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ERC-4626: How the new standard can revive the Defi segment
The Defi boom began on the background of coronacrisis at the end of 2021. After this, the TVL of the ecosystem of decentralized finance went to a decrease. The fall of the indicator was accelerated by Terra, which had a negative impact on the entire crypto industry.
Many market participants have hopes for the upcoming upgrade The Merge. Thanks to him, in the medium and long-term perspective, Ethereum can become more attractive. The update should also be a help in solving the problem of scaling, where a large role is assigned to cartoon and rollups.
In particular, the new tokens standard-EIP-4626 can have a beneficial effect on the market and the Defi ecosystem in particular. It is designed to improve Dapps interaction and expand the possibilities for profitable farming.
- Many Defi platforms lack a single implementation standard. This complicates the development and integration of applications, exposes security vulnerability and prevents the scaling.
- EIP-4626 is designed to solve these problems by opening the next page in Defi 2 development.0.
- The new standard is actively introducing well -known projects, including Yearn, Alchemix, Balancer and Fei Protocol.
Advantages and disadvantages of profitable farming
The Defi segment is gradually moving towards standardization, since users want to move the assets between different blockchains as simple and safely as possible.
Interoperability is facilitated by cross-drawing, many of which require wrapped tokens. Using the latter involves additional actions and gas costs.
In addition, not all cross-mines are safe. For example, recently hackers led out about $ 190 million from the Nomad protocol. Chainalysis analysts estimated at $ 2 billion the amount of funds stolen from the beginning of the year as a result of 13 attacks on cross-protocols.
Despite serious risks, the Defi segment continues to develop-many users are primarily interested in the possibilities of obtaining relatively high income in comparison with the traditional market.
Income farming (or pharmacing) opens up wide opportunities for profitable investment. Its essence is simple: market participants provide tokens platforms, receiving a reward for this. The process resembles a bank deposit, but there are no burdening procedures of KYC/AML and other bureaucratic troubles here.
Due to its component, Defi is like a certain “financial lego”. The interaction of various applications opens up a huge number of complex strategies for maximizing profits, requiring a rather deep understanding of processes and the study of “pitfalls”.
To make life easier for farmers, profitability aggregators have been created – automated pharmaceutical platforms. They themselves implement complex strategies, saving time, efforts and transaction commissions. Only a few clicks are required to interact with such platforms from the user.
A separate category includes optimizers of concentrated liquidity positions like popsicle finance. Such platforms are designed to increase the efficiency of liquidity providers on Uniswap V3 and reduce the risks of inconsistent losses.
Yearn Finance from Andre Kronya is one of the first yield aggregators in Defi. Consider the principle of operation of the platform on the example of the Yveth storage.
Users can deposize ETH in the YveTH storage and get in return YETH. Then the smart contract brings funds to the landing protocol MakerDao, creating DAI. Stablecoin is placed in the Y Pool of Curve, generating income in CRV tokens. The latter are converted into ETH, then to be periodically accrued to users of the YETH storage.
A huge number of such aggregators and vaults created. However, before the emergence of the ERC-4626 there was no single standard for the implementation of such decisions, which led to various risks and difficulties.
“Yet tokens are in complete disorder. Minimum profiters, storage facilities, landing markets and native tokens like Xsushi are often implemented with small variations, ”said YEARN developers.
It took a lot of time to develop platforms. In addition, technical differences gave rise to problems associated with interactiveness and scalability, exposed vulnerabilities.
“In order to create one application based on Defi-tokens of profitability, you needed to write dozens of complex, subject to adapters errors that could process every unique variation,” added representatives of the created Cronier platform.
ERC-4626-standard of tokenized storages
In early April, the developers of YEARN announced the completion of work on the ERC-4626 and the beginning of the “great standardization of storage”.
YEARN developers expressed confidence that the ERC-4626 will become a “gold standard for any profitability token”, and also conducted a parallel with ERC-721 in the context of NFT.
“Standardization of storage implementation simplifies the integration of applications, modules and other tools,” the ERC4626 website says.Info.
As explained by Huobi Research experts, ERC-4626 unifies the following parameters:
- ways to add user funds to the repository, as well as their conclusion;
- functions of calculating the number of profitability tokens and basic assets;
- occurring during the interaction with https://gagarin.news/page/3/ the storage of the event, including the input and withdrawal of funds;
- Interface to confirm the addresses of basic assets.
“As a result, standardized storages will allow each token profitability to interact with other similar coins quickly and freely, opening a new era of interactions of various protocols,” the researchers emphasized.
In Huobi Research, the advantages and new opportunities that the ERC-4626 opened:
- Saving funds. The new standard provides a universal framework for developers. To connect to new storage facilities using revenue tokens, only a unified API will be required . In this case, it is not necessary to create special adapters, wrapped tokens and other tools that suggest additional steps. Standard rules will also reduce audit costs;
- Further improvement of the component of Defi Protokols. ERC-4626 eliminates obstacles to the integration of decentralized applications. There is a synergy effect that increases the value of Dapps;
- Increased capital efficiency Thanks to the widespread support of profitability tokens. The latter will be able to freely move between various protocols like basic assets;
- Defi 2 concept promotion.0. Huobi Research experts are sure that along with the income aggregators will actively introduce a new standard landing platform. This should contribute to the emergence of more complex profit strategies.
The creator of the Joi Santoro Standard is convinced that the ERC-4626 also saves time to development, gives integration flexibility, increases the safety of user interaction with applications and promotes innovation.
Defi segment and crypto industry as a whole are rapidly developing. This is much facilitated by venture investments, the volume of which grows even against the background of a bear market.
Many decentralized applications would not have prevented a single standard like ERC-721 in the context of NFT. This gap is designed to replenish the ERC-4626, which will simplify the integration of the protocols and allow them to interact more widely to each other.
Applications built on the ERC-4626 can easily integrate with any other platforms that have introduced a new standard. This expands the range of all kinds of profitability strategies, and also facilitates the work of developers.
It is possible that the ERC-4626 will really become the “gold standard” for the new generation Defi segment. Or, at least, an important addition to all the famous ERC-20.
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