Ethereum ERC-20: What It Is, How It Works, and Why It Matters

When you buy a crypto token like ALF, SHARDS, or WAG, you’re usually buying an ERC-20 token, a digital asset built on Ethereum using a standardized set of rules. Also known as Ethereum token standard, it’s what lets your wallet recognize, send, and track thousands of different coins without needing a separate system for each one. Without ERC-20, every new token would be a wild west of incompatible code—no one could trade them easily, and exchanges wouldn’t know how to list them.

This standard isn’t just a technical footnote—it’s the backbone of DeFi, airdrops, and dApps. Projects like WagyuSwap and WorldShards use ERC-20 tokens because they can plug directly into wallets like MetaMask and exchanges like Binance Alpha. It’s also why you see so many scams: if a token doesn’t follow ERC-20 rules, it might not even be real. That’s why the FEAR token airdrop and WHX scam both failed—they either didn’t deliver on their promises or didn’t even exist as proper ERC-20 contracts. Smart contract vulnerabilities, like reentrancy attacks, often target these tokens because they’re so widely used.

ERC-20 isn’t perfect. It’s old, it’s slow, and it can get expensive on Ethereum when gas fees spike. But it’s still the most trusted way to build a token because it’s predictable. Developers know exactly what functions to code—transfer, balanceOf, approve—and users know what to expect. Even newer chains like Base or Velas often copy ERC-20 just to stay compatible. If you’re looking at a crypto project, check if it’s ERC-20. If it’s not, ask why. Most of the time, the answer isn’t good.

Below, you’ll find real breakdowns of tokens built on this standard—some legit, some gone, some outright scams. You’ll see how ERC-20 enables everything from gaming airdrops to decentralized exchanges, and why the same rules that make it powerful also make it dangerous if you don’t know what you’re looking at.