ERC-20
ERC-20 is the token standard on Ethereum: a set of rules a contract follows so wallets and exchanges understand the token without bespoke support. Most well-known tokens, USDT and USDC among them, are issued under it.
How it works
The standard defines a handful of required functions: read a balance, transfer tokens, approve someone to spend yours. Any contract with them works in every wallet and on every exchange automatically, with nothing to add per token.
The token itself is just an entry in a contract saying who owns how much. No separate "coins" exist, so issuing one costs a single transaction, and anyone can do it.
Fees on an ERC-20 transfer are paid in ETH, not in the token itself. So a wallet holding only USDT can send nothing at all: gas needs ether.
The same token on different networks
USDT exists on several networks. They are different tokens with the same name.
| ERC-20 (Ethereum) | fee in ETH |
| TRC-20 (Tron) | fee in TRX |
| BEP-20 (BNB Chain) | fee in BNB |
Send ERC-20 USDT to an address an exchange issued for TRC-20 and it goes nowhere. This is the most common unrecoverable loss beginners make, and the network warning on an exchange is not decoration.
What to know
- A name guarantees nothingIssuing a token with any project's name and logo costs a few dollars. Verify the contract address.
- You need ETH for gasKeep a little ether in any wallet holding ERC-20 tokens, or they are stranded there.
- Approvals are open-endedThe approve function grants a contract the right to spend your tokens and stays live until you revoke it by hand.
- Newer standards existERC-721 and ERC-1155 cover NFTs. ERC-20 is only for fungible tokens, where one unit equals any other.