Last Updated: 8 February 2022
The Ethereum network is one of the most commonly used blockchain networks in the crypto industry. So many people rely on it to perform fast transactions and to manage their crypto assets. It also supports a wide range of token-based projects. It works seamlessly with the ERC20, which is essential to developing such projects.
ERC20 is an abbreviation for Ethereum Request for Comment.
On the Ethereum network, the ERC20 is the standard that supports the use of tokens while implementing projects involving smart contracts.
Following the ERC20 framework, you can manage a smart contract aimed at project monitoring, supply management, and disbursing tokens at the end of the contract.
The ERC20 Token Supported Smart Contracts
On the Ethereum network, you can do much more than making peer-to-peer payments. The applications include using a safe and secure platform to complete transactions with people you have never seen before. It aims to make the process of managing contracts less stressful. At the same time, the platform eliminates extra charges you may have paid during traditional contracts. Essentially, these are all features of the smart contract.
The smart contract framework allows you to scan the templates to choose one that matches the type of contract you plan to establish with another individual or company. During a smart contract, no human monitoring is needed. And at the end of the deal, you get what you are supposed to receive as payment.
On the other hand, if there is a breach of contract, the system penalizes the guilty party. However, everyone linked to the smart contract can observe how it proceeds by using the smart contract’s code.
ERC20 tokens support smart contracts. These tokens already have a good reputation in the market. Therefore, they are most ideal for smart contracts.
Read more useful Articles on our Ethereum Wiki Page
The ETH network leverages the ERC20 standard as the guideline for creating tokens on the blockchain. Previously, exchanges created go-between platforms to support the exchange of tokens. But now, such processes are seamless. Now, using the ERC20 standard, we can have a functional ERC20 contract that is independently managed. Therefore, you do not need to bother about monitoring supply, balances, or transactions.
Only tokens that have features matching the ERC20 specifications can be used in an ERC20-based contract. However, it is possible to add features outside the standard when necessary.
In addition, for a token to be involved in an ERC20 contract, it needs to meet the standards of ERC20. However, it is possible to enhance contracts by adding features not included in the ERC20 guidelines.
Overall, the guidelines exist to enable users to merge two smart contracts if they are about the same investment. Therefore, if that happens, it is possible to link smart contracts features such as the wallets involved, user interface, and exchanges used for the contract.
Linking two smart contracts is possible because of the API that the ERC20 supports. The API allows third-party apps to use the information to complete transactions. This also means that it is possible to code third-party apps for the ERC20 without affiliation with the ERC20 token.
Converting Assets to Tokens
The finance sector is evolving, and the changes look promising. We are now at a time when different assets can be converted to token values. For example, it is possible to evaluate assets such as real estate, shares, art, etc., to know their token values.
Furthermore, we now see that assets that qualify for trading as stocks can have more value when graded as tokens. Moreover, evaluating these assets as tokens allows smaller companies to raise the funds they need without going through middlemen. This is one of the reasons why they released a large number of ERC20 tokens to the public during the ICO.
Why ICOs Are Becoming Frequent
Brands organize the Initial Coin Offerings to raise the funds needed to manage their products. However, it is also an opportunity for the public to gather cryptocurrencies when they buy into the ICO. The goal for investors is to buy tokens that will appreciate in value over time. Then they can resell these tokens to make a profit.
In addition, the funds raised during ICOs are also used to pay for projects aimed at improving the brand’s products. To avoid confusion, ICOs are different from IPOs.
During ICOs, you will not need to be financially involved in the project before buying their tokens. On the other hand, IPOs offer the public a way to become direct shareholders in the company. So, we can say that ICOs are less formal and not as regulated as IPOs.
Evaluating Assets Token Value
Generally, evaluating assets as tokens is the best approach for the public. It means that the value of assets can be reduced to smaller numbers. Therefore, more people can invest because the smaller values become more affordable. Essentially, it opens the gateway for people who do not have too much money to buy those assets’ shares or tokens in bulk.
What Are the Hopes For ERC20 In the Future?
At an international level, many people have accepted the ERC20 concept. The public acceptance started as far back as 2018. Now, with more people involved, smart contracts are even more popular. One good experience with smart contracts encourages the public to use the process again. And the good news spreads. However, the frequency of ICOs is not as much as it used to be. Some countries have placed stringent regulations on ICOs.
A renowned website named CoinMetrics has claimed that the number of smart contracts used in different industries has increased by 350% since 2019. The attribute the significant increase to the new tokens that ERC20 has introduced into the market. Also, they claim that a digital game of cards named ‘Gods Unchained’ has made smart contracts more popular because it is involved in the game.
In conclusion, ERC20 tokens are becoming more reputable. They have been used in several industries, and the outcomes are outstanding. We know that the future holds huge potentials for ERC20.
Last edited by Indexuniverse.eu