The Ethereum ecosystem features a variety of standards that guide the functionality of smart contracts from creation to deployment. The most common standards include ERC-20, ERC-721, ERC-777, and ERC-1155, each serving distinct purposes.

This article defines ERC-20 tokens, highlights their uses, and outlines some mandatory functions in Solidity that developers need to use to adhere to the standard. If you want to create your own ERC-20 token using Solidity, this guide will provide a comprehensive understanding of how to get started.

What is an ERC-20 Token?

An ERC-20 token is a popular fungible cryptocurrency token compatible with Ethereum or EVM-compatible blockchains. It serves as a digital asset representing anything on the blockchain, offering flexibility for numerous use cases.

This preset smart contract contains a specific interface that serves as a technical standard for development. Developers can leverage the ERC-20 token and its associated rules for a streamlined development experience. Popular decentralized exchanges like Uniswap and SushiSwap utilize the ERC-20 token standard for its seamless compatibility and integration into their ecosystems.

How Are ERC-20 Tokens Used?

ERC-20 tokens have no restrictions on representation, allowing them to go beyond typical cryptocurrencies like ETH. They are fungible, transferable, and can be limited to a max supply, making them suitable for creating rewards, representing physical objects, shares of a company, and more.

Designed to standardize token development, the ERC-20 token can represent any fungible asset on the Ethereum blockchain. By providing variables such as name, symbol, and supply, anyone can launch an ERC-20 token with standard behavior and interface.

ERC-20 tokens are fungible, meaning each token is exactly equal to any other token without special rights or behavior. This equality of value makes ERC-20 tokens useful for applications like a medium of exchange, currency, voting rights, and staking.

Why is the ERC-20 Token Standard Important?

The ERC-20 token standard introduces a unified approach for fungible tokens, ensuring they share similar properties. Since its proposal in 2015, ERC-20 has allowed protocols, platforms, and developers to create smart contracts that can use any token following the standard without needing special logic for each new token. This standardization enhances the development process and significantly benefits the entire crypto ecosystem.

What Solidity Functions Are Mandatory for All ERC-20 Tokens?

The ERC-20 standard includes a set of methods and events that must be present in every implementation. These methods handle value transfers, balance lookups, and other metadata retrievals.

1. totalSupply

The totalSupply method denotes the current total supply of the tokens.

  function totalSupply() external view returns (uint256);

2. balanceOf

The balanceOf method returns the number of tokens held by a specific address.

  function balanceOf(address account) external view returns (uint256);

3. transfer

The transfer method sends tokens from one address to another, with the sender being the transaction origin.

  function transfer(address recipient, uint256 amount) external returns (bool);

4. approve

The approve method allows another address to spend tokens on behalf of the sender, commonly used in decentralized exchanges.

  function approve(address spender, uint256 amount) external returns (bool);

5. transferFrom

The transferFrom method works with approve, enabling a spender to transfer tokens from one address to another.

  function transferFrom(address sender, address recipient, uint256 amount) external returns (bool);

6. allowance

The allowance method returns the remaining number of tokens that a spender is allowed to spend on behalf of an owner.

  function allowance(address owner, address spender) external view returns (uint256);

What Solidity Functions Are Optional for All ERC-20 Tokens?

Optional functions like name, symbol, and decimals provide additional details about the contract, enhancing its readability and usability.

1. Name

The name function provides a human-readable name for the token.

  string public constant name = "ERC20Basic";

2. Symbol

The symbol function provides a human-readable ticker symbol for the token, similar to ETH or BTC.

  string public constant symbol = "ERC";

3. Decimals

The decimals function defines the precision of the token, commonly set to 18 (same as Ether).

  uint8 public constant decimals = 18;

What Are ERC-20 Data Structures?

ERC-20 data structures, such as balances and allowances, facilitate the organization and implementation of token operations on the blockchain.

Balances

An internal table tracks the token balances of wallet addresses.

  mapping(address => uint256) balances;

Allowances

An internal table tracks the delegated spending allowances of wallet addresses using nested mappings.

  mapping(address => mapping(address => uint256)) allowances;

Summary

The ERC-20 token standard provides a robust framework for creating fungible tokens on the Ethereum blockchain. By adhering to the mandatory functions and understanding the optional extensions, developers can create tokens that are easily integratable into the existing Ethereum ecosystem. The standardization introduced by ERC-20 has significantly streamlined token development and interaction, benefiting the broader crypto community.

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Last updated 17 Aug 2024, 12:31 +0200 . history