ERC-20 Token Standard

Before ERC-20, every token on Ethereum had its own unique interface — wallets and exchanges had to write custom code to support each one. In November 2015, developer Fabian Vogelsteller proposed EIP-20 (later known as ERC-20), a standard interface for fungible tokens. Its adoption was explosive: the 2017 ICO boom ran almost entirely on ERC-20 tokens, and today there are over 500,000 ERC-20 tokens deployed on Ethereum alone.

The standard defines six mandatory functions: totalSupply() (total token count), balanceOf(address) (how many tokens an address holds), transfer(to, amount) (send tokens), transferFrom(from, to, amount) (spend approved tokens), approve(spender, amount) (grant spending allowance), and allowance(owner, spender) (check remaining allowance). Two events, Transfer and Approval, provide on-chain logs. This minimal interface is powerful: any ERC-20 token works automatically with MetaMask, Uniswap, Aave, Compound, and thousands of other protocols without custom integration.

The approve-and-transferFrom pattern, while useful for DeFi, created a significant security vulnerability: users routinely approved unlimited (uint256 max) allowances to protocols for convenience, meaning a compromised protocol could drain all approved tokens. This led to the ERC-2612 (permit) extension (now standard in USDC, DAI) that allows gasless approvals via signatures, and widespread recommendations to revoke stale approvals using tools like Revoke.cash. ERC-20's successors include ERC-721 (NFTs), ERC-1155 (semi-fungible multi-tokens), and ERC-4626 (yield vault tokens).