Yearn Finance introduces ERC-4626 standard
The popular decentralized platform Yearn Finance has supported the new ERC-4626 token standard. The co-author of the new standard told the media that support for Yearn Finance is a huge success. This is a signal to other reputable teams to study and implement ERC-4626.
The novelty is called the “tokenized storage standard”. This is the new standard for interest-bearing tokens on the Ethereum blockchain. It was created in March 2022. DeFi projects were the first to use it, which indicates a high interest in innovations in the field of an early upgrade of the network to ETH 2.0.
Previously, before the introduction of this standard, developers had to create solutions for integrating interest tokens manually. Then it was necessary to check this code for vulnerabilities, spending project funds on this.
According to the co-author of the standard, Joey Santoro, this presented difficulties for developers, and also contributed to the unreliability and inefficiency of many DeFi projects. Considering how much funds are blocked in this area, this has also discredited it due to frequent hacks.
To understand the depth of the problem, imagine if investors were to suffer due to an error in the manually written aToken (Aave), cToken (Compound), xToken (Sushi) protocols. After all, these tokens are needed to calculate the income that investors receive from their investments.
Thanks to the ERC-4626 standard, it is possible to automate the creation of custom storages for such tokens. This will speed up and simplify this process, as well as avoid mistakes. It also contributes to the creation of a common interface for similar tokens used in projects for farming profitability.
From now on, developers creating ERC-4626 storages can be sure that they will work with all tokens of this standard. This will expand the possibilities of the cryptosphere and will become an incentive for financial innovation. This was the case after the introduction of the ERC-20 standard in 2017.
Commenting on the innovation, Yearn Finance representatives noted that ERC-4626 will become the gold standard for interest-bearing tokens. The platform will encourage the adoption of this standard, even if individual developers do not actively use it.
You’ve heard of ERC-20s, ERC-721s and ERC-1155s— yearn.finance (@iearnfinance) April 5, 2022
Soon you shall know ERC-4626s
The Tokenized Vault Standard (ERC-4626) is final. And the Great Vault Standardization begins now
This does not mean that Yearn Finance will stop supporting other interest-bearing tokens, but integrating them will require the creation of a two-tier conversion system to be compatible with the new standard. In simple terms, "Yearn V3 + ERC-4626 = INEVITABILITY".
Implementing a new standard does not require a hard fork. It is already used by many projects. In addition to Yearn Finance, it is also used by Alchemix, Balancer, Rari Capital, Fei Protocol and Open Zeppelin.
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