ERC-20 tokens are the foundation of the Ethereum ecosystem. They allow for the creation of cryptocurrencies and decentralized applications that operate under a unified set of rules. This standard simplifies life for developers and users alike. In this article, we will thoroughly examine how these tokens work, their history, advantages, and limitations.

ERC-20 tokens are a standard created for the Ethereum network that functions as a universal language for interacting with all applications within the blockchain. Thanks to this standard, developers can easily create tokens, and users can utilize them in various applications, such as DeFi or NFTs.

ERC-20 defines a set of rules for creating and operating tokens. This simplifies their use in any applications compatible with Ethereum. For example, DeFi platforms accept tokens from different developers, as they all follow the same standard.

Usage example: you can send a token, and the smart contract automatically checks your balance and transfers the asset to the new owner.

ICOs (Initial Coin Offerings): most tokens created to attract investments follow this standard.

NFTs (non-fungible tokens): although NFTs use a different standard (for instance, ERC-721), many auxiliary tokens for managing NFTs are built on the ERC-20.

Wallets: ERC-20 tokens are supported by popular wallets like MetaMask, Trust Wallet, and others, making them convenient for users.

1. Developers know how to create tokens, and users can easily manage them.

2. The standard is based on smart contracts that operate automatically, reducing errors and minimizing human influence.

3. ERC-20 tokens are applicable in various fields — from decentralized finance to blockchain gaming.

ERC-20 was proposed in 2015 by Vitalik Buterin and the Ethereum team. The main goal of creating the standard was to simplify the process of token development and their integration into the Ethereum ecosystem.

Why did ERC-20 become important? Before its introduction, each token was created with unique rules, leading to confusion and difficulties in usage. ERC-20 addressed this problem by providing a unified set of rules that simplifies interaction between tokens and applications.

Today’s role of ERC-20:

• The standard is used by millions of users.

• Most crypto projects, including DeFi, ICOs, and auxiliary tokens for NFTs, are based on ERC-20.

• This standard has become the foundation of the Ethereum ecosystem.

The ERC-20 standard is a set of rules that define how tokens interact with each other and with applications on the Ethereum blockchain. Tokens are created using mandatory and optional methods, which makes them versatile and easily integrable into the ecosystem.

Smart contracts on which ERC-20 tokens operate require thorough verification before launch, as errors can lead to financial losses.

Example of an error: if the transfer method is incorrectly configured, tokens can be locked in the contract or sent to the wrong address.

Benefits of Testing:

• Reduction of token loss risks.

• Increased user trust.

• Protection against vulnerabilities and hacker attacks.

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