ERC-20 Token: What It Is, How It Works, and Why It Powers Most Crypto

When you hold a token like UNI, LINK, or AAVE, you’re not holding a coin—you’re holding an ERC-20 token, a digital asset built on the Ethereum blockchain using a standardized set of rules. Also known as Ethereum Request for Comment 20, it’s the most common way to create tokens that work with wallets, exchanges, and DeFi apps. Unlike Bitcoin or Ethereum itself, which are native coins, ERC-20 tokens run on top of Ethereum’s network. They don’t have their own blockchain—they piggyback on Ethereum’s security and speed.

This standard defines how tokens behave: how they’re transferred, how balances are checked, and how new tokens are created. Think of it like a universal plug—you can use any ERC-20 token with any wallet, exchange, or DeFi protocol that supports Ethereum. That’s why over 90% of tokens on platforms like Uniswap, SushiSwap, or Raydium are ERC-20. It’s not magic—it’s just a shared language that lets different projects talk to each other. Without ERC-20, DeFi as we know it wouldn’t exist. You couldn’t stake AVENT, trade BLUE, or claim SCH airdrops without this standard holding everything together.

But it’s not perfect. ERC-20 tokens can have bugs, scams, or poor code—like DOGS Solana or PRICK, which look like real tokens but have zero real utility. Even worse, some fake exchanges like Rokes Commons try to pass off worthless tokens as legitimate. That’s why knowing the difference between a real ERC-20 token and a scam is critical. You don’t need to be a coder, but you do need to check if a token has verified contract code on Etherscan, if it’s listed on major DEXs, and if the team is transparent. The standard itself doesn’t guarantee safety—it just makes it easier to build and track tokens.

Behind every ERC-20 token is a smart contract, a self-executing program on Ethereum that enforces the token’s rules. This contract controls supply, transfers, and approvals. It’s what lets you send tokens without a middleman. But if the contract has a flaw—like a missing permission check—it can be drained. That’s why audits matter. Projects like DeDust and Raydium don’t just rely on ERC-20—they build complex systems on top of it, using the standard as a foundation.

And then there’s the Ethereum, the blockchain that makes ERC-20 tokens possible. While other chains like Solana, Sui, or TON have their own token standards, ERC-20 still dominates because of its network effect. Even if you’re using a token on a different chain, chances are it was first launched on Ethereum. That’s why most crypto guides, airdrops, and exchange reviews—like those for ZBG, SatoExchange, or Bitpin—focus on ERC-20 tokens. They’re the lingua franca of crypto.

So when you see a new token pop up, ask: Is this ERC-20? Is the contract verified? Who made it? The answers will tell you more than any price chart. Below, you’ll find real-world reviews and deep dives into tokens, exchanges, and risks—all tied back to this one simple standard. Whether you’re chasing an airdrop, avoiding a scam, or trying to understand DeFi, knowing how ERC-20 works is your first real advantage.