What is ERC20?

By Lyle Daly – Updated Feb 26, 2025 at 2:14 PM EST

Key Points

ERC-20 is a set of rules for tokens on Ethereum, impacting token function and compatibility.
Created by Fabian Vogelsteller in 2015, ERC-20 became an official Ethereum standard in 2017.
Investing in ERC-20 tokens provides security and ecosystem compatibility but with high volatility.

ERC-20 is a token standard used by Ethereum (ETH -0.93%), the world's largest programmable blockchain.

It's easier to understand when it's broken down a little bit. Ethereum is a programmable blockchain, meaning people can use it to create their own tokens. These tokens can represent basically anything on Ethereum, including points in an online platform, shares in a company, or currencies such as the U.S. dollar.

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About the Author

Lyle Daly is a contributing Motley Fool stock market analyst covering information technology and cryptocurrency. Lyle has been a contributor at the financial services company since 2018. His work has been featured on USA Today, Yahoo Finance, MSN, Fox Business, and Nasdaq. Before joining The Motley Fool, he wrote for financial brands including Intuit.

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@LyleDaly

Lyle Daly has positions in Bitcoin, Ethereum, Solana, Tether, and USDC. The Motley Fool has positions in and recommends Bitcoin, Ethereum, Polygon, Solana, and Uniswap Protocol Token. The Motley Fool has a disclosure policy.

ERC-20 vs. ERC-721 vs. ERC-1155

Ethereum has multiple token standards. In addition to ERC-20, two other important token standards are ERC-721 and ERC-1155. Here's what makes them different:

ERC-20 is the fungible token standard. Fungible tokens are identical to one another in type and value. Cryptocurrencies are an example of fungible tokens.

ERC-721 is the non-fungible token (NFT) standard. NFTs are used to identify something unique, such as a digital collectible.

ERC-1155 is the multi-token standard. It's a smart contract interface that can manage multiple token types. ERC-1155 tokens can perform the same functions as both ERC-20 and ERC-721 tokens.

Notable ERC-20 tokens

It would take some time to go through all the ERC-20 tokens in existence. According to Etherscan, there are currently more than 500,000, and the number keeps rising.

These include some of the largest cryptocurrencies on the market, smaller projects, and -- to be completely candid -- a bunch of scams. Because of how easy it is to launch a token on Ethereum, the quality of these projects can vary quite a bit.

Here are some of the most notable ERC-20 tokens and what they do:

Wrapped Bitcoin (WBTC -1.63%) is a version of Bitcoin (BTC -1.41%) that's tokenized so it can be used on the Ethereum blockchain. It's backed 1:1 by Bitcoin reserves.

Polygon (CRYPTO:MATIC) is a Layer 2 blockchain, meaning that Polygon is a separate blockchain that extends Ethereum. It's designed to run alongside Ethereum and provide faster, cheaper transactions.

Shiba Inu (SHIB -1.56%) is one of the most popular meme tokens. It's not highly regarded as an investment or a crypto project, but it has a passionate fanbase.

Uniswap (UNI -1.48%) is a decentralized cryptocurrency exchange. It operates using smart contracts and without any central authority, and it allows users to swap cryptocurrencies.

Tether (USDT +0.02%), USD Coin (USDC +0.01%), and Binance USD (BUSD +0.17%) are all stablecoins pegged to the U.S. dollar. They're designed to maintain a price of $1.

It's important to clarify that some of these cryptocurrencies are available across different blockchains as multiple types of tokens, not just ERC-20 tokens. For example, Tether is available as an ERC-20 token, but there are also USDT tokens available on Solana (SOL -1.35%), Algorand (ALGO +1.50%), and several other blockchains.

What is ERC20?

Key Points

What is Ripple?

What Is the Next Cryptocurrency to Explode in 2026?

Who Holds the Most Bitcoin? A Breakdown by Investor, Fund, Company, and Country

Crypto vs. Stocks: What's the Better Choice?

About the Author

Our Guides

Premium Investing Services

What is Ripple?

What Is the Next Cryptocurrency to Explode in 2026?

Who Holds the Most Bitcoin? A Breakdown by Investor, Fund, Company, and Country

Crypto vs. Stocks: What's the Better Choice?

What makes ERC-20 unique?

Where ERC-20 came from

How ERC-20 works

Investing in ERC-20 tokens

ERC-20 vs. ERC-721 vs. ERC-1155

Notable ERC-20 tokens

Related Investing Topics