Today, it would be hard to imagine the crypto sphere without ERC-20 tokens. These unique financial instruments revolutionized the industry and introduced a new era in token launches. For these reasons and more, ERC-20 tokens are the most popular token standard in the world.
What Are ERC-20 Tokens
ERC-20 tokens are tokens designed and used solely on the Ethereum blockchain. Every ERC-20 tokens adhere to a list of standards set up by the Ethereum community in 2017. Interestingly, these coding restrictions include three optional rules and six mandatory rules that developers must follow.
These rules help promote innovation and development. ERC-20 tokens can be shared, exchanged for other tokens, or transferred to a crypto-wallet. These tokens enjoy a level of interoperability that other token standards will never achieve. There are tons of wallets, exchanges, games, and now DeFi staking options available to ERC-20 token holders.
History of ERC-20 Token Ecosystem
There was never a guarantee that the ERC-20 protocol would be as popular as it ended up being. For example, in October 2019, more than 200,000 ERC-20-compatible tokens existed on Ethereum’s main network. This number has only increased since then, and for good reason.
ERC-20 started off as an internal protocol to simplify the launch of tokens on the Ethereum blockchain for developers. However, it soon became evident that there was a huge demand for this standard in the market. The year was 2017 and the ICO boom was about to begin.
Ethereum’s decision to make ERC-20 public changed everything. It made it possible for enterprises to leverage the security and efficiency of Ethereum’s blockchain without investing millions into developing an independent system. This development led to thousands of firms hosting ERC-20 token ICOs. Notably, this token standard was one of the main driving forces behind the 2017 breakout.
Why are ERC-20 Tokens so Popular
It only takes a quick glimpse at the ERC-20 token standard to see why it has become so popular. For one, it’s very versatile. You can program ERC-20 tokens that fill almost any role in the crypto space. This flexibility makes these tokens ideal for businesses who want to provide users with tokens that are not cumbersome to store or use.
No other token standard has the Dapp support of ERC-20 tokens. There are endless ERC-20 compatible wallets available across all platforms. Additionally, some ERC-20 wallets integrate directly into your browsers like Metamask. This configuration is extra convenient because you can link your wallet directly to your exchanges.
ERC-20 token users have access to some of the most popular DEX (decentralized exchanges) in the world. DEXs differ from their centralized counterparts in that they don’t hold user’s crypto directly. Instead, they only link traders and make a small fee. This strategy makes DEXs less likely to get hacked because there is no centralization of user’s funds.
Additionally, platforms such as Uniswap provide startups access to much-needed liquidity with little restrictions. Consequently, Uniswap is the most popular DEX in the market today.
ERC20 Ecosystem is Blowing Up
From the looks of the market trends, ERC-20 tokens are set to dominate the sector for years to come. Ethereum has a major upgrade planned for the end of the year. This upgrade will switch these tokens from a PoW consensus mechanism over to a PoS system. The goal is to reduce the network’s footprint and increase sustainability.
ERC-20 is the Future.
There are endless reasons why a firm would choose the ERC-20 format for its token. The huge network of developers, users, and investors make ERC-20 the token standard to beat.
By D. Hamilton, BIG Writer