require ETH for gas fees. TRC-20 transactions are processed on TRON and usually require TRX for network fees. Wallet compatibility, transaction speed, fee structure, and exchange support may also differ depending on the blockchain used.
This distinction matters in payments because sending a token through the wrong network can result in delays, extra recovery steps, or permanent loss if the receiving service does not support that blockchain.
Core technical functions
The ERC-20 token standard definition is based on a set of required and optional smart contract functions. Some of the core ones include totalSupply, which shows the total number of tokens in existence, and balanceOf, which returns the token balance of a wallet address.
Other important functions include transfer, which sends tokens from one wallet to another, and approve plus transferFrom, which allow one address or application to spend tokens on behalf of another within set limits. This approval mechanism is widely used in DeFi applications and payment flows.
The standard also includes events such as Transfer and Approval, which help wallets, explorers, and applications track activity on-chain.
Summary
The ERC-20 standard is a shared rule set for fungible tokens on Ethereum. If you are asking what is an ERC-20, the short answer is that it is a token format that allows Ethereum-based assets to work consistently across wallets, exchanges, and decentralized applications.
Understanding ERC 20 is useful for anyone sending tokens, building with smart contracts, or accepting crypto payments. Because many stablecoins and digital assets on Ethereum follow the EIP-20 ERC-20 standard, it remains a foundational concept in crypto infrastructure.
What blockchain uses the ERC-20 standard?
ERC-20 is used on the Ethereum blockchain. It is the standard for fungible tokens created through Ethereum smart contracts.
What is an ERC-20 contract address?
An ERC-20 contract address is the blockchain address of the smart contract that created and manages a specific token. It is not the same as a personal wallet address. The contract address identifies the token itself on Ethereum.
Why are ERC-20 gas fees sometimes high?
ERC-20 transactions use the Ethereum network, so fees depend on network demand, transaction complexity, and current gas prices. When network activity rises, sending ERC-20 tokens can become more expensive.
How many confirmations are needed for ERC-20 payments?
The number varies by exchange, wallet, or payment provider. Some services may treat a transaction as received after a few confirmations, while others may require more for internal risk controls. Businesses should follow the confirmation policy of their payment processor or custody provider.
Can ERC-20 transactions be reversed?
No. ERC-20 transactions are generally irreversible once confirmed on the blockchain. If tokens are sent to the wrong address or through an unsupported network, recovery may be difficult or impossible.
