> For the complete documentation index, see [llms.txt](https://www.anandisheladiya.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://www.anandisheladiya.com/protocols/ercs-and-eips/erc-20-the-standard-for-fungible-tokens.md).

# ERC-20: The Standard for Fungible Tokens

### **Introduction**

ERC-20 is the most widely used Ethereum token standard for **fungible tokens**, meaning each token is **identical** and **interchangeable** (e.g., USDT, DAI, LINK). It defines a set of rules that all Ethereum-based tokens must follow.

### **Architecture**

An ERC-20 token smart contract includes:

* **Balance Mapping:** Stores token balances for each address
* **Total Supply:** Defines the total number of tokens created
* **Transfer Mechanism:** Allows tokens to be sent between addresses
* **Allowance Mechanism:** Enables third-party contracts to spend tokens on behalf of users

### Key Functions of ERC-20

| Function                                | Description                              |
| --------------------------------------- | ---------------------------------------- |
| totalSupply()                           | Returns total token supply               |
| balanceOf(address)                      | Returns the balance of an address        |
| transfer(address, uint256)              | Transfers tokens to another address      |
| approve(address, uint256)               | Allows a spender to use a set amount     |
| transferFrom(address, address, uint256) | Transfers tokens using the allowance     |
| allowance(address, address)             | Checks how many tokens a spender can use |

### **Workflow of ERC-20 Transactions**

1. **Token Deployment:** The ERC-20 smart contract is deployed on Ethereum.
2. **Minting:** The contract owner mints tokens.
3. **Transfer:** Users can send tokens to other addresses using `transfer()`.
4. **Approval & Spending:**
   * User A calls `approve(spender, amount)`, allowing Spender to use a specific amount.
   * Spender calls `transferFrom(userA, userB, amount)` to transfer the tokens.

### Example: ERC-20 Smart Contract

```solidity
// SPDX-License-Identifier: MIT
pragma solidity ^0.8.0;

contract MyERC20Token {
    string public name = "MyToken";
    string public symbol = "MTK";
    uint8 public decimals = 18;
    uint256 public totalSupply = 1000000 * 10**18;
    
    mapping(address => uint256) public balanceOf;
    mapping(address => mapping(address => uint256)) public allowance;

    event Transfer(address indexed from, address indexed to, uint256 value);
    event Approval(address indexed owner, address indexed spender, uint256 value);

    constructor() {
        balanceOf[msg.sender] = totalSupply;
    }

    function transfer(address _to, uint256 _value) public returns (bool success) {
        require(balanceOf[msg.sender] >= _value, "Insufficient balance");
        balanceOf[msg.sender] -= _value;
        balanceOf[_to] += _value;
        emit Transfer(msg.sender, _to, _value);
        return true;
    }

    function approve(address _spender, uint256 _value) public returns (bool success) {
        allowance[msg.sender][_spender] = _value;
        emit Approval(msg.sender, _spender, _value);
        return true;
    }

    function transferFrom(address _from, address _to, uint256 _value) public returns (bool success) {
        require(balanceOf[_from] >= _value, "Insufficient balance");
        require(allowance[_from][msg.sender] >= _value, "Allowance exceeded");
        balanceOf[_from] -= _value;
        balanceOf[_to] += _value;
        allowance[_from][msg.sender] -= _value;
        emit Transfer(_from, _to, _value);
        return true;
    }
}

```

### ERC-20 Token Flow

```scss
[ User A ]  ---> (transfer 100 tokens) --->  [ User B ]
[ DApp ]   ---> (approve & transferFrom) ---> [ Marketplace ]

```