Digital assets Fungible Tokens can be swapped with each other and have the same worth, just like regular currencies. Widely utilized in DeFi platforms, fungible tokens like ERC-20 tokens on Ethereum enable smooth transactions, lending, and staking, providing liquidity and convenient exchange across the blockchain network.
Since the value and characteristics of each token are the same, they are ideal for use cases such as asset management, rewards, and payments. One ETH, for instance, is always worth the same as another ETH, just as one dollar bill is worth the same as any other dollar bill. Across blockchain networks, this feature makes exchanges simple and allows for liquidity.
The operation of DeFi applications, which allow users to take part in lending, borrowing, and yield farming, depends on fungible tokens. DeFi platforms guarantee seamless and transparent transactions through the use of fungible tokens as the medium. By enabling liquidity pools—where users contribute money in return for benefits—these tokens also eliminate the need for conventional middlemen and build a strong, dynamic financial system.
Fungible tokens, like BEP-20 on Binance Smart Chain, are utilized on blockchain networks other than Ethereum, frequently utilizing their standards. By enabling fungible tokens to be exchanged and utilized across several blockchains, cross-chain technology expands its usefulness and accessibility.