Open almost any Ethereum wallet and you'll see ETH sitting alongside USDC, LINK, UNI, and a dozen other tokens. They all live in the same wallet. They all transact on the same blockchain. But they are fundamentally different types of assets — and understanding that difference helps you understand how your wallet works, why gas fees work the way they do, and what you're actually holding.
Ethereum is the network. ETH is the fuel.
Ethereum is a decentralised blockchain — a global computer that thousands of nodes run simultaneously. ETH (Ether) is the native currency of that network. It serves two purposes:
- Gas fees. Every transaction on Ethereum — whether you're sending ETH, transferring USDC, or interacting with a smart contract — requires gas. Gas is paid in ETH. Always. You cannot pay gas fees with USDC or any other token, even if USDC is what you're moving.
- Store of value / collateral. ETH is used as collateral in DeFi protocols, staked to secure the network, and held as a long-term asset by millions of people.
ETH is not a token running on Ethereum — it is Ethereum at the base layer. This distinction matters when it comes to how transactions work.
What is an ERC-20 token?
ERC-20 is a technical standard — a set of rules that define how a token smart contract must behave so that wallets, exchanges, and other contracts can interact with it in a predictable way. "ERC" stands for Ethereum Request for Comment, and 20 is the proposal number.
When a project creates a token on Ethereum, they deploy a smart contract that implements the ERC-20 interface. That interface requires specific functions like transfer(), balanceOf(), and approve() — all with standardised inputs and outputs. Because every ERC-20 token behaves the same way at the interface level, your wallet can display, send, and receive any ERC-20 without custom code for each one.
Some examples of ERC-20 tokens you might hold:
- USDC / USDT / DAI — stablecoins pegged to the US dollar
- WBTC — Wrapped Bitcoin, a tokenised representation of BTC on Ethereum
- LINK — Chainlink's oracle network token
- UNI — Uniswap's governance token
- AAVE — Aave's governance and utility token
The key practical differences
| ETH | ERC-20 token | |
|---|---|---|
| Lives in | The Ethereum base layer | A smart contract |
| Gas fees | Paid in ETH | Still paid in ETH |
| Contract address | None (native) | Has a unique address |
| Sending requires | ETH for the transfer + gas | ETH for gas only |
| Created by | Ethereum protocol | Any developer deploying a contract |
Common mistake
You have 500 USDC but zero ETH. You try to send the USDC. The transaction fails — not because there's a problem with your USDC, but because you have no ETH to pay the gas fee. Always keep a small amount of ETH in any Ethereum wallet you use for transactions.
WETH: when ETH gets wrapped
ETH predates the ERC-20 standard. This creates a compatibility issue: many DeFi protocols are built to work only with ERC-20 tokens, and ETH — as a native asset — doesn't qualify.
Wrapped ETH (WETH) solves this. It is an ERC-20 token with a 1:1 peg to ETH. You deposit ETH into the WETH contract and receive an equivalent amount of WETH tokens. You can unwrap them at any time to get your ETH back. WETH behaves like any other ERC-20, which makes it compatible with protocols that can't handle native ETH.
You will commonly encounter WETH when providing liquidity on Uniswap, interacting with certain lending protocols, or trading on platforms that use an ERC-20-only order book.
How Heldby handles both
Heldby tracks ETH and ERC-20 tokens automatically. When you add a wallet address, Heldby queries your ETH balance directly and uses Alchemy's token detection API to find all ERC-20 tokens you hold — no manual imports, no token lists to configure.
Portfolio value is calculated by multiplying each balance by the current price from CoinGecko. Your cost basis is recorded when tokens arrive so Heldby can show your unrealised P&L without you needing to track anything manually.
One thing to keep in mind: Heldby is Ethereum mainnet only. It does not show tokens on L2 networks like Arbitrum or Optimism, even if those tokens are technically ERC-20 compliant. Those networks run separate chains with separate balances — tracking them is a planned feature for a future version.
The short version
- ETH is the native currency of Ethereum. It powers every transaction as gas.
- ERC-20 tokens are smart contracts that follow a standard interface. They run on top of Ethereum.
- You always need ETH to pay gas, even when moving ERC-20 tokens.
- WETH is a wrapped version of ETH that behaves like an ERC-20 for protocol compatibility.
- Both types live in the same wallet and are tracked together in Heldby.