How To Create An ERC-20 Token: A Step-by-Step Guide

The Ethereum ecosystem has revolutionized blockchain development with standards like ERC-20, the most widely adopted token standard for fungible assets. Introduced in 2015 via EIP-20, ERC-20 provides a blueprint for creating interoperable tokens on Ethereum. This guide walks you through the entire process—from setup to deployment—while ensuring compliance with the ERC-20 standard.

Understanding the ERC-20 Token Standard

ERC-20 defines a set of six mandatory functions and two events that ensure token compatibility across Ethereum applications:

Core Functions:

• totalSupply(): Returns the token’s circulating supply.
• balanceOf(address _owner): Checks an address’s token balance.
• transfer(address _to, uint256 _value): Moves tokens between accounts.
• transferFrom(address _from, address _to, uint256 _value): Enables third-party transfers (e.g., for exchanges).
• approve(address _spender, uint256 _value): Grants spending permissions to another address.
• allowance(address _owner, address _spender): Tracks approved token amounts.

Events:

• Transfer: Emitted during token movements.
• Approval: Triggered on spending authorizations.

Metadata Fields:

• name (e.g., "Binance USD")
• symbol (e.g., "BUSD")
• decimals (e.g., 18)

Tools Needed to Build an ERC-20 Token

1. Remix IDE: Browser-based Solidity IDE for quick prototyping.
2. Hardhat: A JavaScript/TypeScript framework for advanced projects (used in this guide).
3. OpenZeppelin Contracts: Secure, audited smart contract libraries.

👉 Explore Hardhat’s features

Step-by-Step ERC-20 Token Creation

Step 1: Environment Setup

Install Node.js and initialize a Hardhat project:

mkdir erc20-token && cd erc20-token
npx hardhat init

Select JavaScript and accept default settings.

Step 2: Project Structure

Hardhat generates:

• contracts/: Solidity files.
• scripts/: Deployment scripts.
• test/: Automated tests.
• hardhat.config.js: Network configurations.

Step 3: Install Dependencies

Add OpenZeppelin’s ERC-20 implementation:

npm install @openzeppelin/contracts --save-dev

Step 4: Writing the Smart Contract

Create Token.sol in contracts/:

// SPDX-License-Identifier: MIT
pragma solidity 0.8.17;
import "@openzeppelin/contracts/token/ERC20/ERC20.sol";

contract Token is ERC20 {
    constructor() ERC20("Rocket Token", "ROCKET") {
        _mint(msg.sender, 1_000_000 * 10 ** decimals());
    }
}

Step 5: Extending Functionality

Add token burning and a payable mint function:

function burn(uint256 amount) external {
    _burn(msg.sender, amount);
}

function buy() external payable {
    require(msg.value > 0, "Send ETH to buy tokens");
    _mint(msg.sender, msg.value * 10 ** decimals() / 0.01 ether);
}

Step 6: Deployment

1. Configure hardhat.config.js for Goerli Testnet:

   require('dotenv').config();
   module.exports = {
     networks: {
    goerli: {
      url: "YOUR_GOERLI_RPC_URL",
      accounts: [process.env.PRIVATE_KEY]
    }
     }
   };

2. Run deployment script:

   npx hardhat run scripts/deploy.js --network goerli

Compliance Considerations

• Emit Transfer events for all token movements (including burns/mints).
• Return true on successful transfers.
• Handle zero-value transfers normally.

👉 Read the official ERC-20 standard

FAQ

Q: Can I create an ERC-20 token without coding?

A: Yes, using no-code platforms, but custom features require Solidity.

Q: What’s the cost to deploy an ERC-20 token?

A: Depends on gas fees—estimates range from $50–$500 on Ethereum Mainnet.

Q: How do I verify my contract on Etherscan?

A: Flatten the contract and submit the code via Etherscan’s verification tool.

Final Thoughts

Building ERC-20 tokens is straightforward with tools like Hardhat and OpenZeppelin. Always prioritize security audits and thorough testing before mainnet deployment. For further learning, check the Solidity documentation.