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What Is the Concept of “Fungibility” in the Context of ERC-20?

Every unit is identical and interchangeable, making them suitable as currency or collateral, as only a single balance is tracked.
Greeks.live05.12.25

What Is the Concept of “Fungibility” in the Context of ERC-20?

Fungibility means that every unit of a token is identical and interchangeable with any other unit of the same token. For example, one USD Coin (USDC) is always equal in value and function to any other USDC.

ERC-20 enforces this by only tracking a single balance for each address, making the tokens suitable for use as currency, utility tokens, or collateral in DeFi protocols.

What Specific Data Points Must Be Tracked for Every Crypto Transaction?
How Does the Concept of ‘Fungibility’ Relate to a Commodity Classification?
How Does True Fungibility Benefit a Currency?
What Is “Token Mixing” and Why Is It Sometimes Used?
How Does ERC-1155 Improve Gas Efficiency over ERC-20 and ERC-721?
What Are the Key Differences between ERC-721 and the Newer ERC-1155 Standard?
How Does Regulatory Compliance Affect the Fungibility of Some Tokens?
How Does a Lack of Fungibility Impact a Token’s Liquidity?

Glossar

Erc-20

Architecture ⎊ The ERC-20 standard defines a uniform API for fungible tokens on the Ethereum blockchain, facilitating interoperability between decentralized applications and exchanges.

Fungibility

Definition ⎊ Fungibility is the economic characteristic where individual units of an asset are perfectly interchangeable because they carry the same intrinsic value and utility regardless of prior history.

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