ERC-20 Token Integration for Scaffold-ETH 2

Prerequisites

This skill is designed for Scaffold-ETH 2 (SE-2) projects. If the user is not already inside an SE-2 project, use the ethereum-app-builder skill from this same skill package to scaffold one first, then come back here to add ERC-20.

How to check: look for packages/nextjs/ and either packages/hardhat/ or packages/foundry/ in the project root, along with a root package.json with SE-2 workspace scripts (yarn chain, yarn deploy, yarn start).

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.

SE-2 Project Context

Scaffold-ETH 2 (SE-2) is a yarn (v3) monorepo for building dApps on Ethereum. It comes in two flavors based on the Solidity framework:

• Hardhat flavor: contracts at packages/hardhat/contracts/, deploy scripts at packages/hardhat/deploy/
• Foundry flavor: contracts at packages/foundry/contracts/, deploy scripts at packages/foundry/script/

Check which exists in the project to know the flavor. Both flavors share:

• packages/nextjs/: React frontend (Next.js App Router, @scaffold-ui/components, Tailwind + DaisyUI, RainbowKit, Wagmi, Viem). Uses ~~ path alias for imports.
• packages/nextjs/contracts/deployedContracts.ts: auto-generated after yarn deploy, contains ABIs, addresses, and deployment block numbers for all contracts, keyed by chain ID.
• packages/nextjs/scaffold.config.ts: project config including targetNetworks (array of viem chain objects).
• Root package.json: monorepo scripts that proxy into workspaces (e.g. yarn chain, yarn deploy, yarn start).

SE-2 uses @scaffold-ui/components for blockchain/Ethereum components (addresses, balances, etc.) and DaisyUI + Tailwind for general component and styling.

The deployment scripts go alongside the existing deploy scripts, and the frontend page goes in the nextjs package. After deployment, deployedContracts.ts auto-generates the ABI and address, so the frontend can interact with the token using SE-2's scaffold hooks (useScaffoldReadContract, useScaffoldWriteContract).

Look at the actual project structure and contracts before setting things up. Adapt to what's there rather than following this skill rigidly.

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 "..."

Deployment

Hardhat

Deploy script goes in packages/hardhat/deploy/. SE-2 uses hardhat-deploy, so the script exports a DeployFunction. Use a filename like 01_deploy_my_token.ts (numbered to control deploy order). The autoMine flag speeds up local deployments.

Foundry

Add a deploy script in packages/foundry/script/ and wire it into the main Deploy.s.sol. SE-2's Foundry setup uses a ScaffoldETHDeploy base contract and DeployHelpers.s.sol. Import and call the new deploy script from Deploy.s.sol's run function.

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)