DeFi has been in desperate need of a unified token standard for a long time now and seems like EIP-4626 is exactly what the market demanded ⚡️.
What is EIP-4626/ERC-4626?
The 4626 token standard is a totally new token standard, that is said to make inter-chain operations much faster and less expensive, consequently bringing more users into blockchain 📈. EIP-4626 will also make creating yield-farming platforms much easier.
The reason for creation
Since “The Merge” was announced, people returned the faith in blockchain once again, because the next evolutionary step was right around the corner. Higher scalability of the nets can be achieved by using rollups, but the inter-chain connectivity needed a new token standard focused on it ⛓.
Main selling points
EIP-4626 is said to unite several nets by provoking them to use the new standard, that will be multi-chain compatible. The new standard is already being actively utilised by projects like yEarn, Alchemix, Balancer and Fei Protocol.
All that sounds great, but you would probably ask why is the future of DeFi connected with farming 👨🌾.
Making blockchain a technology utilised all over the world would also mean making people, who are not interested in using it follow the trends 🌊. Something trendy shall also be relatively simple and your regular user would not want to explore the harder ways of passive income through blockchain like trading. Why would they if there is an option to just deposit your fiat into the bank? 🏦
Farming is easy
The main idea of EIP-4626 is making the malformation into blockchain as low as possible. Hence, creating safe and easy inter-chain bridges 🌉 (that aren’t bridges at all basically) and implementing yield farming, that is the actual analog of bank deposits, but from the blockchain world.
Making vaulting easier too
Another reason for users to avoid blockchain is the lack of confidence in its security. You don’t see armed people 🔫guarding the vaults and you don’t even get those vaults to be universal. Once again, 4626 creates an ecosystem that allows your vault, built upon the EIP-4626 token to be completely connected with all the other 4626 based vaults 🙌.
Even Huobi admired
Highly respected Huobi Research team pointed out that EIP-4526 unifies multiple things inside the blockchain. ✊
- Vault deposit and withdrawal of your funds.
- Profitability token and base asset number calculation function.
- Asset address approval interface.
A handful of reasons prove, that yEarn might be going in the right direction developing their new token standard. 4626 could become the NFT focused
ERC-721, but for DeFi, because while non-fungible tokens already have their universal token standard, DeFi still lacks one.
Stay tuned 📻