--- title: ERC-20 url: "https://www.unknowngravity.com/en/glosario/erc-20" site: Unknown Gravity published: "2025-06-11T06:27:19+00:00" modified: "2026-07-15T10:51:27+00:00" language: en-US description: "ERC-20 is a technical standard for the creation and management of fungible tokens on the Ethereum network and any blockchain compatible with the Ethereum Virtual Machine (EVM)." section: "Home > ERC-20" --- # ERC-20 GLOSSARY · BLOCKCHAIN & WEB3 Standard for fungible tokens on Ethereum and other EVM-compatible blockchains. WHAT IS IT? · FOR DUMMIES ERC-20 is like a recipe for creating digital currencies inside Ethereum. All the coins that follow this recipe can be divided, exchanged and used in a way that is compatible with each other. It's the most common type of token and is used for payments, governance, rewards, and more. If you used cryptocurrencies like USDT, LINK or DAI, they were probably ERC-20 tokens. WHAT IS IT? · PRO **ERC-20** is a technical standard for the creation and management of **fungible tokens** on the Ethereum network and any blockchain compatible with the Ethereum Virtual Machine (EVM). It was proposed by Fabian Vogelsteller in 2015 and defines a minimum interface that smart contracts must implement to guarantee **interoperability and compatibility** with exchanges, wallets, decentralized applications (dApps) and other contracts. This standard includes essential functions such as `transfer ()`, `transferFrom ()`, `approve ()`, `allowance ()` and `Balance of ()`, which allow you to move tokens between addresses, authorize third parties to operate on behalf of the user, check balances and control spending limits. Being tokens **expendable**, all ERC-20s are interchangeable with each other, as with traditional money: 1 token A is equivalent to another token A. This makes them ideal for representing units of value, internal currencies, stablecoins, governance tokens, point systems or rewards. Its modular design and wide adoption have made ERC-20 the most used standard in Web3, providing everything from ICOs (Initial Coin Offerings) to DAOs (Decentralized Autonomous Organizations) and DeFi platforms. On a technical level, ERC-20 tokens are deployed using smart contracts that manage the logic of issuance, distribution, supply control and updates, and may also include extensions such as pauses, burns, minteo or white lists. Its standard nature has been key to the development of the Ethereum ecosystem, but it also has limitations: it does not include native functionality for non-fungible tokens, nor for batch operations, and it suffers from restrictions related to implementation errors and gas efficiency. ## 01 / Key points - Standard for creating fungible tokens on Ethereum - Allows tokens to be interchangeable with each other (like coins) - Define functions such as `transfer ()`, `approve ()` and `Balance of ()` - It is the technical basis for many well-known tokens: USDT, UNI, LINK, DAI, etc. - Interoperable with exchanges, wallets and DeFi platforms ## 02 / Advantages - **Broad compatibility**: supported by most exchanges and wallets - **Technical simplicity**: easy to implement and audit - **Base of the DeFi ecosystem**: most protocols use it as standard - **Modular and extensible**: allows you to add additional logic depending on the project - **Market compatibility**: integrates smoothly into pools and secondary markets. Actual liquidity depends on the project and on demand, not on the standard ## 03 / Disadvantages - **Mandatory fungibility**: does not serve to represent unique assets - **Common Implementation Mistakes** may cause loss of funds - **No native support for batch transfers or metadata** - **Gas efficiency issues** in intensive use cases - **Vulnerable to infinite approvals** if it is not managed properly the `approve ()` RELATED CONCEPTS [Fungible Token](/en/glosario/token-fungible) [Ethereum](/en/glosario/ethereum) [Smart contract](/en/glosario/smart-contract) [Liquidity Pool](/en/glosario/liquidity-pool-fondo-de-liquidez) KEEP LEARNING [How to create your own blockchain-based cryptocurrency](/en/articulos/crear-tu-propia-criptomoneda-blockchain) [Tokenomics that work: How to design an economy that doesn't collapse in 6 months](/en/articulos/tokenomics-que-funcionan-como-disenar-una-economia-que-no-se-derrumbe-en-6-meses) [Comparison of smart contracts programming languages](/en/articulos/lenguajes-programacion-smart-contracts) [Complete Guide to Launching a Security Token Offering (STO) in Europe: Everything You Need to Know](/en/articulos/guia-completa-lanzar-security-token-offering-sto-europa-todo-lo-que-debes-saber) [DeFi: What decentralized finance is and how does it work](/en/articulos/defi-que-son-como-funcionan-finanzas-descentralizadas) RELATED SERVICES [Token development](/en/servicios/desarrollo-de-tokens) [Token issuance](/en/servicios/emision-de-tokens) [Cryptocurrency development](/en/servicios/desarrollo-de-criptomonedas) [Tokenomics](/en/servicios/tokenomics) [Development for Ethereum (EVM)](/en/servicios/desarrollo-para-ethereum-evm) [Full glossary](/en/glosario) This entry is informative. It is not legal, tax or investment advice. The rules cited change: check the current version on [BOE](https://www.boe.es) and [EUR-Lex](https://eur-lex.europa.eu).