ERC20

An ERC20 token contract keeps track of fungible tokens: any one token is exactly equal to any other token; no tokens have special rights or behavior associated with them. This makes ERC20 tokens useful for things like a medium of exchange currency, voting rights, staking, and more.

Constructing an ERC20 Token Contract

Using OpenZeppelin Contracts, we can easily create our own ERC20 token contract, which will be used to track Gold (GLD), an internal currency in a hypothetical game.

Here’s what our GLD token might look like.

// contracts/GLDToken.sol
// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import {ERC20} from "@openzeppelin/contracts/token/ERC20/ERC20.sol";

contract GLDToken is ERC20 {
    constructor(uint256 initialSupply) ERC20("Gold", "GLD") {
        _mint(msg.sender, initialSupply);
    }
}

OpenZeppelin contracts are often used via inheritance, and here we’re reusing ERC20 for both the basic standard implementation and the name, symbol, and decimals optional extensions. Additionally, we’re creating an initialSupply of tokens, which will be assigned to the address that deploys the contract.

That’s it! Once deployed, we will be able to query the deployer’s balance:

> GLDToken.balanceOf(deployerAddress)
1000000000000000000000

We can also transfer these tokens to other accounts:

> GLDToken.transfer(otherAddress, 300000000000000000000)
> GLDToken.balanceOf(otherAddress)
300000000000000000000
> GLDToken.balanceOf(deployerAddress)
700000000000000000000

A Note on decimals

Often, you’ll want to be able to divide your tokens into arbitrary amounts: say, if you own 5 GLD, you may want to send 1.5 GLD to a friend, and keep 3.5 GLD to yourself. Unfortunately, Solidity and the EVM do not support this behavior: only integer (whole) numbers can be used, which poses an issue. You may send 1 or 2 tokens, but not 1.5.

To work around this, ERC20 provides a decimals field, which is used to specify how many decimal places a token has. To be able to transfer 1.5 GLD, decimals must be at least 1, since that number has a single decimal place.

How can this be achieved? It’s actually very simple: a token contract can use larger integer values, so that a balance of 50 will represent 5 GLD, a transfer of 15 will correspond to 1.5 GLD being sent, and so on.

It is important to understand that decimals is only used for display purposes. All arithmetic inside the contract is still performed on integers, and it is the different user interfaces (wallets, exchanges, etc.) that must adjust the displayed values according to decimals. The total token supply and balance of each account are not specified in GLD: you need to divide by 10 ** decimals to get the actual GLD amount.

You’ll probably want to use a decimals value of 18, just like Ether and most ERC20 token contracts in use, unless you have a very special reason not to. When minting tokens or transferring them around, you will be actually sending the number num GLD * (10 ** decimals).

note

By default, ERC20 uses a value of 18 for decimals. To use a different value, you will need to override the decimals() function in your contract.

function decimals() public view virtual override returns
(uint8) { return 16; }

So if you want to send 5 tokens using a token contract with 18 decimals, the method to call will actually be:

transfer(recipient, 5 * (10 ** 18));