What Is ERC-20?
ERC-20 is the Ethereum rulebook for fungible tokens: coins where one unit equals another. USDC, UNI, and a million mistakes are ERC-20s. If a token implements a small set of functions (transfer, approve, transferFrom, balanceOf, totalSupply), every wallet and DEX already knows how to show it and swap it. The standard is why tokens feel native in MetaMask.
How It Actually Works
- The contract holds a ledger of addresses and balances on the account model. Your "token balance" is a line in that contract, not in ETH itself.
- Approve lets a spender pull tokens later. That is how Uniswap takes USDC from you in one click, and how a honeypot or drainer empties you in one click.
- Anyone can deploy an ERC-20 named "USDC" or "Ethereum." The standard is spelling, not authenticity. Check the contract address.
Risks and Common Mistakes
- Unlimited approvals to a random router. Revoke when you are done: Revoke.cash.
- Sending ERC-20 to a contract that cannot handle it, or to the right address on the wrong chain. The token stays on the chain you sent it on.
When It Matters
Every EVM token that is not an NFT. ERC-721 is the non-fungible cousin. Wrapped ETH is an ERC-20 costume on ETH itself; see wrapped tokens.
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