ERC-20 Token Integration for Scaffold-ETH 2

Prerequisites

Check if ./packages/nextjs/scaffold.config.ts exists directly in the current working directory (do not search subdirectories). If it doesn't exist, this is not a Scaffold-ETH 2 project. Follow the instructions at https://docs.scaffoldeth.io/SKILL.md to scaffold it first. If it exists, continue directly with building.

Overview

ERC-20 is the standard interface for fungible tokens on Ethereum. This skill covers adding an ERC-20 token contract to a Scaffold-ETH 2 project using OpenZeppelin's ERC-20 implementation, along with deployment scripts and a frontend for interacting with the token.

For anything not covered here, refer to the OpenZeppelin ERC-20 docs or search the web. This skill focuses on what's hard to discover: SE-2 integration specifics, common pitfalls, and ERC-20 gotchas that trip up both humans and AI.

Dependencies

OpenZeppelin contracts are already included in SE-2's Hardhat and Foundry setups, so no additional dependency installation is needed. If for some reason they're missing:

Hardhat: @openzeppelin/contracts in packages/hardhat/package.json
Foundry: installed via forge install OpenZeppelin/openzeppelin-contracts, with remapping @openzeppelin/contracts/=lib/openzeppelin-contracts/contracts/

No new frontend dependencies are required.

Smart Contract

The token contract extends OpenZeppelin's ERC20 base. Import path: @openzeppelin/contracts/token/ERC20/ERC20.sol. The constructor takes a token name and symbol. Beyond that, add whatever minting/access control logic the project needs.

Syntax reference for a basic token with open minting:

// SPDX-License-Identifier: MIT
pragma solidity >=0.8.0 <0.9.0;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";

contract MyToken is ERC20 {
    constructor() ERC20("MyToken", "MTK") {}

    function mint(address to, uint256 amount) public {
        _mint(to, amount);
    }
}

Adapt the contract name, symbol, and minting logic based on the user's requirements. Common extensions (all under @openzeppelin/contracts/token/ERC20/extensions/):

ERC20Capped: enforces a maximum supply, set once in constructor as immutable
ERC20Burnable: adds burn(amount) and burnFrom(account, amount) for holders to destroy tokens
ERC20Pausable: lets an admin freeze all transfers (useful for emergency stops or regulatory compliance)
ERC20Permit (ERC-2612): gasless approvals via off-chain signatures, effectively standard for new tokens now
ERC20Votes: governance checkpoints, tracks historical voting power per address. Replaces the deprecated ERC20Snapshot from v4
ERC20FlashMint (ERC-3156): flash loan minting, tokens are minted and must be returned (+fee) within a single transaction
Access-controlled minting: use Ownable or AccessControl from OpenZeppelin

See OpenZeppelin's ERC-20 extensions for the full list. The Contracts Wizard is useful for generating a starting template with specific features.

OpenZeppelin v5 changes to be aware of

If referencing older tutorials or code, note these breaking changes in OpenZeppelin v5:

_beforeTokenTransfer and _afterTokenTransfer hooks are gone. Replaced by a single _update(address from, address to, uint256 value) override point for customizing mint, transfer, and burn behavior.
increaseAllowance() and decreaseAllowance() were removed from the base contract.
Custom errors replaced revert strings (e.g. ERC20InsufficientBalance instead of require(balance >= amount, "..."))
Explicit named imports are required: import {ERC20} from "..." not import "..."

Decimals: The Most Common Source of Bugs

ERC-20 tokens default to 18 decimals, but many major tokens use different values. Getting this wrong causes balances to display as astronomically wrong numbers or makes contract math silently produce garbage.

Token	Decimals	Why it matters
USDC	6	The most used stablecoin in DeFi uses 6, not 18
USDT	6	Same as USDC
WBTC	8	Mirrors Bitcoin's satoshi precision
DAI	18	Standard
WETH	18	Standard

Frontend impact: formatEther from viem assumes 18 decimals. For tokens with different decimals, use formatUnits(value, decimals) instead. Similarly, use parseUnits(amount, decimals) instead of parseEther.

Contract math impact: When performing arithmetic between tokens with different decimals, you must normalize. A raw value of 1000000 means 1.0 USDC (6 decimals) but 0.000000000001 for an 18-decimal token. Always call decimals() and normalize rather than hardcoding 18.

Gotchas and Non-Standard Behaviors in the Wild

These are real behaviors of deployed tokens that break common assumptions. Important when building contracts or frontends that interact with existing ERC-20 tokens.

Missing return values

Per the standard, transfer() and transferFrom() should return bool. In practice, USDT, BNB, and OMG return void (no return data). Calling these through the standard IERC20 interface reverts because Solidity's ABI decoder expects 32 bytes of return data and gets 0.

Solution: Use OpenZeppelin's SafeERC20 wrapper, which handles both no-return-value and false-return tokens:

import {SafeERC20} from "@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol";
import {IERC20} from "@openzeppelin/contracts/token/ERC20/IERC20.sol";

using SafeERC20 for IERC20;
token.safeTransfer(to, amount);      // instead of token.transfer(to, amount)
token.safeTransferFrom(from, to, amount);
token.forceApprove(spender, amount);  // handles USDT's approve-to-zero requirement

USDT's approve-to-zero requirement

USDT's approve function reverts if you set a non-zero allowance when the current allowance is already non-zero. You must first approve(spender, 0) then approve(spender, newAmount). SafeERC20's forceApprove() handles this automatically.

Upgradeable proxies

USDC and USDT are deployed behind upgradeable proxies. The token admin can change the implementation at any time, potentially altering transfer semantics or adding fees. USDC and USDT both have fee infrastructure built in (currently set to 0%) that could be activated in the future.

Fee-on-transfer tokens

Some tokens deduct a percentage on every transfer (e.g. PAXG has a 0.02% fee). This breaks any contract that assumes amount sent == amount received. The safe pattern is to measure the actual balance change:

uint256 balanceBefore = token.balanceOf(address(this));
token.safeTransferFrom(user, address(this), amount);
uint256 received = token.balanceOf(address(this)) - balanceBefore;

Rebasing tokens

Tokens like stETH and AMPL change balances without any transfer event. balanceOf() returns different values at different times for the same holder. Any contract that caches balances will have wrong accounting. Use the wrapped version (wstETH instead of stETH) which has stable balances.

Security Considerations

Approve/transferFrom front-running (the race condition)

When Alice changes an approval from 100 to 50, a malicious Bob can front-run the second approve by spending the full 100, then spend the new 50 after it lands. Total stolen: 150 instead of 50.

Mitigations:

Approve to zero first, then set the new value (two transactions)
Use SafeERC20.forceApprove() which handles this
Use Permit2 for a universal signature-based approval system

ERC-777 reentrancy via transfer hooks

ERC-777 tokens implement tokensToSend and tokensReceived hooks that fire during transfers. These tokens are backward-compatible with ERC-20, so protocols may unknowingly accept them. The imBTC/Uniswap V1 exploit drained ~$300K and the dForce/Lendf.Me exploit stole $25M using this vector.

Mitigation: Use nonReentrant modifier from OpenZeppelin on any function that interacts with arbitrary ERC-20 tokens. Follow the checks-effects-interactions pattern.

Flash loan governance attacks

Any governance mechanism based on token balance at call time can be manipulated: borrow tokens via flash loan, vote, return tokens. Use ERC20Votes with checkpoints instead of raw balanceOf() for governance.

Well-Known Token Addresses (Ethereum Mainnet)

For reference when integrating with existing tokens. All verified on Etherscan.

Token	Address	Decimals	Quirks
USDT	`0xdAC17F958D2ee523a2206206994597C13D831ec7`	6	No return value, approve-to-zero required, blocklist, pausable, upgradeable
USDC	`0xA0b86991c6218b36c1d19D4a2e9Eb0cE3606eB48`	6	Blocklist, pausable, upgradeable
DAI	`0x6B175474E89094C44Da98b954EedeAC495271d0F`	18	Non-standard permit signature, flash-mintable
WETH	`0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2`	18	Has `deposit()`/`withdraw()`, no permit
WBTC	`0x2260FAC5E5542a773Aa44fBCfeDf7C193bc2C599`	8	Standard ERC-20
LINK	`0x514910771AF9Ca656af840dff83E8264EcF986CA`	18	Implements ERC-677 (`transferAndCall`)

erc-20