ERC-20 Token: What It Is and Why It Powers Most Crypto Projects

When you buy a crypto token that isn’t Bitcoin, chances are it’s an ERC-20 token, a technical standard for tokens built on the Ethereum blockchain that lets them be sent, traded, and used across apps. Also known as Ethereum Request for Comment 20, it’s the reason you can hold hundreds of different coins in the same wallet — from stablecoins like USDC to meme tokens like DOGE on Ethereum. Without ERC-20, DeFi, NFTs, and most crypto projects wouldn’t exist the way they do today.

Think of ERC-20 like a universal plug. Just as any device with a USB-C port works with any USB-C charger, any Ethereum wallet or exchange that supports ERC-20 can handle any token made to that standard. That’s why you can trade ERC-20 token projects like Uniswap, Aave, or Chainlink on platforms like MetaMask, Coinbase, or Block DX without needing special software. The standard defines how tokens are created, transferred, and tracked — things like total supply, who owns what, and how balances update. It’s not magic, just smart contract code that everyone agrees to follow.

But not all tokens are created equal. Some ERC-20 tokens have real utility — like governance rights or access to DeFi protocols. Others? They’re just names on a blockchain with no team, no roadmap, and no future. That’s why you’ll see posts here about fake airdrops, dead tokens like MATE or VIKC, and scams hiding behind flashy names. The same standard that enables innovation also makes it easy for fraudsters to launch tokens overnight. Knowing the difference between a real project and a rug pull comes down to understanding what ERC-20 actually does — and what it doesn’t guarantee.

Behind every ERC-20 token is a smart contract, a self-executing program on Ethereum that automatically handles token rules like transfers and balances. That’s why audits matter. If the code has bugs or backdoors, your tokens can vanish — and no one can stop it. That’s also why platforms like CertiK and OpenZeppelin exist — they check these contracts before you invest. And because ERC-20 runs on Ethereum, it’s tied to its network fees, congestion, and upgrades. When Ethereum gets slow or expensive, so do your token transactions.

ERC-20 isn’t the only standard — there’s BEP-20 on BSC, SPL on Solana, and others. But ERC-20 is still the most widely adopted. It’s the reason you can stake tokens on Cake DeFi, trade them on decentralized exchanges like Uniswap v2 on Base, or use them as collateral in lending protocols. It’s the common language of crypto. But language can be misused. That’s why this collection includes deep dives into exchanges that support ERC-20, scams that fake token airdrops, and how tax rules treat these tokens in places like Switzerland or the U.S. You’ll find real examples of what works, what fails, and what to avoid.

Whether you’re holding a stablecoin, trading a new DeFi project, or just trying to understand why your wallet shows 50 different tokens — you’re dealing with ERC-20. And knowing how it works is the first step to not getting burned.