Back in 2015, the Ethereum blockchain network made a big splash and quickly established itself as a major player in the world of cryptocurrencies. It serves as the foundational infrastructure for a wide range of digital assets, with ERC20 coins being a prime example of this diverse ecosystem. While there are numerous tokens in the mix, what unites them all is their shared purpose: Each one functions as a smart contract on the Ethereum blockchain. In this article we want to introduce you to some of the best and most popular ERC20 tokens and help you to make an informed financial decision, save your funds, and help you to gain profit.
ERC20 in a nutshell
There are three pillars that Ethereum stands on: Gas, ether, and the ERC-20 token standard, which empowers the creation of cryptocurrencies built upon its infrastructure. Ethereum is not just a blockchain, it serves as a versatile platform. This unique characteristic allows it to accommodate a wide array of other tokens and to facilitate the development of decentralized applications (dApps) through the use of smart contracts. As Ethereum's popularity surged and more individuals embarked on the journey of crafting their own smart contracts, a formidable challenge arose: How to seamlessly facilitate interactions among these diverse contractual entities?
The answer emerged in the form of ERC20 (Ethereum Request for Comment 20). This standard is, essentially, a well-defined set of guidelines that simplifies and streamlines the process of enabling smart-contracts to communicate and collaborate harmoniously with one another. Tokens forged under this principle possess the inherent ability to seamlessly interchange with one another, all the while preserving their distinct functionalities. It was in the year 2017 when the Ethereum community formally embraced the ERC20 standard. Practically every smart contract token conceived on the Ethereum blockchain adheres to the ERC20 compatibility, demonstrating its widespread adoption. Tokens minted in accordance with this standard possess the innate capability to seamlessly exchange with one another, all while preserving their distinct functionalities. Casting our minds back to the year 2017, this marked the official adoption of the ERC20 standard by the Ethereum community. Fast forward to today, and you'll find that almost every smart contract token minted on the Ethereum blockchain adheres faithfully to the principles of ERC20 compatibility, showcasing its widespread acceptance and integration.
ERC20 tokens list
Amidst the ever-expanding market with thousands of digital tokens circulating in it, it becomes imperative to navigate this vast ocean of choices with prudence. Whether you identify as an investor, a trader, or merely someone captivated by the potential of blockchain technology, the capacity to distinguish between these tokens and pinpoint the optimal ones holds great importance when it comes to making well-informed financial judgments. Please remember that anyone can create an ERC20 token, and conduct independent research before investing to avoid unnecessary financial loss. In this article we provide the information only about well-known and reliable tokens.
Following, you can find a list of top ERC20 tokens to invest in this year with their brief descriptions that will help you to not get lost in the realm of ERC20 coins.
Starting with the giant of ERC20 tokens, we want to introduce you to Tether (USDT). Being one of the biggest ERC20 tokens, Tether (USDT) proudly claims the title of the world's largest stablecoin, and has the highest market capitalization in its category. Tether’s strength lies in its steadfast value, firmly tethered to the US dollar (thus the name) and comprehensively supported by reserves. This quality makes Tether much more resilient to market volatility, setting it apart from its algorithmic stablecoin counterparts. Although Tether has encountered minor value shifts, its prevailing trend is one of stability. It generally maintains a consistent value of nearly $1 per coin. Investors frequently turn to USDT as a reliable financial buffer. For instance, imagine that the value of the token that you invested in plummets abruptly. You may opt to swiftly reposition your assets into USDT to shield your investments from potential losses.
LINK is rightfully called one of the best ERC20 tokens to invest in. Within the expansive Ethereum blockchain, Chainlink assumes a crucial role. It operates as a blockchain oracle, making the integration of external data into smart contracts smoother. In essence, Chainlink can be linked to essential infrastructure for the Ethereum blockchain. For example, in instances when smart contracts rely on external data such as sports scores or the US dollar's value, Chainlink stands ready to supply the necessary data. LINK is Chainlink’s native token, and acts as the requisite currency for numerous critical network functions, chief among them being data retrieval. Furthermore, it serves as compensation for data providers, thereby ensuring the seamless and efficient operation of the Chainlink network. But this is not the only reason that makes LINK worth your investments; LINK tokens have a fixed supply of 1 billion, and this supply is immutable. As the Chainlink network witnesses increased usage, the demand for LINK rises while the supply remains steadfast, and the value of the token increases correspondingly.
Uniswap leads the way among decentralized cryptocurrency exchanges (DEX), seamlessly integrating itself into the Ethereum blockchain. Rooted firmly within the Ethereum network, Uniswap grants investors the freedom to participate in a wide range of token trading. At the heart of the Uniswap exchange lies UNI, its native ERC20 coin. UNI plays an important role as a governance token, empowering its owners to shape the course of the Uniswap project. As Uniswap's popularity continues to rise and more users embrace the platform, the inherent value of the UNI token tends to increase. It’s safe to say that UNI is taking a place among the most popular ERC20 tokens. Uniswap's enduring appeal stems from its decentralized framework, which eliminates the need for investors to surrender control of their private keys during transactions. This crucial feature reinforces financial security, ensuring the protection of investors' assets.
Shiba Inu (SHIB)
SHIB is a memecoin and it’s one of the relatively new ERC20 tokens on this list. Nevertheless, it’s also one of the most successful crypto coins in the history of memecoins and decentralized payments in general. Debuting in 2020, this ERC20 token has done exceptionally well in terms of returns. Usually, memecoins don't offer much value compared to popular cryptocurrencies like Bitcoin and Ethereum, but Shiba Inu is different because its development team is actively working to make SHIB more valuable for its holders. They hit a big milestone in July 2021 when they introduced a decentralized exchange. This move shows that the creators are serious about making SHIB more useful.
Because of their effort, SHIB has become the second most popular meme coin, right behind DOGE. In just a few years since it started, Shiba Inu's value has skyrocketed by a huge 642,000%. What's even more appealing is that SHIB is quite affordable to get started with. Some might mistakenly think that because of its low price the coin does not pose any value in terms of investments, but the SHIB forecast for the next 5-10 years looks more than promising. Experts believe it could go up by over 900% or even more within that time frame. That makes this unique coin a great choice for crypto investors, especially for those of them who just started their journey and don't have a lot of money to invest.
Why invest in ERC20 tokens?
The primary appeal of considering top-tier ERC20 tokens for your investment portfolio lies in their remarkable flexibility, allowing them to seamlessly swap with any other ERC20 token. This adaptability streamlines the process, offering a smooth and hassle-free experience. It empowers investors to readily seize emerging investment opportunities within the Ethereum blockchain ecosystem. For instance, if a new ERC20-based token enters the scene, you can effortlessly trade some of your tokens for the new asset. Thanks to the ERC20 protocols, you can navigate this landscape without grappling with hefty commissions.
However, before diving into ERC20 coin investments, it's crucial for our users to consider the following factors:
- Despite the fast transaction capabilities of ERC20 tokens, transaction fees can still be relatively high. These fees also often increase during busy times, which makes small transactions less practical.
- It's crucial to understand that almost anyone can create an ERC20 token, leading to a saturated market. Identifying the most promising ERC20 tokens for investment can be challenging (but not impossible with the help of our blog, of course). To address this, consider diversifying your investments.
- Many ERC20 tokens have relatively small market capitalizations. While this may offer significant profit potential, it can also result in limited liquidity. This means selling an ERC20 token at a favourable market price may be more challenging.
Considering these factors, investing in ERC20 tokens can be a profitable venture, as long as you approach the market with wisdom and a clear understanding of the potential risks and rewards.