What Is ERC? Ethereum’s Key Token Standards Explained in 2025

In the world of blockchain, Ethereum is not only the leading platform for decentralized applications but also the birthplace of industry-defining token standards. Among them, the question “What is ERC?” has become increasingly important for developers and crypto users alike—especially as ERC tokens dominate DeFi, NFTs, and the broader Web3 space.

What Is ERC? A Basic Definition of Ethereum Request for Comments

ERC stands for Ethereum Request for Comments, a set of technical standards proposed by developers to introduce new functionalities on the Ethereum blockchain. These standards ensure interoperability between tokens, smart contracts, wallets, and decentralized applications (dApps).

Once an ERC standard is accepted, it becomes a foundational part of Ethereum’s infrastructure. ERCs simplify the process of issuing new tokens and allow thousands of Web3 projects to operate smoothly on a shared network.

What Is ERC in the Context of ERC-20: The Most Common Token Standard

Among all ERC standards, ERC-20 is the most widely used and is the go-to standard for creating fungible tokens. It outlines essential functions such as:

• Total token supply
• Transferring tokens between wallets
• Checking account balances
• Authorizing token transfers

Well-known tokens like USDT (on Ethereum), UNI, LINK, and AAVE all follow the ERC-20 standard. This compatibility allows them to be easily supported by popular wallets like MetaMask, centralized exchanges, and DeFi applications.

What Is ERC in the NFT Space? Understanding ERC-721 and ERC-1155

Beyond ERC-20, Ethereum also supports non-fungible tokens (NFTs) through ERC-721. Each ERC-721 token represents a unique digital asset and is commonly used in blockchain games, digital art, and collectibles. The ERC-1155 standard offers a more advanced model, enabling the creation of both fungible and non-fungible tokens within a single smart contract. This flexibility makes it ideal for Web3 games, reducing gas costs and optimizing asset management.

What Is ERC’s Role in the Ethereum and Web3 Ecosystem?

The question “What is ERC?” is more than just a definition—it’s a gateway to understanding how Web3 applications communicate. ERC standards serve as a common language, allowing wallets, exchanges, and dApps to interact seamlessly.

When a token follows an ERC standard, it can instantly integrate with platforms like Uniswap, OpenSea, decentralized wallets, and Layer-2 networks. This boosts compatibility and accelerates innovation across the blockchain space.

What Is ERC Used for in Real-World Applications?

As of 2025, tens of thousands of ERC tokens are in circulation. Some of the most notable use cases include:

• Stablecoins: Tokens like USDT and USDC use ERC-20 for stability and liquidity.
• DAO Governance: Tokens such as COMP and AAVE enable on-chain voting through ERC-based functionality.
• NFT Marketplaces: Platforms like OpenSea support ERC-721 and ERC-1155 tokens for unique digital items.
• GameFi: Web3 games rely on ERC tokens as in-game currencies and digital assets.

These standards ensure that tokens can be easily traded, stored, and integrated across major blockchain platforms.

What Are the Limitations of ERC Standards?

Despite their success, ERC standards are not without drawbacks. Transactions on Ethereum often suffer from high gas fees, especially during periods of network congestion.

Some older ERC standards also lack robust security features or support for upgrades. Additionally, ERC tokens do not inherently support advanced functionalities like transaction refunds, user protections, or real-time transfers.

To address these issues, newer standards like ERC-777 and ERC-4626 are being developed to enhance security, efficiency, and user experience across Ethereum-based applications.

What Is ERC’s Future in Ethereum Development?

Ethereum continues to evolve through major upgrades like Danksharding, Layer-2 rollups, and ERC-4337 (Account Abstraction). These enhancements aim to simplify blockchain interactions by introducing gasless transactions, smart wallets, and multi-signature functionality.

Looking ahead, the integration of ERC standards with technologies like AI, big data, and IoT could give rise to new token types that enable automated payments, decentralized identity, and real-world infrastructure via DePIN (Decentralized Physical Infrastructure Networks).

Conclusion

Understanding what ERC is is the first step to grasping how thousands of tokens function in the blockchain ecosystem. ERC standards are more than just technical definitions—they are the backbone of Ethereum’s growth, interoperability, and dominance in Web3. By 2025, as the ecosystem becomes more complex and diverse, ERCs will continue to evolve to meet the needs of users, developers, and the global community. Staying informed about the latest ERC standards will be essential for optimizing blockchain experiences in the Web3 era.