ERC-20
A widely used Ethereum token standard that defines common rules for creating and interacting with fungible tokens.
ERC-20 is a technical standard for creating fungible tokens on Ethereum, meaning each token unit is interchangeable with any other unit of the same token. It defines a shared set of functions, such as checking balances, transferring tokens, and allowing another address or smart contract to move tokens on a user’s behalf. Because these rules are standardized, wallets, exchanges, and decentralized applications can support many different tokens in a consistent way.
ERC-20 matters because it made launching and integrating Ethereum-based tokens much simpler. Many stablecoins, governance tokens, and utility tokens use the ERC-20 format, allowing them to work across compatible wallets, trading platforms, and DeFi protocols. A practical comparison is a standard plug shape: different devices can be made by different companies, but if they follow the same plug standard, they can connect to the same outlets. Similarly, ERC-20 tokens can be different projects’ assets while still interacting with the same Ethereum tools.
Other terms in Ethereum
Account Abstraction (ERC-4337)
A way for Ethereum wallets to act like smart contracts, enabling features such as gas sponsorship, account recovery, and custom transaction rules.
Beacon Chain
Ethereum’s proof-of-stake coordination layer that organizes validators and finalizes blocks for the network.
EIP
An Ethereum Improvement Proposal is a formal document used to suggest, discuss, and standardize changes to the Ethereum network or ecosystem.
ERC-1155
An Ethereum token standard that lets one smart contract create and manage multiple token types, including fungible tokens, NFTs, and semi-fungible items.