I am new and self studying how ERC20 token and smart contract works. After reading through some documents and blogs about creating token and ICO smart contracts. I have questions about how people buy and sell ERC20 tokens through token exchange after successful ICO.
In order to list the token on exchange for trade, I think the token owner must provide token address. What functions must be included in the token contract? I am curious how token exchange validate if token contract works with their buy/sell process?
Thanks.
Best Answer
The token owners list the tokens on exchange and thus user can start trading the coins and hence the price of tokens become master driven.
Each exchange has different requirements. Most exchanges are not just satisfied with token address. They need a complete code, they need an audit report as well. because any vulnerable token hack causes exchanges to lose the trusts of users.
To solve this challange we have a standard of fungible tokens ( ERC-20). So there is a common method to transfer tokens. Any token implementing ERC-20 standard have the same functions for transfer of tokens. So it is easier for exchanges implementing ERC-20 tokens to support any other ERC-20 token, without worrying about other details.