Developers can create new ERC standards that define a required set of functions for a token type – and they did just that. Two recently created ones have each attracted some attention and may find adoption in the future.
Crypto users are probably familiar with numerous ERC standards, the most common of which is ERC-20, a standard for creating fungible tokens that are compatible with the broader Ethereum (ETH) network.
Other popular standards include ERC-721, a standard for creating non-fungible tokens (NFTs), and ERC-1155, a standard that supports the creation of both fungible and non-fungible tokens.
Developers recently created two more standards that grabbed some attention from the community, these being ERC-4626 and ERC-721R.
ERC-4626: designed to standardize tokenized Vaults
Crypto vaults are contracts into which users deposit tokens and earn yield in return. Many of such vaults are tokenized. For instance, Aave mints aTokens, Compound (COMP) mints cTokens, and Sushi mints xTokens for the funds deposited in the protocols.
Currently, the issue is that each of these protocols implements its own tokenized vaults since there is no standard interface. The newly proposed Ethereum standard ERC-4626 aims to address this issue.
“Tokenized Vaults have a lack of standardization leading to diverse implementation details,” the team behind EIP-4626 said. “Some various examples include lending markets, aggregators, and intrinsically interest bearing tokens.”
They added that this makes integration difficult as protocols need to conform to many standards, which
“forces each protocol to implement their own adapters which are error prone and waste development resources.”
While it usually takes quite some time for a new ERC standard to gain popularity among decentralized finance (DeFi) protocols, the popular DeFi yield aggregator Yearn Finance (YFI) has already shown support for ERC-4626.
“Contributors are already working hard implementing the standard for Yearn’s V3 vaults,” the protocol said on Twitter, adding that “ERC-4626 will be the gold standard for any sort of interest-bearing token… from Yearn Vaults to AAVE deposits and Balancer linear pools.”
ERC-721R: designed to bring refund option to NFTs
Launched by CryptoFighters Alliance, a P2E (play-to-earn) blockchain game, the ERC-721R Token standard aims to create a trustless refund design to the NFT smart contract, allowing minters to refund NFTs within a given period.
“NFTs need a refund period, just like any other product,” the team said on Twitter. “A time for buyers to decide if the team they just gave their ETH to actually deserves it. This is a check on the massive amounts of upside collections get when launching their mint.”
According to the team, this new token standard would force digital artists to deliver on their promises and would make them accountable by enabling users to refund directly from the mint contract.
“For collectors, the benefits of ERC721R are pretty straight forward: minimized rug pull risk during the refund period,” the team said.
However, some users have questioned the validity of this proposal given that blockchain transactions are irreversible. “This doesn’t exactly prevent a rug because funds moved === funds unavailable,” one user said.