Following the successful deployment of twenty-five previous Ethereum Request for Comment (ERC) standards, including the industry-recognized ERC-20 designed for tokens, ERC-721 for non-fungible tokens (NFTs), and ERC-1155, a single multi-token smart contract; recently adopted ERC-4626 is gaining traction in the Ethereum community due to its purported revenue-generating benefits.
Referred to as the “tokenized storage standard”, ERC-4626 is to be implemented in the next Ethereum fork update after being approved by the developers as part of the Ethereum governance procedure.
The ERC-4626 standard, serving as a complement to the ERC-20 — and with the use of EIP-2612 under consideration to endorse user experience (UX) sharing — is expected to bring wide-ranging benefits to the Ethereum decentralized finance (DeFi) ecosystem , increasing the composability and availability of profitable storage across multiple networks.
As an Application Programming Interface (API), much of the implementation will take place behind the scenes within the network and therefore not particularly visible on the user’s Dashboard, but extremely valuable to their participation experience.
One of the main draws to interacting with DeFi protocols for the retail market is their positively disproportionate returns compared to traditional bank bond accounts and savings offerings.
Income-generating assets such as SushiSwap’s xSushi, Aave’s aToken, or Yearn Finance’s yToken allow users to stake the network’s native tokens for the wrapped version, benefiting from both the liquidity purchased and the interest generated.
However, as Yearn Finance succinctly notes, “To build a single application based on revenue-generating DeFi tokens, you need to write dozens of complex, error-prone adapters that can handle each unique variation,” and also if you “Build an application on top of a single ERC store -4626… it will work for all other ERC-4626 tokens.”
5/ Yearn V3 + ERC-4626 = unavoidable. Contributors are already hard at work implementing the Yearn V3 storage standard, as are developers at @AlchemixFi, @balancer, @RariCapital, @feiprotocol, @OpenZeppelin and elsewhere. Perhaps one day we will even see. Erc4626 tab on @etherscan – yearn.finance (@yearnfinance) April 5, 2022
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The ERC-4626 concept was originally presented on December 22 as an Ethereum Improvement Proposal (EIP) by five authors led by Fei protocol founder Joey Santoro.
According to an anecdotal story from collaborator t11s, the number 4626 was born during training, noting that the melodic rhyming pattern sounded more appropriate for the name of their invention than, for example, the more monotonous 4700.
Seen as a protocol standard designed to optimize and unify the technical parameters of revenue-generating storage, the proposal quickly sparked discussion, suggestions, and rebuttals on open source development platforms Github, Ethereum Magicians, and cryptocurrency-related social networks Twitter. consensus marked throughout the community.
One respondent, albertocuestacanada, raised concerns about the potential impact of wording regarding the calculateShares section required for shareAmount equality, arguing that it would prevent vaults from charging deposit or withdrawal fees. Santoro soon revised this section “in favor of a better invariant that it returns the same value as calling mint/deposit in the same transaction.”
The ERC-4626 tokenized storage standard is ready for final review. Consider how this standard will revolutionize DeFi. Be sure to share any suggested changes to the branch: https://t.co/ArchwpUNn4. proposed design — ERC-4626 Joey (@joey__santoro) January 12, 2022