The New Token Standard ERC 4626 & What This Could Mean For The Future of DeFi.
Have you heard of the new ERC 4626 token standard? Well the Tigerswap team is about to break it all down for you a little bit in this article. So you know how ERC 721 was introduced some times back and ushered in a whole new market and NFT industry? The new ERC 4626 is about to fuel in the next wave of DeFi! Are you ready for this?
Over here at TigerSwap, the team at Tiger Labs are constantly evolving and coming up with innovative solutions to contribute to the future of DeFi. With the v3 AMM and concentrated liquidity amongst other modules we are building on the Binance Smart Chain Network here — https://app.tigerswap.global, the announcement of ERC 4626 is not only a thing of joy, it is a validation to let the world know that DeFi ecosystem is a continuously innovating environment looking to solve real blockchain problems. Let’s talk a little about ERC 4626 and what to expect:
First, unlike similar situations and scenarios, in this case, all applications built on the ERC-4626 vaults work with all yield-bearing ERC-4626 vaults, making integration and innovation much easier.
Currently the total value locked in DeFi is about $160 billion dollars however, yield farming was less attractive to individual users without significant capital or knowledge of the concept, which led to the introduction of “yield aggregators” — sets of smart contracts that pool user funds and optimize yields. These quickly became known as vaults.
But the issue is that, it’s quite difficult to build apps on top of the vaults thus creating limitations on scaling and opening up security vulnerabilities. The new ERC 4626 is expected to standardize the vaulting process. One the uniqueness of the new standard is that it has the ability to classify tokens into transferable and non-transferable vaults. The user’s representative token, the ERC-20, represents a fraction of the vault’s pool in a transferable vault. On the other hand, non-transferrable vaults do not make use of tokens.
So far, the adoption to this new standard has commenced already with many developers already building on it and expressing their support including Yearn Finance, Alchemix, Rari Capital, Open Zeppelin, and Balancer.
The DeFi space is poised for massive adoption and people are finding more and more ways to interact with different tokens and increase the value of their assets. Looks like we should be bracing up for a new DeFi explosion season sometimes later this year. At TigerSwap we are strategically getting positioned for the future of DeFi, Join us today below:
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