A technological standard or set of guidelines called ERC-20 is used on the Ethereum blockchain to make it easier to create and use fungible tokens. It outlines the fundamental interfaces and functionalities necessary for tokens to work with the Ethereum network, enabling seamless interoperability between various decentralized applications (DApps) and wallets.
The majority of the tokens utilized in different DeFi initiatives and distributed through Initial Coin Offerings (ICOs) follow the ERC-20 standard.