Yearn Finance (YFI) becomes the first protocol to adopt Ethereum’s ERC-4626

LAGOS (CoinChapter.com) — Yearn Finance, a DeFi protocol running on the Ethereum blockchain, has become the first major protocol to officially adopt the newest Ethereum Request for Comments (ERC) standards, ERC-4626.

The blockchain platform announced plans to integrate ERC-4626 through its official Twitter account. It described the new standardization as “composability at its finest,” adding that ERC-4626 will boost DeFi adoption and enable users to move assets across chains better.

“ERC-4626 will be the gold standard for any sort of interest-bearing token,” Yearn Finance said.

What is ERC-4626?

ERC-4626 is a standard for tokenized vaults with a single underlying ERC-20 token. Notably, vaulting is the process of locking in a token on one chain so it can be minted into a token that you can use on a different chain.

The token is designed to streamline the different types of yield-bearing tokens, making it easier to integrate them into Defi protocols. It comes after the successful deployment of 25 previous Ethereum token standards.

Referred to as the tokenized vault standard, ERC-4626 aims to provide wide-scale benefits across Ethereum’s DeFi network. The token also creates a shared interface for coins held in vaults or smart contracts that draw liquidity from deposits of asset tokens for yield farming strategies.

Notably, the token standard will be implemented at the next Ethereum fork upgrade following approval from Ethereum developers.

The new standardization follows the launch of ERC-20 for fungible tokens (i.e., stablecoins and governance tokens), ERC-721 and 1155 for nonfungible tokens (NFTs), and BSC-20 for the Binance Chain’s compatible token, among others.

ERC-4626 cofounder, Joey Santoro also expressed delighted with Yearn Finance integration. He also noted that the move would serve a level of legitimacy and encouragement to other protocols in the space.

Yearn Finance Token Drops 20% In One Week

Meanwhile, despite the adoption of ERC-4626 and activities on its network, Yearn Finance’s native token (YFI) has plummeted significantly.

YFI dropped over 20% in the past seven days and is now trading at a low level of around $20. According to data from CoinGecko, the token has been experiencing a bearing run down by 78% from its all-time high in May.

Currently, YFI was down by 5% on the day alongside the entire crypto market, which is on downside movements. The global cryptocurrency market cap was down by 3.7%, hovering around $1.9 trillion at the time of publication.

The decline also caused the project to lose over $600 million in its total value locked (TVL). According to data from DefiLlama, Yearn Finance TVL has slid from $4.2 billion on February 21 to $2.8 billion on April 11.