Much-anticipated addition to Ethereum (ETH) protocol, a Tokenized Vault Standard, may change the game in DeFi
With this standard, a single Ethereum ERC-20 token will act similarly to vaults, the building blocks of the global decentralized finance (DeFi) ecosystem.
Turning tokens into vaults: Introducing EIP-4626
Ethereum (ETH) developer and expert who goes by @0xSassun on Twitter, the co-founder of the Stack3 DAO platform, has taken to Twitter to share the benefits of the most unusual proposal for Ethereum (ETH) in the last month.
In short, this proposal will introduce a new Ethereum-based token standard, ERC-4626. These tokens could replace vaults, yield-bearing mechanisms for the DeFi segment.
Modern yield-bearing tokens guarantee their users periodic rewards that correlate with the growth of the underlying liquidity pools. However, building DeFis on top of yield-bearing tokens is rather challenging right now: to ensure their integrity, engineers need to write multiple attack-resistant “adapters.”
If EIP-4626 were approved, such mechanisms would be developed “Lego-style”, the software developers add.
Ethereum (ETH) veterans support the eccentric proposal
As explained by @0xSassun, the implementation of ERC-4626 will boost the interoperability of different DeFi protocols and reduce development complexity and effort.
Additionally, this update will bring smart contract security and auditability. This is why seasoned Ethereum (ETH) developers support the innovation to come.
Namely, it is endorsed by Joey Santoro of Fei Protocol (FEI), representatives of Yearn.Finance (YFI) protocol and VC heavyweights Paradigm.
