Create An ERC20 Token | 5 Simple Steps (2024)

An ERC-20 token is a digital asset that is built on the Ethereum blockchain and follows a specific set of rules and standards, known as the ERC-20 standard. These rules dictate how the token can be transferred, how it can be used, and how it can be stored. ERC-20 tokens are often used as a form of digital currency or as a representation of an asset, such as a stock or commodity. They can also be used to represent membership in a club or organization, or to represent a utility or service.

What is an ERC20 Token?

ERC-20, standing for Ethereum Request for Comment with the identifier number 20, is an innovation designed to enhance the Ethereum network's capabilities. This protocol has become a crucial technical standard in the Ethereum blockchain ecosystem, particularly for crafting smart contracts and implementing tokens. It establishes a uniform rule set that all Ethereum-based tokens adhere to.

In essence, ERC-20 tokens are blockchain assets with transferable and valuable properties, bearing resemblance to cryptocurrencies like Bitcoin and Litecoin in several respects. However, a key distinction lies in their operational framework: unlike having independent blockchain infrastructures, ERC-20 tokens operate on the Ethereum blockchain and employ gas for transaction fees.

Prior to the advent of ERC-20, token creation was a highly individualized process, with each new token differing fundamentally from others. This posed significant challenges, especially for developers aiming to integrate different tokens. They were compelled to delve into the unique smart contract code of each token, given the absence of standardized token-building guidelines. This scenario was especially cumbersome for wallet and exchange platform developers, necessitating a thorough understanding of each token's code to support them on their platforms, thereby complicating the addition of new tokens.

Now, with the ERC-20 standard, wallets and exchanges have streamlined the process of incorporating a variety of standardized tokens. This standard also simplifies the exchange process between ERC-20 tokens and other cryptocurrencies. The introduction of ERC-20 has significantly eased interactions among different tokens, making it a virtually effortless and efficient endeavor.

Use Cases for ERC20 Tokens

Enterprise businesses use ERC-20 tokens for a variety of reasons, some of the most common include:

1. Tokenization of assets: ERC-20 tokens can be used to tokenize physical assets, such as real estate or art, making them more easily tradable and accessible to a wider range of investors.
2. Smart contract functionality: ERC-20 tokens are built on the Ethereum blockchain, which allows for the creation of smart contracts. These smart contracts can be used to automate various business processes, such as supply chain management or voting systems.
3. Creating loyalty and reward programs: ERC-20 tokens can be used to create loyalty and reward programs for customers, which can be used to incentivize repeat business and customer engagement.
4. Fundraising: ERC-20 tokens can be used as a form of digital currency to raise funds through Initial Coin Offerings (ICOs) or Security Token Offerings (STOs).
5. Increased efficiency and lower costs: ERC-20 tokens can be used to streamline financial transactions, reduce administrative costs, and increase the speed of money transfer.
6. Creating decentralized apps: ERC-20 tokens can be used to create decentralized apps (dApps), which can be used for a variety of purposes such as creating decentralized exchanges, voting systems and more.

Minting an ERC-20 token is not a particularly difficult task, but traditionally it required a certain level of technical knowledge and understanding of the blockchain. Developers could use a token creation platform, write their own smart contracts, or outsource to a team of developers versed in tokenization.

The Kaleido platform made this process radically different—easier and quicker to implement.

Create an ERC20 Token onKaleido

Step 1: Create a Kaleido account

If you haven’t already, sign up for a Kaleido account here. Create an account and password and you will be all set. NFTs can be created with any plan on Kaleido, starter tier (free) included!

Step 2: Create a blockchain network

After your network is created you will need to create an environment. There are options for different protocols, however, to mint a ERC-20 token make sure you create an “Ethereum” one. You will also need to select a provider.

For our purposes any will do but if you are curious about the differences here is a technical overview.

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You’re almost there. Once your environment is created, set up a node and leave the default configurations of “small” and “signer” on the final panel.

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Step 3: Create a Token pool

Make sure that your node has finished initializing and that the status has changed to Started. This is important as the node needs to be ready in order to be used as a signing account.

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Navigate to the “digital assets” selection in the left panel and click “tokens”. Select the Signing Account as the node you created in the previous step which will be used to deploy the token contract to the blockchain and create the token using our Token Factory. Select KaleidoERC20MintableBurnable as the template to use. Other ERC20 templates are okay as well but for this example we want the token to be mintable and burnable.

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Give your token a name and symbol along with a supply. Since the contract is mintable you can always mint more tokens to increase the supply at a later point in time. For decimals, 18 is the default amount that Ether and most ERC20 token contracts use. Then click “Deploy Token Instance” and “Finish”.

Navigate back to the Tokens section and you should see your deployed token.

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Step 4: ERC20 Transactions

Now that you have deployed a ERC20 contract, the next step is to mint your token. Go back to the left navigation and click on “tokens”. You should now see your created NFT. In the top right, click “select signing account” and pick the same account you used to create your ERC20 contract.

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You should now see options to transfer, mint, or burn your token. As an example, click the “Mint” option and input a value of 100.

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After clicking mint, the address balance should increment by 100.

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You can also check the on-chain transactions by going to Data Explorer on the left nav. Clicking Block Explorer will show you the latest transactions that happened and include details such as the hash, block number, timestamp, and more.

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The Token Explorer will also show a similar view but show token transactions only.

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Step 5: Transferring Tokens

Navigate back to the Tokens section and select your token. Select “transfer” and you should see the following screen.

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You may either provide an address from your blockchain environment or a custom address. To get another address in your blockchain environment simply create a second node. In this tutorial we will show how to get your token into Metamask.

If you haven’t setup a Metamask wallet before, check out this guide to create one.

In your Metamask account, click the networks dropdown and click “Add Network.”

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This will bring you to your Metamask settings screen where you will need to “Add a network manually”.

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For Network name, you may name this anything. To get the RPC URL and Chain ID, navigate back to your Kaleido console and go to the Blockchain section. On the Blockchain dashboard select “View Node” for your node.

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Then click Connect App and create a new app cred called “metamask”. The RPC URL will be listed under JSON/RPC HTTP endpoint. Copy this value into Metamask.

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To get your Chain ID, click on the Settings section. Your Chain ID will be under Environment Info.

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Once you have all the information click save in the Metamask settings.

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Next, click “Import tokens” which should prompt you for the token address. The token address may be found in the Tokens section under Token Info.

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Copy this value and your token symbol and decimals should auto-populate. Finally, transfer tokens to your Metamask account by copying your Metamask wallet address.

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Select an amount to transfer and click Transfer. Once you get a “Successful Transaction” message go back to your Metamask wallet.

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Refresh and your balance should now appear.

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Additional Support Resources

Congratulations, you have transferred your newly minted ERC20 token to your Metamask wallet!

Minting a ERC20 token is just one of many things you can do using Kaleido. Be sure to check out Kaleido’s YouTube channel, blog posts, and docs for more information and other tutorials about how to use the platform.