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

When you hold a token like USDT, LINK, or UNI, you’re holding something built on Ethereum ERC-20, a technical standard that defines how tokens behave on the Ethereum blockchain. Also known as ERC20, it’s the reason your wallet can send, receive, and track thousands of different tokens using the same simple rules. Without ERC-20, every new crypto project would need to build its own payment system from scratch. Instead, they just follow the standard—and instantly work with wallets, exchanges, and DeFi apps.

ERC-20 isn’t a coin. It’s a smart contract, a self-executing piece of code on Ethereum that enforces rules for token creation and transfer. Think of it like a vending machine: you put in ETH, and it gives you tokens based on fixed rules—no middleman needed. This is why you can swap tokens on decentralized exchanges like Uniswap without trusting a company. The code does the work. It also explains why so many airdrops—like KOM or DSG—give you ERC-20 tokens. They’re built on Ethereum because it’s the easiest, most compatible system.

But ERC-20 isn’t perfect. It’s old. It doesn’t handle complex actions like voting or staking well, which is why newer standards like ERC-721 (for NFTs) and ERC-1155 (for multi-token types) exist. Still, over 90% of all tokens on Ethereum use ERC-20. That’s why you see it everywhere: in DeFi lending, stablecoins like EURØP, tokenized stocks like CRWDx, and even failed projects like FSN. It’s the common language.

What does this mean for you? If you’re trading, holding, or claiming tokens, you’re almost certainly dealing with ERC-20. Your wallet needs to support it. Your exchange must list it. And if a project claims to be on Ethereum but doesn’t use ERC-20, it’s either lying or using a niche alternative. You don’t need to code it—but you do need to understand it. That’s why the posts here cover everything from how ERC-20 tokens move between wallets to why some exchanges delist them, and how scams exploit the standard to trick users. Whether you’re checking out a new airdrop, using a DEX like Ebi.xyz, or wondering why your USDT balance shows up as a token and not a coin—this is the foundation.