- What is the ERC20 standard?
- What is Ethereum Dapps?
- Top 5 ERC20 tokens
The cryptocurrency world might seem difficult to anyone who is new to the crypto space. The crypto world might also seem more confusing to those who lack expert technical knowledge about blockchain technology and smart contracts. The possibilities and potential that this industry has, has seen the participation of many new investors.
It is important to understand the technical properties of any digital currency be it bitcoin, ethereum, litecoin, etc to make a sound decision while investing. One of the most intriguing and major concepts that govern the crypto space and is especially related to smart contracts and smart property is, what is known as ERC20 and the significance of this standard for ethereum.
The scripting standard that is used in the ethereum platform, parent platform of ether, is called ERC20. These technical standards are created using the Ethereum network.
What is Smart Contract?
A smart contract is a self-executing contract that automatically executes the terms set between the buyers and sellers. The agreement is written with the help of lines of codes that execute themselves at the predefined time. This code along with the contract is present on the decentralized blockchain network. The transactions are tracked and executed with the help of this code. Click for more details on what smart contracts are.
What is ERC20?
ERC20 is one of the most important ethereum tokens. ERC20 is nothing but the technical standard set for every token backed by an ethereum network. It is required for all the smart contracts used on the ethereum blockchain. It is essential for the implementation of the Ethereum tokens since it defines the set of rules for all these tokens.
ERC20 tokens are blockchain technology-based assets that have a certain value and can be received or sent. The only difference is that these tokens do not have their blockchain technology and run on the Ethereum network. These tokens are very similar to Bitcoin, litecoin, ether, and other cryptocurrencies.
New investors and crypto enthusiasts often confuse ether and ERC20. However, they are completely different entities. While Ether is the native token of the ethereum blockchain, ERC20 is the set of standards on which the ethereum blockchain runs. This standard can be used by others to create other tokens like ether having their value.
This token standard is specific to fungible tokens. ERC20 does not offer standards for non-fungible tokens. Therefore, only ERC20 tokens can be exchanged with one another. The smart contracts backed by these standards are used to initiate the payment.
6 Rules defined by ERC20 standard
There are certain functions that a token built on these standards can perform:
- Total Supply: This section provides information about the total supply of tokens.
- BalanceOf: This function provides information about the balance of the owner’s account.
- Transfer: This function is responsible for transferring a specified number of tokens to a particular address.
- TransferFrom: This function acts as the vehicle to transfer the specified tokens from a particular address.
- Approve: If the user wishes to withdraw a certain number of tokens from the specified account, this function comes in handy.
- Allowance: This function plays a pivotal role in returning a certain number of tokens from the spender to the owner.
These functions are capable of triggering the other two events of transfer and validation. Transfer event takes place whenever there is a transfer of tokens while the validation event takes place when approval is required.
Today, ERC20 tokens are available for peer-to-peer exchange for each other or are tradable on cryptocurrency exchanges such as CoinDCX.
What are Ethereum Dapps ? 4 Benefits of Dapps
A decentralized application (Dapp) is an application built with the combination of smart contracts and fronted UI (user interface). This Dapp is nothing but a backend code running on the decentralized network. Why Ethereum Dapps? The reason being their accessibility and transparency. Ethereum, smart contracts are more like open APIs therefore, developers of Dapps can even include these smart contracts even if it was written by someone else.
There are numerous benefits of Dapp development. Some of them being:
|Complete integrity of data|
- Privacy: The Dapps do not require real-world identity for interaction or deployment. Therefore, privacy is heightened.
- Complete integrity of data: Once the data is stored in blockchain it is immutable. Thanks to its cryptographic primitives the data is indisputable. This forbids the malicious actors to forge transactions or other data that has already gone public.
- Verifiable behavior/ trustless computation: Smart contracts are guaranteed to get executed in predictable ways without needing a middleman or central authority. This system is not visible in the case of traditional models. This trustless system is available in the case of Dapps.
- No censorship: The resistance to censorship is another amazing feature of decentralized applications (Dapps). No single entity in the network can block users from deploying dapps or submitting transactions and reading data from blockchain technology.
Top 5 ERC20 Tokens of 2021
ERC20 tokens are ubiquitous for many crypto newbies. Here is the list of the top 5 ERC20 tokens by market capitalization that all the crypto investors have their eyes on. The ether price and the prices of other tokens are latest by September 2021.
|Ethereum (ETH)||$3,025.52||$355,954,342,190||117,744,500 ETH|
|Dai (DAI)||$1.00||$6,476,466,354||6,474,952,202 DAI|
|Enjin Coin (ENJ)||$1.32||$1,100,916,130||834,340,659.57 ENJ|
|The Sandbox (SAND)||$0.6732||$599,512,433||892,246,119.22 SAND|
|Aragon (ANT)||$4.38||$173,436,579||39,609,522.81 ANT|
The Final Takeaway
ERC20 tokens have received a lot of limelight due to their accessibility and transparency. These ERC20 tokens have numerous use-cases including crowdfunding, voting rights, easy deployability, dapps, etc.
Although these ERC2- tokens have yet to achieve their perfect standards and have certain cons such as long transaction periods during high ethereum congestion. However, the future of ethereum and ERc20 standards, as concluded by the experts, is quite bright. This is visible from the hike in ether price and other ERC20 backed tokens.
ERC20 is by far the most popular standard used for the creation of different dapps and other tokens. As of December 2020, there have been 829 projects based on the ERC20 token standard along with 350000 token contracts.
Every investor has their eyes on the top ERC20 tokens by market capitalization.
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