eth erc20

The Ethereum ERC-20 standard is the most widely adopted token standard on the Ethereum blockchain, providing unified rules and interfaces for creating and deploying fungible tokens. This standard was proposed by Ethereum community member Fabian Vogelsteller in November 2015 and was formally established in September 2017. By defining a set of functions and events that must be implemented, ERC-20 enables tokens to interact seamlessly within the Ethereum ecosystem, greatly facilitating the development of the token economy and laying the technical foundation for the ICO boom of 2017.

Background: The Origin of ERC-20 Standard

The name ERC-20 comes from "Ethereum Request for Comment," with "20" being the proposal's sequence number. Before ERC-20, token projects on Ethereum operated independently without a unified standard, causing interoperability issues and complications for exchange integrations. Standardization process:

1. In November 2015, Fabian Vogelsteller proposed EIP-20 (Ethereum Improvement Proposal 20)
2. After community discussions and multiple revisions, the standard was gradually refined
3. In September 2017, ERC-20 was officially accepted by the Ethereum community as the token standard
4. Subsequently, it quickly became the de facto standard for issuing tokens in the Ethereum ecosystem The emergence of ERC-20 solved the compatibility challenges faced by early token projects, creating conditions for the explosive growth of the token economy.

Work Mechanism: How ERC-20 Standard Works

The ERC-20 standard defines a set of mandatory core functions and optional features that ensure tokens can be consistently recognized and processed within the Ethereum ecosystem: Mandatory core functions:

1. totalSupply(): Returns the total token supply
2. balanceOf(address): Returns the token balance of a specified address
3. transfer(address,uint256): Transfers a specified amount of tokens to a target address
4. transferFrom(address,address,uint256): Transfers a specified amount of tokens from a source address to a target address
5. approve(address,uint256): Allows an address to withdraw tokens from the caller's account
6. allowance(address,address): Checks how many tokens an address can withdraw from another address Standard events:
7. Transfer: Triggered when tokens are transferred
8. Approval: Triggered when the approve function is successfully called From a technical implementation perspective, ERC-20 tokens are created based on Ethereum smart contracts. Developers can easily deploy their own tokens by writing smart contracts that comply with the standard interface, without having to design transfer logic and account systems from scratch.

Risks and Challenges of ERC-20 Standard

Despite becoming an industry standard, ERC-20 still has some inherent risks and technical limitations: Security risks:

1. Token loss issue: If users send ERC-20 tokens directly to a contract address rather than using the approve/transferFrom mechanism, funds may be permanently lost
2. Reentrancy attack risk: Some ERC-20 implementations may have reentrancy vulnerabilities, especially when interacting with other contracts
3. Approve mechanism flaws: In some cases, changing approval amounts may lead to security issues Technical limitations:
4. Lack of native metadata support; token name, symbol, etc. need to be implemented through non-standard extensions
5. Imperfect transaction confirmation mechanism, unable to notify receiving contracts after transfers
6. No support for atomic batch transfers, increasing gas costs for complex operations Regulatory challenges:
7. Many ERC-20-based tokens may be classified as securities, facing regulatory compliance requirements
8. Different jurisdictions have varying legal positions on tokens, increasing complexity for cross-border applications
9. Contradiction between anti-money laundering (AML) and know-your-customer (KYC) requirements and token anonymity As the ecosystem evolved, new standards like ERC-721 (non-fungible tokens) and ERC-1155 (multi-token standard) emerged to address some limitations of ERC-20, but ERC-20 remains the dominant standard for fungible tokens. Despite its limitations, the ERC-20 standard has proven its value and resilience as a core building block of the Ethereum ecosystem. It has not only standardized token development but also fostered the flourishing of the entire decentralized finance (DeFi) ecosystem. By providing a unified token interface, ERC-20 enables exchanges, wallets, and applications to interact seamlessly with any compatible token, thereby reducing integration costs and enhancing market liquidity. As Ethereum continues to evolve, the ERC-20 standard will likely maintain its position as the fundamental standard for fungible tokens while coexisting with emerging standards to build a richer blockchain asset ecosystem.