Our Global Presence :

Home / Blog / Coin Development

How to Create ERC20 Token: Step-by-Step Guide for Ethereum Projects

Daljit Singh

20 MIN TO READ

February 25, 2026

How to Create ERC20 Token: Step-by-Step Guide for Ethereum Projects

Daljit Singh

20 MIN TO READ

February 25, 2026

Table of Contents

Thinking about how to create an ERC20 token but not sure where to start?

You’re not alone. Ethereum is based on the ERC20 tokens, which drive utility and governance tokens, DeFi protocols, gaming resources, and digital memberships.

The ERC20 standard makes them such a popular tool.

It defines a consistent set of rules that allow tokens to work seamlessly with Ethereum wallets, exchanges, and decentralized applications, without custom integrations.

In this guide, you’ll learn:

What an ERC20 token is and why it’s used

The key steps required to create an ERC20 token

How deployment on Ethereum actually works

Common mistakes that cause token projects to fail

Whether you are developing a new product, launching a crypto project, or considering defining the tokenization of your business, this step-by-step guide will take you through the whole process, starting with concept to deployment.

Let’s dive in.

What Is an ERC20 Token?

It is always a good idea to establish what an ERC20 token is and why it is so popular within the Ethereum ecosystem before you leap into creating an ERC20 token.

In simple terms:

ERC20 token is a digital asset based on the Ethereum blockchain that is governed by an overall set of rules in terms of which tokens are created, exchanged, and managed by smart contracts

Since such rules are standard, ERC20 tokens are easily used in Ethereum wallets, exchanges and decentralized applications without integrations.

Fungible vs. Non-Fungible Tokens

ERC20 tokens can be fungible which implies:

Each token has the same value

One token may be swapped with another with no difference.

This is different from non-fungible tokens (NFTs), where every asset is unique and not interchangeable

What Are the Most Common Uses of ERC20 Tokens?

ERC20 tokens are compatible with a broad spectrum of applications of blockchains in real life, including:

Utility tokens that open features or services of a platform.

Governance tokens which confer voting rights to the holders.

Stablecoins designed to maintain a steady value

Reward tokens used for incentives and loyalty programs

The knowledge of these use cases can assist you in making better decisions in designing your token prior to proceeding to the development.

What Are the Practical Applications of ERC20 Tokens?

ERC20 tokens are not mere experiments of technology; it is a real tool that businesses can use to address real problems.

Organizations, both startups and established businesses, are building ERC20 token to open new options to owning, trading and automating value on the Ethereum blockchain.

Here are some of the most common ways they’re used in the real world.

Tokenizing Real World Assets

ERC20 tokens can be a representation of a business as a physical or digital asset, such as real estate, artwork, or commodity.

This simplifies asset division, trade, and transfer, typically at a cheaper cost of creating an ERC20 token than in the conventional financial model.

Automating Business Logic with Smart Contracts

Since ERC20 tokens are based on Ethereum, they are able to interoperate with smart contracts.

This enables companies to automate such processes as:

Supply chain tracking

Voting and governance systems

Payments and settlements

These systems do not need to be operated manually once installed.

Loyalty and Reward Programs

Many brands use ERC20 tokens to reward customer engagement.

Rewards can be transferred, redeemed, or even exchanged by using tokens instead of being locked into one platform, and this allows the user greater flexibility and openness.

Fundraising and Capital Formation

ERC20 tokens are commonly used in fundraising models like ICOs and tokenized offerings.

They enable projects to fund capital sources around the world as well as provide contributors with in-chain evidence of involvement and ownership.

Reducing Transaction Costs and Friction

The transfer of tokens can be cheaper and quicker than the use of traditional systems.

This implies reduced intermediaries, reduced administrative expenses, and shorter settlement periods in the case of businesses.

Powering Decentralized Applications (dApps)

Decentralized applications are frequently based on the ERC20 tokens.

They’re used for:

Governance voting

Access control

In-app payments and incentives

Due to this flexibility ERC20 is the most used standard of token on Ethereum.

Creating an ERC20 token is not always straightforward, but to create one that is secure, scalable, and consistent with business objectives, it takes much more than code to be deployed.

What makes the difference between successful token projects and others is understanding the entire token lifecycle, including the idea, deployment, and continued administration.

Launch a feature-rich ERC20 token designed for utility and growth.

From tokenomics to deployment, we build assets that stand out.

Explore Token Solutions

What Do You Need Before Creating an ERC20 Token?

Before you jump into code, pause for a moment.

Most teams rush straight to development when they decide to create an ERC20 token but the real work starts before the smart contract is written.

Here’s what you should have clearly defined first:

1. A clear token purpose

Ask yourself why the token exists at all. Is it driving up an infrastructure, or granting access, or rewarding users, or facilitating governance? A token that does not have a practical use case does not last long.

2. Thoughtful crypto tokenomics

This is where many projects succeed or fail.

You’ll need to define:

Total supply: fixed or adjustable?

Minting and burning rules: who controls supply changes, if any

Distribution model: allocations for users, team, ecosystem, and liquidity

The crypto tokenomics should be planned in a way that it does not harm trust, adoption, and long-term value.

Expert insight:

Over 60% of failed token projects collapse due to weak tokenomics, not faulty smart contract code.

3. Key technical decisions

Before deployment, decide:

Whether to launch on Ethereum mainnet or a Layer 2 network for lower fees

If your contract should be upgradeable or permanently immutable

Every option has an effect on cost, security and flexibility.

4. Budget and cost planning

It is not a free process to create an ERC20 token. Plan for:

Gas fees for deployment and testing

Security audits which play a critical role in safeguarding users and funds.

Skipping this step often leads to rushed launches and avoidable risks.

Getting these prerequisites right ensures that the steps to create an ERC20 token go smoothly and safely.

What Are the Steps to Create an ERC20 Token?

The process of creating an ERC20 token might appear complicated, yet it is easy to break it down into several steps, and even a novice blockchain user can achieve it. Here’s how to approach it, with practical tips from real-world token development services.

Step 1: Design Your Token Economics

Have some thought as to what your token is going to do before you code.

Fixed vs. inflationary supply: Decide if your token will have a capped supply or if new tokens can be minted over time.

Allocation examples: Plan how tokens will be distributed—team, ecosystem incentives, liquidity, airdrops, etc.

Pro tip: Well-designed tokenomics can make or break adoption. A lot of projects end up failing because their distribution was not considered.

Step 2: Set Up Your Development Environment

Once your plan is clear, it’s time to set up the tools:

Solidity: The programming language for Ethereum smart contracts.

Hardhat or Foundry: Popular frameworks for building, testing, and deploying contracts.

OpenZeppelin contracts: Industry-standard libraries for ERC20 tokens.

Why OpenZeppelin matters: It is trusted in token development services across services to develop faster and more vulnerable.

Step 3: Write the ERC20 Smart Contract

Now comes the heart of your token: the smart contract.

Core functions:

transfer() – move tokens between addresses

approve() – grant other people the ability to spend on your behalf.

transferFrom() – transfer using an allowance

mint() / burn() – optional creation or destruction of tokens

Step 4: Test Your Smart Contract

The problem with most new token projects is testing.

Unit tests: Check every function works as intended.

Edge cases: Consider the extreme cases (like max supply limits).

Testnet deployment: Use Sepolia, Holesky, or other Ethereum testnets before mainnet.

Step 5: Deploy Your ERC20 Token

Deployment makes your token live, but it comes with considerations:

Gas estimation: Plan for Ethereum transaction costs.

Deployment scripts: Automate with Hardhat or Foundry for accuracy.

Contract verification: Confirm your contract on Etherscan for transparency.

Typical ERC20 deployment gas costs (2026 estimates):

Deployment Type	Estimated Gas Cost (ETH)	Approx. USD Range
Basic ERC20 token	0.02 – 0.05 ETH	$50 – $150
ERC20 with mint/burn logic	0.04 – 0.08 ETH	$100 – $300
Upgradeable ERC20 (proxy)	0.06 – 0.12 ETH	$150 – $350

Step 6: Security Audit & Risk Review

Security is non-negotiable. A single flaw can drain liquidity overnight.

Watch for: Reentrancy attacks, overflows/underflows, and improper permissions

Real-life experience: The reason that some rug pulls occurred in 2024 was due to the lack of auditing of mint functions. This can be avoided by a proper audit by reputed token development services.

Step 7: Token Distribution & Liquidity Setup

Finally, get your token into circulation responsibly.

Airdrops: Distribute tokens to early adopters.

Vesting contracts: Issue shares to the team members or investors.

DEX liquidity pools: Enable trading on decentralized exchanges.

Pro tip: Vesting is a way to build trust and avoid abrupt dumping that may frighten investors.

Next step recommendation: Partnering with professional token development services will save time, minimize risks, and make sure that your ERC20 token has a strong foundation.

Ready to turn your vision into a thriving digital asset?

Let’s craft your custom ERC20 token together.

Button – Get Your Free Quote

Wrapping Up

Knowing how to create an ERC20 token is news to be excited about, yet to make a token work requires more than just an execution of a smart contract.

From smart contract decisions to long-term maintenance, the right expertise can save time, reduce risk, and prevent costly mistakes.

Debut Infotech is recognized as a leading token development company, supporting startups and enterprises through every phase of ERC20 token creation. With deep expertise in smart contracts, security best practices, and regulatory awareness, our team focuses on building tokens that are stable, compliant, and ready to scale.

Ready to move forward? Talk to Debut Infotech today and turn your token idea into a scalable blockchain solution.

Frequently Asked Questions (FAQs)

Q. What is ERC20 token?

Yes, ERC-20 is the standard of token creation, which runs on the Ethereum network, which sets the regulations of fungible tokens so that they become interchangeable and compatible between wallets and dApps in the Ethereum system. Instead of having their own blockchains, ERC-20 tokens are built using smart contracts on Ethereum and use its network for transactions and gas fees (paid in ETH).

Q. Is ERC-20 the same as ETH?

No, ERC-20 is not the same as ETH.

ERC-20 is a standard of generating tokens on the Ethereum network. It establishes standards of fungible tokens that can be used in any wallet and compatible across the decentralized apps (dApps).

Unlike ETH, ERC-20 tokens don’t have their own blockchain. They are developed with smart contracts on Ethereum and use the Ethereum network to execute the transactions.

All transaction fees, called gas fees, are paid in ETH, even when sending or using ERC-20 tokens.

Q. Can I Create My Own Token?

Yes! You can create your own token using no-code platforms on Ethereum or BNB Chain, or build custom smart contracts for full control. Start by defining your token’s purpose, choosing a blockchain, and checking legal requirements before launch.