So I am trying to understand ethereum better. If someone could help me by correcting me where I am wrong here.

As I understand ERC-20 is the ETH token. When you buy ETH on Binance or Uphold or wherver, you are buying ERC-20. Correct?

So then other tokens are minted like BAT or Enjin. What is the relation of these minted tokens to ERC-20? Other than ERC-20 just being the protocol? More speicifcally, if BAT or Enjin tokens gain value and popularity, does this somehow increase the value of the original ERC-20 token?

Also I understand minted tokens all run on the same Ethereum Network as ERC-20. So this means the Ethereum Network "miners" are also validating the transactions for minted tokens. If this is the case, do miners get a small payout of whatever token transaction they helped to validate? Or do the miners get some payout converted back to ERC-20? What I am trying to understand is, what is the monetary incentive for miners to validate minted token transaction? Like if I mint a new token right now, and that token is literally worth $0, why would miners start validating the transactions?

  • As I understand ERC-20 is the ETH token. When you buy ETH on Binance or Uphold or wherver, you are buying ERC-20. Correct? - wrong! Nov 29, 2020 at 8:37
  • ETH is not a token, but a currency (or a coin if you will). It is the basic payment unit of the Ethereum blockchain network. All other tokens in this network are programmable entities built on top of (or based on) this payment unit. ERC20 is one of several different standards for tokens on this network. There are by now many tokens implementing this standard, one of which, known as WETH is a commonly used token in several trading systems (e.g., Uniswap), with the purpose of it being to represent the ETH currency as an ERC20 token, in order to make it easily tradable against other tokens. Nov 29, 2020 at 8:42
  • what is the monetary incentive for miners to validate minted token transaction? - miners don't care about the specific purpose of the transactions that they mine. Their incentive is very simple - they get a certain amount of ETH (aka gas fee) for every transaction that they mine, based on the size of the transaction and the gas-price offered by the user who is requesting the transaction to be mined. Nov 29, 2020 at 8:48

2 Answers 2


The value of ERC-20 and other based on ethereum blockchain influenced by various factor perhaps increase demand in minted token can increase their value but its not guranteed outconme The value of the token primarly determined by the market forces The increase demand can be in various factors such as token being used by the popular Dapps or gaining attaraction by mean of transaction in specific ecosystem Its important to note that popularty of token does not depend on usage alone other factors such as overall market sentiments , project fundamentals and competition can also plahy important role in its value however the market investor play an important role in determining the value of tokens


ERC20 is simply a standard that defines how all tokens should behave on the Ethereum network. If a token does not conform to the ERC20 specification, it can't be used on many platforms, including exchanges. You should avoid centralized exchanges as much as possible and use only decentralized exchanges, such as uniswap or balancer. Attacks and exploits occur almost exclusively on centralized exchanges. Given that tokens adhere to the ERC20 standard, minting them provides no benefit to miners that any other contract transaction of the same size wouldn't yield. Ethereum miners get paid in Eth for running and validating the programs called smart contracts through mining transactions. Eth is not a ERC20 token, but the base currency. So if someone minted any given token, it would require miners to verify the contract executed correctly, and all miners check to see if they have the same answer. Transactions are added to blocks and verified blocks are added to the blockchain. Miners get a commission on transaction fees paid to execute and verify transactions per block. So even if a token is worth $0, the logical process of minting it costs money, and to mint it, you have to pay the fee that goes to the miners.

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