An ERC20 token is a digital asset that is created and hosted on the Ethereum network and follows a set of ERC20 standards, or Ethereum’s standard for Fungible Tokens. ERC20 tokens make it easier for anyone to create their own tokens, which can be transferred or stored on-chain. They are also much faster to create because developers only need to follow the blueprint prepared in the ERC20 standard, which is open source.
Furthermore, ERC stands for Ethereum Request for Comment, and “20” refers to the number assigned to the request.
Some of the most popular ERC20 tokens include YFI, UNI, MKR, DAI, etc.