ERC-20 is a technical standard that defines how tokens work on Ethereum, covering things like how balances are tracked and how tokens are transferred between addresses. It's the reason thousands of different tokens can all function consistently within wallets and exchanges built on \[pillar hyperlink: What Is Ethereum\].
The standard, defined
ERC-20 specifies a common set of rules a token's smart contract must follow, including functions for checking balances, transferring tokens, and approving another address to spend on your behalf. Any token following these rules is automatically compatible with the broader Ethereum ecosystem.
Examples
Many well-known Ethereum-based tokens, including numerous DeFi and utility tokens, follow the ERC-20 standard. This is distinct from Ether itself, which is a coin, not a token. See Coins vs Tokens for that distinction.
Wallets and compatibility
Because ERC-20 is standardized, any wallet supporting Ethereum can automatically handle any ERC-20 token without custom integration work. This consistency is a major reason the standard became so widely adopted, and it's just one category within \[pillar hyperlink: What Are Crypto Tokens\].