What are EIP and ERC?

ERC stands for Ethereum Request for Comment. Essentially, they are standards that have been approved by the community and are used to convey technical requirements and specifications for certain use cases. The first standard was introduced in November 2015 by Fabian Vogelsteller as an Ethereum Request for Comments (ERC). It was automatically assigned GitHub issue number 20, giving rise to the name “ERC20 token.” The vast majority of tokens are currently based on the ERC20 standard. The ERC20 request for comments eventually became Ethereum Improvement Proposal 20 (EIP-20), but it is mostly still referred to by the original name, ERC20.

ERC20 is a standard for fungible tokens, meaning that different units of an ERC20 token are interchangeable and have no unique properties. A fungible token is one in which all ‘parts’ of the token are the same. Exchanging 1 ETH for a different 1 ETH doesn’t change anything. You still have 1 ETH. Therefore, ETH is a fungible token. All fiat currency is also fungible. NFTs are examples of Non-Fungible Tokens (more on this later) where each token is different from a different token.

For example, decentralized exchanges like Uniswap allow you to swap any token for any other token. This is only possible because pretty much all tokens follow the ERC-20 standard, so Uniswap could write code which works with all tokens following the standard.

The ERC20 standard defines a common interface for contracts implementing a token, such that any compatible token can be accessed and used in the same way. The interface consists of a number of functions that must be present in every implementation of the standard, as well as some optional functions and attributes that may be added by developers.

Example: ERC20 interface defined in Solidity:

contract ERC20 {
   function totalSupply() constant returns (uint theTotalSupply);
   function balanceOf(address _owner) constant returns (uint balance);
   function transfer(address _to, uint _value) returns (bool success);
   function transferFrom(address _from, address _to, uint _value) returns
      (bool success);
   function approve(address _spender, uint _value) returns (bool success);
   function allowance(address _owner, address _spender) constant returns
      (uint remaining);
   event Transfer(address indexed _from, address indexed _to, uint _value);
   event Approval(address indexed _owner, address indexed _spender, uint _value);
}

The ERC-20 token standard is now referenced in the library of standards OpenZeppelin (OZ). OZ is an Ethereum security company. Among other things, OZ develops reference contracts for popular smart contract standards which are thoroughly tested and secure. Whenever implementing a smart contract which needs to comply with a standard, try to find an OZ reference implementation rather than rewriting the entire standard from scratch.

You can look at the implementation of ERC-20 standard contract if you want by following the link: https://github.com/OpenZeppelin/openzeppelin-contracts/blob/master/contracts/token/ERC20/ERC20.sol

You can also llok at the NFT standard Openzeppelin’s ERC721 Contract. ERC721 is the most common standard for creating NFT’s. All standards can be imported in a Smart Contract as follow:

// Import the openzepplin contracts
import "@openzeppelin/contracts/token/ERC721/ERC721.sol";

Conclusion

In this lesson, we learn more advanced solidity concepts to develop Smart Contract. Next lesson is an hands-on to apply those concepts.