What are ERC-20 tokens and how do they affect the Ethereum blockchain network? What are the various use cases?

In simple layman terms, they are tokens that are compatible and minted on the Ethereum network which you can use to interact with dapps in DeFi.

There are many other token standards such as the Binance tokens BEP-2 (binance chain) or BEP-20 (smart chain) or ZRC-2 (Zilliqa chain) and many many more.

The use cases are unlimited. You can create an NFT (not with ERC-20 tokens but other token standards), you can interact with dapps in Defi, do governance voting on DAOs, you can lend out your tokens, you can borrow against your tokens, you can yield farm or do liquidity mining and many more things.

DeFi is basically a parallel financial system that is way more robust than traditional, centralised finance but of course it takes time for awareness and adoption to take place. While banks give u mediocre 0.05% interest on your savings account, DeFi in contrast is easily giving you 10%-40% interest on stablecoins (which are essentially non-volatile, USD-pegged digital currencies) such as USDT or USDC of which both are ERC-20 tokens.

I found this on Investopedia and aiming to help simplify it below:

• The popular cryptocurrency and blockchain system known as Ethereum is based on the use of tokens, which can be bought, sold, or traded.

• One of the most significant tokens is called ERC-20, which has emerged as the technical standard used for all smart contracts on the Ethereum blockchain for token implementation.

• Plenty of well-known digital currencies use the ERC-20 standard, including Maker (MKR), Basic Attention Token (BAT), Augur (REP), and OmiseGO (OMG).

One of the most significant Ethereum tokens is known as ERC-20. ERC-20 has emerged as the technical standard; it is used for all smart contracts on the Ethereum blockchain for token implementation and provides a list of rules that all Ethereum-based tokens must follow.

ERC-20 is similar, in some respects, to bitcoin, Litecoin, and any other cryptocurrency; ERC-20 tokens are blockchain-based assets that have value and can be sent and received. The primary difference is that instead of running on their own blockchain, ERC-20 tokens are issued on the Ethereum network.