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In the letter
- The ERC-20 standard for Ethereum tokens was created five years ago today.
- Over the years, the ERC-20 standard has allowed developers to create hundreds of custom tokens for their projects.
- Today the standard is widely used in decentralized finance.
Exactly five years ago, on November 19, 2015, Vitalik Buterin and Fabian Vogelsteller were co-authors of the ERC-20—A new standard for Ethereum (ETH) based tokens. One that would lead to the biggest blockchain funding boom in history.
Over the years, this token standard has paved the way for some of the network’s biggest hits. These were from the 2017 Initial Coin Offering (ICO) boom to today’s decentralized finance industry (DeFi), Ethereum’s latest “app killer.”
The ERC-20 standard was designed to bring the myriad of different user-created tokens on Ethereum to a common denominator. While the developers were distributing their tokens even before the ERC-20 was created, it was becoming increasingly difficult for these projects to interact with each other. Therefore, a unified set of rules was needed.
Since then, some of the ERC-20-based tokens have become very popular and have even entered the rankings among other cryptocurrencies. For example, EOS, Tron and VeChain were initially launched as ERC-20 tokens before moving on to their respective blockchains.
ERC-20 tokens rose to prominence in 2017. At the time, Bitcoin finally became a worldwide phenomenon, attracting the attention of the public and the media alike. As the cryptocurrency craze hit the world, the most important thing for newcomers was, unsurprisingly, “free money” and that sentiment has spread to all other cryptocurrencies by extension.
As Ethereum allowed virtually anyone to create their own cryptocurrency without too much technical knowledge, it was only a matter of time before various opportunists decided to take advantage of it. On top of the cryptocurrency wave, hundreds, if not thousands, of projects around the world launched their initial coin offerings, attracting hundreds of millions of dollars from traditional investors hoping to get “crazy Xs” with their money. .
As we know today, that bubble burst early. Apart from a few Proven Scam ICOs– such as Ifan, Pincoin, Onecoin, Bitconnect, and Plexcoin, for example – even legitimate projects have encountered numerous hurdles after the crypto investing obsession cooled. The rampant “ICO Wild West” was short lived and slowly dissipated over the course of 2018, just after its peak.
Now, only a few ICO projects remain successful.
The next ERC-20 token boom occurred in mid-2020. In just a couple of months, decentralized finance platforms and their tokens have taken the cryptocurrency sphere by storm, becoming the new “app killer” on Ethereum.
Today, DeFi is a $ 13 billion sprawling market with a complex interconnected ecosystem. Compared to the boom in ICOs, scams are much less prevalent in DeFi, although it has its own problems, mainly hackers. Just recently, Value DeFi was exploited for 6 million dollars, Origin for $ 7 million and the DeFi Akropolis platform for $ 2 million. And this only in the last week.
ERC-20 tokens pushed Ethereum to new highs and lows and it all happened in just five years.
