What is ERC20?
The Ethereum blockchain has a set of technical standards for deploying smart contracts. And ERC20 is one of the most popular token standards for smart-contract development. What is a technical standard? It’s a set of procedures and rules coded into a blockchain as a working template.
It was to be a replicable template for developers to create smart contracts on the Ethereum Network. New fungible crypto tokens created on the Ethereum blockchain follow these standards, like ERC20.
In 2015, blockchain developer Fabian Vogelstellar submitted the initial pitch for the ERC20. It was approved in 2017 by the Ethereum developer community and turned into a template for all fungible tokens. The ERC in ERC20 stands for ‘Ethereum Request for Comment’; and was launched as EIP-20 (Ethereum Improvement Proposal 20). However, the name ERC20 stuck as it grew popular within the community in the two years it remained for approval.
We are going to see what ERC20 token development entails.
What is an ERC20 token?
ERC20 is a technical standard used for fungible tokens. Fungibility means the interchangeability of something. For example, 1inch and ANKR are both ERC20 tokens; hence they can be interchanged for one another depending on their value.
Crypto tokens created with the ERC20 standard are automatically fungible. Let me put it this way. If there is a $20 bill, you can interchange it for two $10 bills and have no value lost. And that is the crux of fungibility. In crypto, ERC20 allows an exchange of tokens from two different smart contracts on the Ethereum network. This standard makes sure that ERC20 tokens function in any Ethereum ecosystem.
Contents of the ERC20 Standard
The ERC-20 has many functions coded within it. It also has events that a token must enforce under the right conditions. So essentially, it provides a framework for the smart contract to execute automatically.
- Total Supply: This is the function determining the total number of tokens issued.
- Balance Of: This function shows the balance of a token owner’s account. (For verifications and audits.)
- Transfer: The Transfer function automatically completes the transfer of tokens to the specified address.
- Transfer From: The TransferFrom function executes the transfers of the crypto tokens from a specified address.
- Approve: The Approve function allows users to withdraw a set amount of crypto tokens from an account.
- Allowance: This function lets the return of a set number of crypto tokens from the spender to the owner.
- Transfer: This is not a function; this is an event. It triggers when a transfer is successful.
- Approval: Approval is also an event. And this is a record of an approved event.
The implementation of users/tokens depends on these code functions and events. They help with accounting for the number of tokens in circulation, keeping and returning balances, submitting transfer and withdrawal requests, approving them, and consenting to automatic transfers, to name a few.
Furthermore, functions can be added to the ERC20 standard depending on the smart contract and its use.
- Mintable: Authorized accounts will be able to create more supply of the tokens.
- Burnable: This extension will allow token holders to destroy their crypto tokens on-chain.
- Pausable: Authorized accounts will be able to pause the mechanism.
- Permit: This extension will help token holders allow third-party to transfer crypto from their accounts without paying gas fees.
- Votes: This extension is perfect for DeFi ecosystems. It helps keep track of historical balances for voting in on-chain governance, with a way to delegate one’s voting power to a trusted account.
- Flash Minting: This is another extension for DeFi lending platforms. Flash Minting is built-in flash loans. It lends tokens without requiring collateral as long as they get returned in the same transaction.
- Snapshots: Authorized accounts will be able to store snapshots of balances that can be retrieved later. Another extension perfect for the DeFi ecosystem and governance.
And all of these features come under ERC20 token development. But there is more to this than that.
Steps on how to create ERC20 token
Allow me to list out the exact steps needed for ERC20 token development.
Open Truffle or Ganache Tools (To create a new project)
- Create a blank project for the smart contracts.
- Assign a Contract folder for the smart contracts.
- Assign the Migrations folder for the deployment script.
- Assign the Test folder for testing the smart contracts.
Create the Token (Use OpenZeppelin library)
- Import the contract ERC20.sol from the OpenZeppelin library containing the implementation for this token standard.
- Call the ERC20.sol and assign the name and symbol parameters to the code.
- Mint the number of tokens needed and specify the number in decimals.
Compile the ERC20 Contract
Compiling the code is necessary because you need to convert the code we understand to a language the blockchain understands. And this is an unavoidable step.
Deploy the Smart Contract
Keep in mind that before deployment, double-check the code several times. Because once the smart contracts get deployed on the blockchain, it becomes immutable. After that, any modification to the code will mean deploying a second smart contract on the chain. And the old contract will always exist in the blockchain.
ERC20 token development depends on the utility of the project and the functions the smart contracts automate on the project. And that is why you need a professional ERC20 token development company to outsource your technical needs.
Why choose Coinsclone for ERC20 Token Development?
Coinsclone are a blockchain-based software company with almost half a decade of experience in blockchain development and smart contracts. We custom-build and encrypt blockchain-based software solutions at an affordable price.
Coinsclone have a broad internal staff of developers from various fields. From software developers, UI designers, and coders to blockchain engineers. We have extensive expertise in smart-contract development on the Ethereum blockchain. We create bug-free, high-quality, smart contracts. We are more than just a technical service; we are an Ethereum Token Development Company.