What Is an ERC-20 Token? Complete Guide for Beginners

ERC-20 is the most widely used token standard in the cryptocurrency world. If you've ever used a DeFi protocol, bought tokens on an exchange, or participated in a token sale, chances are you've interacted with ERC-20 tokens.

What Does ERC-20 Mean?

ERC stands for "Ethereum Request for Comments," and 20 is the proposal number. It's a technical standard that defines a set of rules all Ethereum-based tokens must follow. This standardization is what makes the entire DeFi ecosystem possible — because all tokens follow the same interface, wallets, exchanges, and smart contracts can interact with any ERC-20 token without custom integration.

How ERC-20 Tokens Work

Every ERC-20 token is a smart contract deployed on the Ethereum blockchain (or any EVM-compatible chain like BNB Chain, Polygon, Base, etc.). The smart contract maintains a ledger of balances — it knows exactly how many tokens each address holds.

The standard defines six mandatory functions:

• totalSupply() — Returns the total number of tokens in existence
• balanceOf(address) — Returns the token balance of a specific address
• transfer(to, amount) — Transfers tokens from the caller to another address
• approve(spender, amount) — Allows a third party to spend tokens on your behalf
• allowance(owner, spender) — Returns the remaining number of tokens a spender is allowed to use
• transferFrom(from, to, amount) — Transfers tokens between two addresses (used by DEXes and DeFi protocols)

ERC-20 vs BEP-20

BEP-20 is the token standard for BNB Chain (formerly Binance Smart Chain). Technically, BEP-20 is almost identical to ERC-20 — BNB Chain is an EVM-compatible blockchain, so the same Solidity smart contracts work on both networks. Read our detailed BNB Chain vs Ethereum comparison to help you choose.

The main differences are practical: BNB Chain has much lower gas fees and faster block times compared to Ethereum mainnet. This makes BEP-20 tokens significantly cheaper to create and trade.

Popular ERC-20 Tokens

Many of the biggest cryptocurrencies by market cap are ERC-20 tokens, including USDT (Tether), USDC (Circle), LINK (Chainlink), UNI (Uniswap), and SHIB (Shiba Inu). These tokens power everything from stablecoins to decentralized oracles to governance systems.

Creating Your Own ERC-20 Token

With TokenGeneratorApp, you can create your own ERC-20 or BEP-20 token in minutes. No Solidity knowledge required. Choose your features, configure your parameters, and deploy — it's that simple. Follow our step-by-step guide on how to create an ERC-20 token safely or learn how to create a BEP-20 token safely.

All tokens created on our platform follow the OpenZeppelin ERC-20 implementation, which is the most audited and battle-tested smart contract library in the ecosystem.