Huobi Ventures Weekly Report #31

Insight provided by Alex of Huobi Ventures

The EIP-4626 standard allows implementation of a standard API for tokenized Vaults that represent shares of a single underlying ERC-20 token. Vaults can be regarded as a smart contract used for defi farming, fixed income or investment activities. The yield-bearing token of a Vault act much like a fund share, which represents your ownership of the vault and could generate profits.

This standard is an extension of ERC-20 tokens, which provides basic functionality for depositing tokens and reading balances. By creating such a standard, Defi pools could approach to yield-bearing tokens in a much safer and easier way, and thus create deeper liquidity and interoperability for these tokens.

Motivation
The lack of standardized contracts in Tokenized Vault makes implementation methods difficult to unify, examples include lending markets, aggregators, and tokens with intrinsic interest. This makes it difficult to integrate protocols that need to conform to many standards at the aggregator or plugin layer, and forces each protocol to implement its own adapters that are error-prone and waste development resources. The standardization of tokenized vaults will reduce the integration effort of yield vaults while creating a more consistent and robust token paradigm.

Methods Provided by EIP-4626:
TotalAssets
ConvertToShares
ConvertToAssets
MaxDeposit / previewDeposit / Deposit
MaxMint / previewMint / Mint
Withdraw
Redeem

Implications
Considering the Luna-UST deleverage spiral, how EIP-4626 could change Defi would take years to show up. However, when we recall how ERC-20 and ERC-721 changes the crypto world, EIP-4626 is sure to be an indispensable part in crypto infrastructures. Considering the fact that the circulating velocity of stablecoins is 8x plus of USD, standardization of yield bearing tokens have paved the path for a massive adoption of fixed income Defi, which is ready to provide service for such a high speed of circulation.

Huobi Ventures is focused on growing its venture investment portfolio and supporting blockchain projects through long-term investment strategies.Huobi Ventures aims to identify strategic opportunities across different blockchain verticals to complement and expand Huobi’s product offerings. Acquisitions will be integrated into Huobi’s growing suite of blockchain-enabled applications and services to expand the business into new markets.

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Huobi Ventures

Huobi Ventures

Focus on Huobi’s venture investment portfolio and supporting innovative blockchain projects through long-term strategies. Twitter:@HuobiVentures