If you want to know what an ERC-20 token is, you’ve come to the right place. In this article, we take a look at the concept behind ERC-20 tokens, and their role in cryptocurrencies, and highlight notable examples that have made an impact in the crypto sector.
Understanding ERC-20 Tokens
ERC-20 tokens are an essential element of the Ethereum blockchain, providing a standardised framework for creating digital assets and utility tokens. They adhere to a set of rules known as the ERC-20 standard, enabling seamless compatibility and interaction with decentralised applications (DApps) and smart contracts.
ERC-20 tokens serve as the foundation of the Ethereum ecosystem, equipping developers with the necessary tools to leverage the infrastructure of the Ethereum blockchain while benefiting from a standardised token implementation framework.
Features and Functionality
ERC-20 tokens possess predetermined functions that govern their behaviour and interaction within the Ethereum network. These functions encompass the capability to transfer tokens between addresses, retrieve token balances, and authorise delegated transfers. The ERC-20 standard ensures that tokens developed within this framework can effortlessly integrate with wallets, exchanges, and other platforms based on Ethereum.
Noteworthy Examples of ERC-20 Tokens
Let’s explore some significant ERC-20 tokens.
Ethereum (ETH)
As the native cryptocurrency of the Ethereum network, ETH holds a prominent position. It functions as a means of payment for transaction fees and serves as a store of value within the Ethereum ecosystem.
Binance Coin (BNB)
Initially an ERC-20 token before migrating to its blockchain, BNB plays a pivotal role as the native token of the Binance exchange. It offers discounted trading fees, grants access to token sales, and provides various services within the Binance ecosystem.
Chainlink (LINK)
LINK, an ERC-20 token, is a vital component of the Chainlink network. It facilitates decentralised Oracle services, connecting smart contracts with real-world data. This capability enables the development of sophisticated decentralised applications and decentralised finance (DeFi) platforms.
Takeaway
The ERC-20 standard empowers developers to design tokens with smart contract functionality, enabling seamless integration with various products and services. These tokens represent assets, rights, ownership, access, cryptocurrencies, or other transferable entities that lack uniqueness in isolation.
