What should I consider when choosing the number of decimal places for an ERC20 token/stablecoin?
My first thought was to just use 18 which seems to be the standard because Ether uses 18. However Tether and USD Coin use 6 decimal places, while DAI and True USD use 18.
So my question is how should I make the decision? And what are the possible consequences of using either 6 or 18 decimal places?
As you said, 18 is the standard. Use that unless you have some real reason to do otherwise - all integrations are easier if you use 18 like most other tokens.
Some tokens, especially stablecoins, use less decimals. This is mostly due to compatibility with off-chain things - or at least that was the case in one stablecoin project I was involved with. Many fiat systems utilize 6 decimals, so many fiat-pegged stablecoins utilize the same so off-chain systems are easier to integrated.
It's of course always a tradeoff: if you use less than 18, off-chain systems may be easier to integrate, but on-chain systems will be harder.
If possible, use the standard 18 decimals to avoid confusion.
USDT and USDC use 6 decimals, which can cause issues.
