The ERC-20 tokens have gained a lot of attention and adoption from investors and enthusiasts alike. This further reflects immense growth for the ERC-20 ecosystem, which forms a strong foundation for many projects in the crypto space.
Some of the major projects utilizing ERC-20 tokens include; non fungible tokens (NFTs), decentralized applications (dApps), decentralized finance (DeFi), the metaverse, play-to-earn (P2E) and many more.
So, what are ERC-20 tokens and which are the best ERC20 tokens for 2024? Read this ERC20 token guide to learn more!
List of Top ERC20 Tokens in 2024
Currently, there are over 500,000 ERC-20 tokens available. However, some of these tokens have zero value while others are making big strides in terms of value.
Here are the top-performing ERC20 tokens!
Tether USD (USDT)
Shiba Inu (SHIB)
Uniswap (UNI)
USD Coin (USDC)
Wrapped Bitcoin (WBTC)
Binance USD (BUSD)
Polygon Ecosystem Token (POL)
DAI Stablecoin (DAI)
Maker (MKR)
Decentraland (MANA)
Tether USD (USDT)
Tether USD (USDT), is an ERC-20 token based on the Ethereum blockchain. This token was originally launched on 6th October 2014 as Realcoin and has since then gained massive adoption in various sectors.
Unlike other cryptocurrencies, USDT is backed by USD at a ratio of 1:1 making it less volatile. Additionally, this makes the token unique as its price can never go below $1.
USDT now holds a value of $114.48 B in market cap and is used in many decentralized applications, such as liquidity pools and DEXs.
Pros
Has stable value since it is pegged to USD
Widely accepted in most trading platforms and crypto exchanges
Acts as a basic currency pair for trading ie ETH/USDT, BTC/USDT etc
Cons
Has a centralization risk since its issued by Tether Limited which is a centralized firm.
Faces high regulatory uncertainty in various countries
Experiences stiff competition from other token like USDC
Shiba Inu (SHIB)
Shiba Inu (SHIB) operates as an ERC-20 token on the Ethereum blockchain. The token was launched in August 2020 with an initial price of $0.000000001009 under the name Ryoshi.
Ryoshi later on went ahead to leave the token in the hands of the community. It then turned out later that the Shiba Inu project was an experiment by Ryoshi to see whether a decentralized organization could function without a central leadership.
Initially, SHIB’s supply was divided into two with 50% of the token’s supply issued to Vitalik Buterin (Ethereum co-founder) and the other 50% was then locked on Uniswap. The current market cap of the SHIB ERC-20 token now stands at $9.87B
Pros
Has a promising future as showed by its price hike by over 1430362.4% since its inception
It is a superficially attractive and aesthetic ERC-20 token
Has a strong community and support from influencers like Vitalik and Elon Musk
Cons
It is highly volatile just like most of the other crypto tokens
Does not guarantee investors a long-term investment
Its value has fallen by more than 90% on several occasions
Uniswap (UNI)
Uniswap is an ERC-20 token that powers the Uniswap, which is a decentralized exchange protocol on the Ethereum network. To be more specific, Uniswap is an Automated Liquidity Protocol, hence it does not require an orderbook or central facilitator.
Launched in September 2020, Uniswap did not run any ICO or presale phase. Instead the UNI tokens are and will be distributed based on an established schedule. UNI now has a market cap of $4.63B.
Pros
Offers flexibility to liquidity providers with immediate withdrawal capabilities
No fees charged to list the token making it an essential resource for smaller ERC-20 projects.
Holders have governance rights and can enjoy gas fee-sharing
Cons
Holders pay high gas fees especially when the network gets congested
Can expose liquidity providers to impermanent loss
There is a lack of direct fiat withdrawal options for the token
USD Coin (USDC)
USD Coin (USDC) is a fiat-backed stable coin that exists on the Ethereum blockchain. This coin, being fiat-based, means that it is backed by the reserve assets of the traditional financial system, such as securities, cash, or cash equivalents.
The USDC ERC-20 token was launched on 15th May 2018 by Centre, a joint venture between Coinbase and Circle. Currently, USDC has a total market supply of $34.15B.
Pros
Allows holders to buy and sell other cryptocurrencies without having to move fiat currency in and out of exchanges.
Transaction costs are low cost, making it cost- and time-efficient to use.
It is backed up fully by the regulated reserve assets of the US
Cons
It is not immune to inflation in the US dollar
Has no price appreciation
Brings about centralization in the crypto space
Wrapped Bitcoin (WBTC)
WBTC, or rather Wrapped Bitcoin, is more like a converted version of Bitcoin. This token serves as an ERC20 token investment that holders can use in Ethereum dApps.
Wrapped Bitcoin, was launched in January 2019 with an aim to grant dApps on the Ethereum network access to Bitcoin. This further availed other financial services that were not previously accessible.
This ERC-20 token is backed by BTC, meaning it has a ratio of 1:1 with BTC. Its current market cap is $10,005,321,076.48.
Pros
Allows users access to DeFi lending and borrowing networks without giving up their Bitcoin directly.
integrates the high liquidity of BTC into the Ethereum ecosystem
Makes transactions faster and cost less
Cons
Need for holders to hold BTC backing WBTC introduces centralization
Susceptible to security breaches since it an ERC-20 token
Faced by stiff regulatory constraints in various parts of the world
Binance USD (BUSD)
Binance USD (BUSD) is a stablecoin existing in the Ethereum ecosystem. This ERC-20 token, which has a 1:1 backing from USD, was launched by Binance in partnership with Paxos.
BUSD is unique in its own way as it is fully regulated by the New York State Department of Financial Services (NYSDFS). With a market cap of $5445265.17 USD, Binance designed BUSD to maintain a stable market value.
Pros
Can be used as collateral for borrowing on Binance Margin Trading
Has over 48 trading pairs making it widely acceptable
You can convert it to other several stablecoins on a 1:1 basis and without fees
Cons
Risk of Binance defaulting on its obligations, either through insolvency or fraud
Centralization issue as it is backed by the USD
Polygon Ecosystem Token (POL)
Polygon Ecosystem Token (POL) is designed to replace the MATIC token in 4 years. POL comes in handy to add utility such as restaking aimed at increasing security. Using the POL, validators can restake their POL tokens to secure other chains in the Polygon supernet.
This ERC-20 token, is referred to as an ‘hyperproductive’ token. It will be available to operate as the tax currency of the Polygon network or any other network in the ecosystem as from 4th September 2024.
Pros
Serves as an incentive where users can stake it to earn rewards
Will serve as an upgrade to the MATIC token
Aims to help in nurturing the security, economy, and management of the polygon ecosystem
Cons
No fully predictable supply due to token emissions for validator rewards
Might lose functionality if the Polygon ecosystem experiences serious disruptions
It is still under development
DAI Stablecoin (DAI)
A first of its kind, DAI is a collateral-backed ERC-20 token. What this means is that unlike other asset-backed tokens, DAI is based on an open-source protocol called Maker. Through this protocol exists, DAI tries to maintain its value not backed by the US dollar, but by a collateralized debt denominated in ether (ETH).
The DAI token was launched in December 2027 and is a product of MakerDao and Maker Protocol. Additionally, the token attempts to maintain its price at a 1:1 ratio with the US dollar.
Pros
It is borderless, programmable and easy to transfer at low cost
Provide a convenient alternative place to hold funds whilst the user thinks other crypto assets are more volatile
Maintains stability around its $1 peg, making it a reliable store of value for users
Cons
DAI’s algorithm could suffer a failure, bug, exploit or other issue
Maintains a stable value by using an algorithm that locks in a variety of crypto assets in smart contracts as collateral
If USDC de-pegs, or the issuer of USDC freezes USDC, this could cause DAI to de-peg.
Maker (MKR)
Maker (MKR) is Maker Protocol’s native token. This ERC-20 token makes it possible for users to use their assets to generate DAI, which is a community-managed decentralized cryptocurrency that tracks the price of USD.
MKR holders are able to use this token to vote on proposed changes in the Maker Protocol. Meaning that they get to have a say on the DAI token too as it is dependent on the Maker Protocol.
The MKR token was launched in August 2015 and is gaining a lot of attention from crypto investors. The token now has a market cap of $ 2.60B USD.
Pros
It provides voting rights to people to participate in the ecosystem.
They are dependent on price fluctuations of the DAI token
Makes holders have a say in the addition of CDP to the platform.
Cons
It is more volatile than stablecoins backed by fiat money
Dai collateral can be influenced by other cryptocurrencies
The system is complex and may be unsuitable for beginners
Decentraland (MANA)
MANA is the ERC-20 token powering Decentraland, which is a virtual world built on Ethereum blockchain. Decentraland (MANA) holders can use the token to buy LAND (a piece of a virtual world).
Decentraland (MANA) was founded in 2017 by Esteban Ordano and Ariel Meilich. The ecosystem behind it is one of a kind as it allows users to have full control of a virtual space.
Pros
Fully decentralized and is controlled by the holders
One of its kind as it allows ownership in a virtual world
Backed by a strong community of developers and users
Cons
Has limited accessibility in a VR world
There is risk for exploitation through cyberattacks
Existence of limiting regulations which deter ownership of the token
Understanding ERC20 Tokens
ERC-20 tokens are digital assets based on the ERC-20 technical standard. These tokens exist on the Ethereum blockchain and are the best Ethereum tokens. Since they are fungible, they can be interchanged with each other seamlessly.
Simply, ERC-20 tokens are more like a collection of similar tokens where each token is equal to every other token in the same set. Take it this way for instance, if you have a thousand notes of $10, each note will be similar to all the other notes in terms of physical characteristics and value.
If you need to swap one $10 with another, there’s nothing much that will change apart from the fact that you will just have to pick a different note. Now, this is how ERC-20 tokens work!
The ERC-20 Technical Standard
ERC-20 token standard lies at the heart of the Ethereum blockchain. This standard serves as a technical guideline for the creation of fungible tokens on Ethereum network. It allows for the fungible tokens to be interchanged with one another unlike the ERC721 (non-fungible) tokens.
Additionally, ERC20 token standard provides developers with a framework that enhances creation of tokens through smart contracts. These tokens (ERC-20 tokens) are then used in various decentralized applications and services.
Role of ERC-20 Tokens in the Ethereum Network
Before 2015, the Ethereum ecosystem was faced with various issues which limited seamless interaction between different applications and services. However, the ERC-20 token standard has solved these issues. They include:
Interoperability and compatibility: ERC-2O tokens have standardized interaction between Ethereum-based dApps, exchanges and wallets.
Liquidity and market adoption: Powered by widespread adoption and interoperability, ERC-20 tokens have high liquidity because they are easy to buy, sell and trade.
Security: Based on the decentralized nature of the Ethereum network, various nodes secure the ERC-20 tokens making them resistant to fraud and attacks.
Accessibility: Users and developers alike, can easily access the ERC-20 tokens from major exchanges and popular wallets.
Catalyst to innovation: ERC-20 tokens serve as the driving force behind various DeFi platforms. The tokens are also majorly used in ICOs and fundraising.
Criteria for Evaluating ERC20 Tokens
Several critical factors are involved in the assessment of ERC-20 tokens. These elements determine a token’s market stability, utility, safety, and general potential for growth.
Market Capitalization and Liquidity
In the analysis of ERC-20 tokens, it has to begin with market capitalization and liquidity. Market capitalization entails a measure of the token’s total value, thus providing a view into its market presence and hence the stability it is able to bring.
The higher a token’s market cap, the more stable the token, meaning it has considerable investor confidence. For instance, well-known tokens such as Chainlink and Uniswap that have big market caps reflect their strong market position.
On the other hand, liquidity ensures that one can easily sell or buy a token without causing too much change in its price. High liquidity indicates that both buyers and sellers are ready to trade in the market.
High-liquidity tokens are less prone to price manipulation and offer a more stable investment. This is very important for investors who need to get in or out of positions rapidly without influencing the price of the token.
Use Cases and Real-World Applications
The utility of an ERC-20 token is a big driver of value and longevity. Listed below are some typical use cases:
Initial Coin Offering raising funds for a project: Most of the time, startups use ERC20 tokens as a means for fundraising. They can raise funds for their new projects more quickly and easily;
DeFi platforms: ERC20 tokens are used by many DeFi projects for the lending process. It allows, in turn, earning interest after the process without intermediaries. For instance, Aave or Compound are tokens giving such services without financial institutions.
Utility tokens: These tokens grant access to a company’s product or service. For example, Basic Attention Token is the token used within the Brave browser ecosystem to reward users for viewing advertisements.
Governance Tokens: These are issued by projects to provide voters with voting rights on important decisions. Uniswap’s UNI token provides holders with the right to vote on changes within the protocol.
Stablecoins: Stablecoins are usually pegged to some stable assets, for example, to the US dollar. Stablecoins ensure that the value does not vary highly; rather, it remains stable. USDC and DAI are popular examples. They are majorly used for trading purposes and in transactions.
Community and Developer Support
The strength of the community and the support of developers is yet another factor that is considered to be critically important. A robust community adds to the credibility of any particular token and thus assures its continuous interest and participation.
An active community can develop, market, and support the token, thus making the ecosystem more vibrant. For instance, the success of Ethereum can partly be credited to its robust, active community and developer support.
Developer support is also equally important. In a healthy project, developers will continuously update and improve. The fixing of bugs, the addition of new features, and that the infrastructure of the token is kept secure, efficient, etc.
Tokens with strong developer support easily adapt to changes in the market and technology, ensuring their long-term viability.
Security
This is probably the main consideration when looking at any cryptocurrency. ERC20 tokens that abide by stringent security measures are ensured to guard against hacks, bugs, and vulnerabilities.
Secure ERC20 tokens will follow practices enshrined in the best standards and is also one that undergoes regular audits by notable auditing firms. For instance, Tether (USDT) and Chainlink (LINK) have very strict security measures in place, something that makes users quite confident in them.
Exchange Availability and Trading Volume
The wide exchange availability increases the token’s reach, enhancing its liquidity by attracting more investors. In the case of ERC-20 tokens, for example UNI and LINK, they are available on most major exchanges, hence easily accessible.
High trading volumes, on the other hand, indicate the strong interest and stability of a market. In such cases, high trading volume means ERC-20 tokens are less prone to price manipulation, and a reflection of their value is more accurate.
Factors to Consider While Investing in ERC20 Tokens
When investing in ERC-20 tokens, you need to consider the main factors that influence the growth of these tokens. Some of these factors are include:
Market volatility
Market trends & expert projections
Market sentiment
Technological advancements
Regulatory developments
Market Volatility
One of the major factors to consider when investing in an ERC-20 token is the market volatility. As we all know, the crypto market is very volatile and tokens are susceptible to manipulation. This manipulation comes in the form of news from prominent individuals in the crypto sector, token sale or buy by crypto whales, and more.
Additionally, unlike securities, crypto tokens are not guarded by well established regulations. This further leaves the door open for manipulation which could lead to price hikes and pluments within a very short period of time. As an investor, you need to keep an eye on the market volatility before making your investment to avoid making losses.
Market Sentiment
Market sentiment impacts the price movement of ERC-20 tokens. A positive perception, for instance, will impact the price of a crypto token positively hence making the token bullish. On the other hand, a negative perception will impact the price negatively causing a bearish price movement.
These sentiments are majorly spread via social media or other media platforms. To make informed decisions, you need to closely monitor sentiment analysis and social media trends.
Expert Projections
The cryptocurrency market is full of experts that can offer insightful predictions on price movement. These projections are very vital for identifying the ERC-20 tokens to invest in for both short-term and long-term basis.
Such predictions, however, if made by well known crypto experts, can influence market sentiment and investor behavior. To be on the safe side when choosing your investment token, you need to put these predictions into consideration.
Technological Advancements
Every now and then, there are technological advancements in the crypto space. These advancements aim to make certain projects better by solving challenges faced by users and developers.
When making a choice for an ERC-20 token to invest in, you should thus consider the tech advancements that could influence mass adoption and market uptake.
One good example of how tech advancement is impacting crypto tokens is the rise of the SHIB token after the introduction of Shibaswap, decentralized exchange, which has allowed users to trade SHIB and other tokens within the Shiba Inu ecosystem
Regulatory Developments
Legal frameworks and regulations have a great impact on market trends and price prediction for ERC-20 tokens. This is mainly because regulatory aspects such as government stance and taxation policies for digital assets impact investor’s confidence and market sentiment.
It is thus important to monitor the regulatory and legal framework closely before making an investment decision. Favorable regulations lead to bullish trend while unfavorable ones will lead to a bearish trend
How to Invest in ERC20 Tokens
Let’s explore how to make an ERC20 token investment by connecting your crypto wallet to a decentralized exchange (DEX) and using your Binance account to buy the base currency.
Steps for Buying and Storing ERC20 Tokens
Download a Trust Wallet: First, you need to download a Trust Wallet supported with the Ethereum network.
Set up your Trust Wallet: You will then need to sign up and set up your crypto wallet on your preferred browser or mobile app downloaded.
Buy ETH as your base currency: Once you’re set up, you can login to your Binance account and proceed to buy ETH. You can use the how to buy ETH guide if you’re a first timer on Binance.
Send ETH From Binance to your wallet: After buying your ETH, withdraw it into your Trust Wallet using the wallet address.
Choose a Decentralized Exchange (DEX) and connect your wallet: Proceed to choose a DEX that supports your Trust Wallet, for example 1inch, and connect the two.
Trade your ETH with the coin you want to get: Use your ETH to buy an ERC-20 token that you want.
Recommended Wallets and Exchanges for ERC-20 Tokens
MyEtherWallet (MEW)
Trust Wallet
MetaMask
Exodus Wallet
Trezor Model T
Ledger Nano X
Conclusion
The ERC-20 tokens have various use cases in ICOs, DeFi, Utility tokens, governance tokens and stablecoins. This has seen these tokens gain popularity and widespread adoption.
Onwards, we expect the best ERC20 projects mentioned above to thrive further. However, perform proper research before investing in any of the tokens above.
1. How do I Store and Send ERC-20 Tokens?
You can store ERC-20 tokens on various wallets such as MetaMask, Trust Wallet and many others. These wallets will also allow you to swap other Ethereum tokens for ERC-20 tokens.
2. How Secure are ERC-20 Tokens?
While there are measures to ensure that ERC-20 tokens are secure, these tokens are not fully immune to security breaches.
3. Can You Mine ERC-20 Tokens?
No. You cannot mine ERC-20 tokens because once the smart contract is launched, the project owners have their own plan to distribute the tokens through an ICO or IEO.
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