Creating an ERC20 token is a complex task. However, the first step before token development involves understanding all the costs involved in creating an ERC20 token.
From developer team to project complications, there are a lot of factors to consider when developing an ERC20 token. If you are also looking to ease out the cost complications for your ERC20 token development process, this blog is for you.
We’ll be discussing everything about how much it costs to create an ERC20 token.
So, without further ado, let’s get started –
Table of Contents
What is an ERC20 Token?
Ethereum Request for Comments or ERC20 tokens, simply put, are a type of digital assets created on the Ethereum blockchain. These tokens follow the ERC20 standard.
ERC20 defines a set of rules that all Ethereum-based tokens must follow. These tokens can be used for a variety of purposes, including trading on crypto exchanges and transactions in decentralized applications (dApps).
On one side where Bitcoin operates on its own blockchain, ERC20 tokens are generated using the Ethereum network, making it an easy and popular way to create new cryptocurrencies.
One of the main reasons why startups and entrepreneurs choose ERC20 tokens is to raise funds, especially through initial coin offerings (ICOs). The ERC20 standard provides great compatibility with Ethereum smart contracts. Hence, enabling functional and secure transactions without the need for intermediaries.
Additionally, the cost of producing ERC20 tokens is often affordable. Therefore, it makes them accessible to new businesses looking to raise capital. Due to its widespread adoption and powerful Ethereum network, ERC20 is one of the most important token standards in the crypto space.
Key Factors Influencing the Cost of ERC20 Token Development
Here are the key factors that affect ERC20 token creation cost –
Development Costs
The main cost is to hire blockchain developers or development teams. This cost can vary greatly depending on whether you create your tokens in-house or outsource the work. In-house development can provide great potential but can be expensive due to overhead costs, benefits, and costs.
Outsourcing to a professional ERC20 token development company often saves costs but may require a reliable partner.
Smart Contract Development
Developing and testing smart contracts is important in order to ensure that the tokens function as expected. These contracts handle all the operations, including transactions, so they need to be reliable. Another significant cost factor is security audits. Security audits are important to ensure the contract is free from vulnerabilities.
Platform Fees
Developing ERC20 tokens onto Ethereum requires gas fees, which vary depending on network load. In addition, there may be other platform-related costs such as acquisition costs, storage costs, and maintenance costs that affect the overall budget.
Detailed Cost Breakdown of ERC20 Token Development
Creating an ERC20 token requires a wide range of tasks, from hiring a development team to ensuring security and maintaining operating systems. Each of these aspects involves cost and can vary depending on the complexity of the project and the expertise of the team involved.
Here is a detailed breakdown of the various costs associated with ERC20 token development:
Development Team Costs
Hiring an experienced development team is one of the most important costs in the token creation process. These costs are broken down into factors such as salary, timing, etc.
Average Salary or Hourly Rates:
Blockchain developers are in high demand, and their skills come at a premium. The average salary for a blockchain developer is $147k per year. For independent or outsourced development, rates generally range from $50 to $150 per hour, depending on experience and location.
Estimated Hours of Time Frame for Development:
The completion timing of an ERC20 token depends on its complexity. A basic ERC20 token will take around 50 to 100 hours of development time, while more advanced tokens with additional features or functionality (such as stake placement, governance, or vesting mechanisms) may require 200 hours or more.
In-house vs. Outsourcing:
In-house development surely provides greater control over the development process but can be expensive due to salaries, office costs, and employee benefits.
Outsourcing can be cost-effective, especially when working with experienced blockchain development companies or freelancers. However, you should ensure that you are working with a reputable provider to avoid possible pitfalls such as miscommunication, delays, or sub-iso code quality.
Smart Contract Development Costs
Smart contracts are the core of ERC20 tokens. They handle everything from transactions to token issuance. Their complexity can vary, and so can their costs.
Writing Basic vs. Complex Smart Contracts:
Writing a basic ERC20 smart contract is fairly straightforward. Basic contracts handle important tasks such as transferring tokens between wallets, checking balances, and issuing tokens. The cost of writing a smart contract for a simple token can range from $1,000 to $5,000.
However, complex smart contracts can include additional functionality. These functionalities include governance mechanisms, stake features, and integration with other decentralized applications (dApps). These advanced contracts require a lot of time, testing, and expertise to develop, which can increase costs by $10,000 or more.
Cost of Security Audits and Third-Party Reviews:
Any breach in the crypto blockchain security can lead to serious consequences. In order to ensure that the contract is safe to use, a full security audit is required by the third party. The cost of a security audit can range from $5,000 to $20,000 or more depending on the complexity of the contract and the reputation of the audit firm.
These audits typically include reviewing codes for errors. So that you can ensure compliance with safety standards, and under-contract stress tests in incidents.
Deployment Costs
Once the token and smart contract are developed and tested, the next step is deployment on the Ethereum blockchain. Deployment costs are mainly associated with network fees.
Gas Fees on the Ethereum Network:
As mentioned earlier, using ERC20 tokens on Ethereum requires gas fees, which cover the accounting costs of making the transaction.
Gas fees vary widely depending on network congestion. On average, implementing a basic smart contract can save anywhere from $500 to $1,500 in gas bills. Gas costs can be higher for more complex smart contracts with multiple functions.
Other Associated Costs with Deployment:
Apart from gas fees, there may be other costs associated with deployment, such as transaction fees for interacting with the contract post-deployment or costs related to storage and hosting if your project requires off-chain components. These costs can range from a few hundred to several thousand dollars depending on the scope and ongoing needs of the project.
Additional Costs
Apart from the costs related to development and deployment, there are some other additional costs as well that can significantly affect your complete ERC20 token development cost –
Marketing and Promotion:
Once you have created a token, it is significantly important to work on marketing and promotion. Especially if the token is linked to a fundraising campaign or other project.
Some effective marketing strategies include building websites, creating content, engaging with the crypto community, and potentially hiring influencers or marketing agencies. Marketing costs can vary widely depending on the size and scope of your campaign.
Legal and Regulatory Compliance:
It is important to ensure that your ERC20 tokens are properly complying with local and international laws. Complying with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations can add significant ERC20 token development costs. Legal fees for consulting, drafting service plans, and compliance vary depending on the complexity of the project as well as the jurisdictions involved.
Maintenance and Support:
Once done with the deployment process and regulation charges, all that is left is to give ongoing support to your ERX20 tokens. Make sure to maintain and support your token in order to address any technical issues, update the smart contracts, or adapt to new regulatory changes.
This often involves hiring/retaining a professional ERC20 token development company part-time or full-time. Maintenance costs can range from a few thousand dollars to $20,000 or more per year, depending on the complexity and needs of your business.
Cost Estimation Examples
The cost to create ERC20 tokens varies depending on factors such as token type, structure, complexity, and number of tokens planned. Here is the overall cost breakdown:
Basic ERC20 Token
ERC20 token development costs are relatively low for simple ERC20 tokens with full functionality. Basic ERC20 tokens typically handle basic functions such as money transfer and storage. Simple estimates to create a basic ERC20 token fall between $5,000 and $10,000. These costs include token creation, development, testing, and implementation.
Custom ERC20 Token with Additional Features
If you are seeking advanced capabilities for ERC20 tokens consisting of staking, governance mechanisms, or interplay with decentralized packages (dApps), the cost will increase extensively.
These custom ERC20 tokens require more development hours and clever contract writing as compared to basic ERC20 tokens. For such tokens, the development price can vary from $20,000 to $90,000. This includes more in-depth research, security audits, and better deployment fees due to greater complexity and additional token functionalities.
Ultimately, the cost depends on the specific needs of your business and the token’s purpose. Choosing a simpler token with fewer features can help keep costs down if you are on a tight budget.
Hidden Costs and Considerations
During the development of ERC20 tokens, there can be a number of hidden costs, which can significantly affect your budget if not planned properly.
One of the most commonly overlooked costs involves security. While initial development and deployment costs are more obvious, ensuring your token is secure requires ongoing investment.
Regular security audits, especially after major changes or changes to the blockchain ecosystem, can add thousands of dollars to your budget. Security breaches can result in significant financial losses and reputational damage, and thus, regular audits will be required.
Another hidden cost to creating ERC20 tokens relates to future upgrades and maintenance. Blockchain technology is growing at a very fast pace, and your ERC20 token may require updates to maintain compatibility with new standards or to add enhanced features. These upgrades can be costly. Moreover, the update may involve rewriting or redeploying smart contracts.
Some other maintenance costs may include ongoing server costs, retaining developers for support, or addressing any bugs that arise over time.
Additionally, regulatory compliance can introduce unforeseen costs. Legal requirements around cryptocurrencies are becoming more strict. Therefore, adhering to Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations may require hiring legal consultants or implementing new compliance measures. This will further increase the overall budget.
Strategizing these hidden costs early in the planning process can help prevent unexpected financial strain and ensure the long-term success of your ERC20 token.
How to Optimize Costs
You must optimize the cost to create ERC20 tokens and deployment in order to maximize efficiency without sacrificing quality. Here are a few strategies to help reduce expenses:
Using Existing Frameworks and Tools:
One effective way to reduce costs is to use existing open-source systems and tools. Instead of creating your own tokens, you can use a well-established library like OpenZeppelin, which provides secure, pre-checked smart contract templates. This process saves time and reduces development hours, reducing overall costs. Furthermore, the use of test equipment and contracting systems can simplify manufacturing processes and reduce manual effort, further reducing costs.
Choosing the Right Development Team or Partner:
Choosing the right professional ERC20 token development company is important for cost-effectiveness. Working with a reputable and experienced team or partner with a track record of ERC20 token development can prevent costly mistakes. Moreover, it’ll reduce the need for costly repairs along the way.
Prioritizing Essential Features:
Simplifying the scope of the project by focusing on the essentials can prevent unnecessary costs. Start with a minimum viable product (MVP) that includes core functionality, and plan to add new upgrades in the future. This approach allows you to quickly start with a manageable budget and allows you to make adjustments as needed.
By planning your development strategically and choosing the right resources, you can significantly reduce the overall cost of ERC20 token development and deployment.
Conclusion
And with that, we conclude our exploration of all the cost considerations around ERC20 token development. We certainly hope this guide will help you strategize your ERC20 token development cost.
Remember, one major factor that we have continuously talked about in this blog is hiring a professional token development company. After all, their expertise is what you can use to optimize your development costs.
Talking about leading ERC20 token development companies in India, Technoloader comes out on the top! Our adept team of blockchain experts is all you need to develop a successful ERC20 token.
Connect with Technoloader today!
Frequently Asked Questions
- What is an ERC20 token?
ERC20 tokens are a type of digital asset created on the Ethereum blockchain. These tokens follow the ERC20 standard. ERC20 defines a set of rules that all Ethereum-based tokens must follow. These tokens can be used for a variety of purposes, including trading on crypto exchanges and transactions in decentralized applications (dApps).
- What are the main uses of ERC20 tokens?
Startups and entrepreneurs choose ERC20 tokens to raise funds, especially through initial coin offerings (ICOs). The ERC20 standard provides great compatibility with Ethereum smart contracts. Hence, enabling functional and secure transactions without the need for intermediaries.
- How much does it cost to hire a blockchain developer?
Blockchain developers are in high demand, and their skills come at a premium. The average salary for a blockchain developer is $147k per year. For independent or outsourced development, rates generally range from $50 to $150 per hour, depending on experience and location.
- What is the average time required to develop an ERC20 token?
It depends on its complexity. A basic ERC20 token will take around 50 to 100 hours of development time, while more advanced tokens with additional features or functionality may require 200 hours or more.
- How can I ensure my ERC20 token remains secure and up-to-date?
Conduct regular security audits to ensure your ERC20 tokens are secure and up-to-date. Moreover, apply enhancements when needed, and stay updated on emerging blockchain innovations and compliance requirements.
