One small step for ERC-4626‌ One giant leap for DeFi

ERC-20, ERC-721 and ERC-1155, these Ethereum token standards are well known to many people, so have you heard of ERC-4626?

The concept of ERC-4626 was originally proposed by five authors including Joey Santoro, the founder of Fei protocol, on December 22 last year.

One small step for ERC-4626‌ One giant leap for DeFi

In simple terms, this proposal is seen as a protocol standard to optimize and unify the technical parameters of DeFi yield vaults. This standard quickly sparked discussions on the open source development platform GitHub and the Ethereum Magician forum, and gained positive consensus from the entire community.

Currently, the ERC-4626 standard has entered its final state, and it will be implemented in the next fork upgrade of Ethereum after it is approved by Ethereum governance developers.

What is the significance of the ERC-4626 standard?

So what exactly does this standard do?

Currently, yield aggregators (such as Yearn, Rari, and Idle), lending markets (such as Compound, Aave, and Fuse), and native yield tokens (such as xSUSHI) are often implemented slightly differently. For protocols that need to conform to many standards, this makes integration at the aggregator or plugin layer difficult, forcing each protocol to write its own adapters that are error-prone and waste development resources.

The ERC-4626 standard is to standardize and simplify everything, which makes any yielding token compatible with any DeFi application, thereby enhancing the composability and availability of yield vaults in multiple networks. Accessibility.

No wonder is backing this standard on Twitter.

One small step for ERC-4626‌ One giant leap for DeFi

Yearn V3 + ERC-4626 = Unstoppable
contributors are already working on implementing this standard for Yearn V3’s vaults, as are the developers of AlchemixFi, balancer, RariCapital, fei protocol, Open Zeppelin.
Maybe one day we will even see an ERC-4626 tag on etherscan.

An example using the ERC-4626 standard

Below we can understand the magic of ERC-4626 with an example.

One small step for ERC-4626‌ One giant leap for DeFi

Pirex‌ is a new incentive platform launched by Redacted Cartel for vlCVX‌ holders that introduces exotic liquidity for bribes and voting escrow tokens.

If a user locks his CVX tokens in Pirex, he can get pxCVX tokens, which is a liquid encapsulation of CVX tokens.

Users of Pirex are able to deposit their pxCVX tokens into the Fuse pool and borrow various assets based on the value of the collateral.

Pirex will utilize the ERC-4626 standard as its asset custody solution and utilize the Fei protocol’s flywheel core to manage reward distribution.

Here’s how the combination of ERC-4626 and the Fei protocol’s flywheel core works in practice:

The ERC-4626 standard plugin allows users to deposit yield assets in the Fuse pool without losing rewards. Thus, pxCVX holders will be able to leverage their collateral while maintaining potential bribe returns. And the flywheel mechanism of the Fei protocol is the most important, it will allow easy distribution of rewards to storage users on Fuse, which opens up opportunities for pxCVX to explore complex leverage strategies.

Of course, this feature has not yet been launched, and the specific time has yet to be announced.

ERC-4626 will be one of the catalysts for the next Ethereum DeFi summer

The implementation of the ERC-4626 standard can effectively reduce the friction between DeFi protocols and increase the composability, which will trigger a new wave of innovation in the DeFi field, coupled with the gradual development of the Rollup layer 2 network and the Danksharding expansion plan. It’s very likely that we’ll see Ethereum’s DeFi summer again.

are you ready?

Relevant information:



Posted by:CoinYuppie,Reprinted with attribution to:
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