ERC-20 is the most widely recognised standard for fungible tokens on Ethereum. This Remitano review explains how ERC-20 works, its required functions, common use cases and the precautions users should take to avoid a token scam, malicious approval or wallet hack.
ERC-20 helped establish a common language that allows tokens to work with wallets, exchanges, decentralised applications and blockchain explorers.
However, compliance with ERC-20 only means that a token follows a technical interface. It does not prove that the project is valuable, safe or legit.
ERC stands for Ethereum Request for Comments, while 20 identifies the proposal that introduced the standard.
ERCs are application-level standards developed through the broader Ethereum Improvement Proposal process.
ERC-20 was proposed in 2015 by Fabian Vogelsteller and Vitalik Buterin. Its purpose was to give fungible tokens a consistent interface that Ethereum applications could recognise.
Before common token standards, each project could implement transfers and balances differently. Wallets and exchanges would then need custom code for every new asset.
ERC-20 reduced this problem by defining a shared set of functions and events.
An ERC-20 token is a fungible digital asset issued through a smart contract on Ethereum.
Fungible means that units of the same token are interchangeable. For example, one unit of a particular ERC-20 token should have the same properties and value as another unit of that token.
ERC-20 tokens may represent:
ETH itself is not an ERC-20 token. It is the native currency of Ethereum and is used to pay network gas fees.
Wrapped Ether, or WETH, is an ERC-20 representation of ETH created to make ETH compatible with applications that expect the ERC-20 interface.
An ERC-20 token is controlled by a smart contract containing account balances, transfer rules and other token logic.
When one user sends tokens to another, the contract does not physically move a file or coin. Instead, it updates its internal record by reducing one address’s balance and increasing another address’s balance.
Because ERC-20 contracts use a standard interface, applications can perform familiar actions such as:
The standard defines six primary functions.
| Function | Purpose |
|---|---|
totalSupply() | Returns the token’s current total supply |
balanceOf(address) | Returns the balance held by an address |
transfer(address, amount) | Sends tokens from the caller to another address |
approve(address, amount) | Authorises a spender to use a specified amount |
allowance(owner, spender) | Shows how much the spender is still authorised to use |
transferFrom(sender, recipient, amount) | Moves approved tokens on behalf of their owner |
ERC-20 also specifies two important events:
| Event | Purpose |
|---|---|
Transfer | Records a token transfer, mint or burn |
Approval | Records an updated spending allowance |
Wallets, exchanges and blockchain explorers use these events to monitor token activity.
ERC-20 contracts commonly provide:
namesymboldecimalsThese fields are useful but optional under the original standard.
For example:
The decimals value affects how wallets display a token. It does not create additional tokens or alter the economic supply.
Many ERC-20 tokens use 18 decimal places, but developers can select another value.
Yes, depending on the smart contract.
ERC-20 does not require every token to have a fixed maximum supply. The totalSupply() function only reports how many units currently exist.
A project may design its contract with:
Before buying a token, users should check who can mint new units and whether that authority can be changed.
A project marketed as scarce may not be truly scarce if an administrator can create unlimited tokens.
A user can call approve() to let a decentralised application or another address spend tokens on their behalf.
The approved amount is called an allowance.
For example, when swapping USDT through a decentralised exchange, the user may first authorise the exchange contract to spend the USDT. The exchange then uses transferFrom() to complete the swap.
Approvals make DeFi applications possible, but they also create security risks.
An unlimited approval may remain active until the user revokes it. If the approved contract is malicious or later compromised, it may attempt to withdraw the authorised tokens.
Users should:
ERC-2612 is an extension that allows some ERC-20 approvals to be created through a signed message called a permit.
This can reduce the need for a separate on-chain approval transaction and may improve the user experience.
However, permit signatures are not automatically safe.
A phishing website may ask the user to sign a message that secretly gives a scammer permission to spend their tokens. The victim may not immediately recognise it as an approval because no normal token transfer appears during signing.
Never assume that an off-chain signature is harmless simply because it does not require a gas fee.
Many stablecoins operate as ERC-20 tokens on Ethereum.
Their contracts track balances and transfers, while the issuer or protocol determines how the token maintains its target value.
A stablecoin can still face reserve, issuer, smart-contract, liquidity and regulatory risks.
ERC-20 tokens are widely used in:
Some projects distribute ERC-20 governance tokens that allow holders to vote on protocol proposals.
Holding a governance token does not necessarily provide company shares, legal ownership or guaranteed revenue.
ERC-20 contracts may represent assets such as commodities, financial claims or tokenised real-world instruments.
The token’s technical operation does not prove that the underlying asset exists or can be legally redeemed.
| Standard | Main use |
|---|---|
| ERC-20 | Fungible and interchangeable tokens |
| ERC-721 | Unique non-fungible tokens |
| ERC-1155 | Multiple fungible and non-fungible asset types in one contract |
| ERC-2612 | Signed approval extension for ERC-20 |
| ERC-4626 | Tokenised vault shares based on ERC-20 |
ERC-721 is commonly used for unique NFTs, while ERC-1155 can manage several asset types through a single contract.
ERC-20 remains appropriate when every unit of the asset should be interchangeable.
ERC-20 does not require a receiving contract to confirm that it can properly process an incoming transfer.
If tokens are sent directly to an incompatible contract address, they may become inaccessible.
This does not mean every transfer to a contract will fail. Many DeFi contracts are specifically designed to receive ERC-20 tokens. The risk arises when the receiving contract has no suitable withdrawal or recovery logic.
ERC-20 transactions require ETH to pay Ethereum gas fees.
The fee depends on network demand and transaction complexity rather than the value of the tokens being transferred.
A token contract may contain:
Following the ERC-20 interface does not prevent these additional rules.
Malicious or compromised contracts may exploit existing spending allowances.
Users should periodically review and revoke permissions they no longer need.
Sending an ERC-20 token to the wrong address or through the wrong network can result in permanent loss.
Blockchain transactions generally cannot be reversed by customer support.
No.
Anyone with the necessary technical knowledge can deploy an ERC-20 contract. The standard does not evaluate the project’s team, reserves, business model or intentions.
Scammers can create a token with:
Before buying, verify:
Users assessing a platform can also read Is Remitano Legit? A Guide to Avoiding Crypto Scams and Staying Safe.
Before sending a token:
A token with the same symbol may exist on several networks. Sending an Ethereum ERC-20 token to an unsupported network or deposit route may prevent automatic recovery.
A scammer may create a fake token using the name of a well-known project or send worthless tokens to a wallet to attract attention.
Do not visit websites embedded in an unknown token’s name or description.
Scammers may also impersonate Remitano support and request:
Learn how Remitano impersonators attempt to steal OTP and 2FA information.
No legitimate support employee should need your recovery phrase.
The availability of a particular Ethereum token on Remitano depends on the platform’s current listings and supported networks.
A listing does not guarantee that the asset will rise in price. Users should separately evaluate:
This Remitano review explains how liquidity can affect trading speed and pricing.
When purchasing crypto through P2P trading, users should also read:
Always confirm payments through the actual bank account rather than trusting a screenshot or SMS alert.
Identity verification and transaction monitoring may help a platform investigate suspicious activity and comply with applicable requirements.
Read more about how AML and KYC controls help protect assets on Remitano.
Remitano has also published information about its Hacken-audited CCSS Level 1 Full System Security Certification.
A security certification applies to the assessed system and scope. It does not guarantee that every token is safe or that users cannot lose funds through phishing, malicious approvals or personal mistakes.
An exchange wallet may be convenient for active trading, but the platform controls the associated private keys.
A personal wallet gives the user greater control, while also making the user responsible for:
For larger or long-term holdings, users may consider a hardware wallet after understanding its recovery and backup requirements.
Read more about crypto hack history and the future of cold-wallet security.
The term “Ethereum 2.0” has largely been retired.
Ethereum completed The Merge in September 2022, replacing Proof of Work with Proof of Stake for network consensus.
The Merge did not require users to replace their ETH or convert existing ERC-20 tokens into new versions.
Claims that users must send tokens to an “ETH2 upgrade wallet” are a scam warning sign.
ERC-20 contracts continued operating on the same Ethereum history after The Merge.
ERC-20 is a standard interface for fungible tokens on Ethereum. It enables compatible wallets, exchanges and decentralised applications to identify balances, transfer tokens and manage spending allowances consistently.
Its success comes from interoperability rather than an ability to guarantee token quality.
An ERC-20 token can still be fraudulent, poorly coded, highly centralised or designed to prevent holders from selling.
To stay safe:
A trustworthy Remitano review or token review should examine both technical compatibility and real security risks. The words “ERC-20” alone do not prove that a crypto project is legit, safe or protected against a scam or hack.
