2026-01-16 04:26:16

To understand why Ethereum can become the foundation of the Web3 ecosystem, we have to talk about ERC-20, a seemingly simple yet incredibly crucial technical standard.

**Early Chaos**

Before ERC-20 was introduced, how chaotic was the token ecosystem on Ethereum? Imagine all the appliances in your home, each with a different plug shape—one for the refrigerator, another for the TV, and yet another for the washing machine. That was a true reflection of that era.

Every newly issued token was like a "custom plug." Wallets wanting to support it had to develop a separate set of code. Exchanges needing to list the new token also had to write individual interfaces. The entire ecosystem had no possibility of scaling, and efficiency was extremely low.

**The Power of Standards**

The emergence of ERC-20 changed all that. This protocol is actually very simple—it stipulates that all tokens issued on Ethereum must implement certain "basic actions." Transfers, approvals, balance inquiries... these functions have a unified standard interface.

What does this mean? It means wallet developers can write one set of code to support all tokens adhering to the ERC-20 standard. Exchanges can connect to thousands of tokens in a unified way. The ecosystem thus gained unprecedented efficiency and scalability.

Thanks to this standard, the later DeFi ecosystem found fertile ground. Lending protocols, decentralized exchanges, liquidity mining... these now-common innovations are all built on the ERC-20 foundation.

**Advantages and Risks**

But ERC-20 also brought a problem that still troubles users today—the misuse of the approval mechanism.

ERC-20 stipulates that you can authorize a contract or address to transfer tokens on your behalf. This is a powerful feature that makes complex DeFi operations possible. But at the same time, it has become a hotbed for scams and theft incidents. Many users have had their wallets emptied due to careless approvals.

Authorization itself isn't the problem; the issue is that users often do not understand what approval means, or they are tricked into clicking malicious links. This is the contradiction between the original intent of the protocol design and its real-world application.

**What if There Were No ERC-20**

Imagine a world without this standard. Uniswap wouldn't exist—it needs to support thousands of tokens, which was impossible before standardization. Lending protocols are the same; they require unified interfaces to operate efficiently. Liquidity aggregation, cross-currency swaps, automated market makers... these core functions of modern DeFi would be impossible to realize.

Today, what we call "on-chain finance" is actually built on foundational standards like ERC-20. It is precisely countless seemingly minor standardization decisions that enable a decentralized blockchain network to form an efficient ecosystem.

**Final Thoughts**

ERC-20 didn't make anyone directly money, but it did something more important—it allowed all tokens to circulate in the same world, following the same rules. This is the true backbone of Ethereum, the invisible spine supporting the entire ecosystem's development.

Once you understand this, you can better grasp why Ethereum has become the leading smart contract platform, and why ecosystem standards are so critical to blockchain development.

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SocialFiQueen

· 01-19 00:49

erc20 is really just a plug-in standard; without it, everything would have been a mess long ago. Now, a bunch of trash coins are also because of this protective umbrella. The part about authorization is correct. How many people have had their wallets emptied just because of careless actions... Infrastructure may be boring but deadly. Uniswap without erc20? It simply can't survive. That's why standards are more valuable than the tokens themselves.

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BearMarketNoodler

· 01-18 18:50

Standardization is the ceiling; without ERC-20, it would have died long ago.

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ProposalManiac

· 01-18 17:53

In plain terms, this is a victory of mechanism design. Without standardization, there is no scalability; all historical lessons tell us this. ERC-20 itself is a perfect example of incentive compatibility. Although it appears to be a simple interface standard, it can leverage the entire ecosystem. This approach is worth learning for all blockchains. The issue of authorization abuse is not discussed deeply enough—the fundamental problem is that the governance layer has failed to establish an effective risk disclosure mechanism. Currently, users are still bearing the consequences unilaterally, which is unreasonable. Standardization = decentralization? That's how I interpret it anyway.

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LittleMing'sNameIsWangcai

· 01-18 02:05

Hold on tight, we're about to take off 🛫

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Earn5MillionUInOneYear.

· 01-17 04:23

2026 Go Go Go 👊

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ProbablyNothing

· 01-16 04:53

ERC-20 is that invisible yet omnipresent thing; without it, UNI would have been dead long ago.

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MainnetDelayedAgain

· 01-16 04:51

According to the database, it has been 8 years since the birth of the ERC-20 standard. During this time, many project teams have been making promises but have never been able to surpass its elegant design. It will eventually be achieved. --- So, standards are like invisible money-making machines. Those who set the rules always win. No matter how innovative later entrants are, they are just dancing on someone else's turf. --- Laughing out loud, the issue of authorization abuse has been troubling users since 2018, which is already 6 years ago. The security solutions proposed by project teams are still being baked, I suggest they be listed in the Guinness World Records. --- Alright, this logic is like saying "a router is the foundation of the internet, but be careful not to get electrocuted." Standards and norms are correct; the problem is that user quality can never keep up. --- Having finished reading, ERC-20 is that unassuming yet most profitable infrastructure. It’s much quieter than those project teams shouting about innovation every day, and the results are much better—just the art of time. --- Does co-authoring mean that without standards everything is crap? Then why are there so many NFT standards like ERC721 and ERC1155, yet the ecosystem is still a mess? Feel free to add data.

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0xDreamChaser

· 01-16 04:47

Honestly, ERC-20 is a stroke of genius; without it, Uniswap simply couldn't run. Compared to trading cryptocurrencies for quick profits, this kind of infrastructure is the real wealth-building machine. The authorization part is indeed a trap; many people have been tricked, so be more cautious. Standardization has truly changed everything; otherwise, we'd still be playing with primitive methods. In simple terms, having a solid foundation allows you to build tall buildings. Ethereum is really enjoying this wave of dividends. This article explains complex concepts quite simply, but there are still people who get badly tricked by the authorization part.

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FlashLoanLord

· 01-16 04:46

Wow, this is the true DNA of Web3. No wonder Uni and Aave rely on it to survive.

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SandwichVictim

· 01-16 04:37

Haha, I've already suffered from ERC-20 before. The feeling of authorizing and instantly clearing the wallet is truly amazing. What’s the use of standards? Still got swept away like a floor mat. That analogy of the plug is really vivid. Back then, one coin had a set of code, and now it’s still one coin one scam pattern. And you still dare to call this basic? I think the foundation is just paving the way for scammers. But honestly, without this thing, there wouldn’t be today’s DeFi. I can only say that the standards themselves are not wrong; it’s all the people who are at fault.

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