ERC20 is the technical standard for fungible tokens issued on the Ethereum blockchain. Introduced in 2015, it defines a common set of rules that all Ethereum-based tokens must follow, ensuring seamless interoperability across wallets, exchanges, and decentralised applications (dApps).
How ERC20 Works
Every ERC20 token is governed by a smart contract deployed on Ethereum. The contract specifies the total supply, how tokens are transferred, how balances are queried, and how spending approvals are granted. Because all ERC20 tokens share the same interface, any wallet or exchange that supports the standard can handle any ERC20 token automatically.
Gas Fees
Transactions on Ethereum require gas, paid in ETH. Gas prices fluctuate with network demand. During peak periods fees can exceed $5 per transfer, which makes ERC20 less attractive for small or high-frequency payments. Layer-2 solutions such as Arbitrum and Optimism significantly reduce these costs.
Ecosystem & Wallets
ERC20 tokens are universally supported across MetaMask, Trust Wallet, Ledger, Coinbase Wallet, and virtually every major exchange. The Ethereum ecosystem hosts the largest DeFi network in the world, including Uniswap, Aave, and Compound.
USDT ERC20
USDT on Ethereum (ERC20) is one of the most widely held stablecoin versions. It offers the highest level of compatibility but comes with Ethereum gas costs. Large-value transfers or DeFi interactions are the primary use cases where ERC20 USDT shines.
November 13, 2023
