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Yearn Finance has become the first major protocol to support the adoption of a new Ethereum token standard called ERC-4626 that could help solve composability issues in DeFi and make yield-bearing tokens more secure.
Meet the New ERC-4626 Token Standard
ERC-4626 is a newly proposed Ethereum token standard that’s designed to resolve the varying types for tokens in decentralized finance. By adopting the ERC-4626 standard, yield-bearing tokens, for instance, can easily integrate into other DeFi platforms in a more secure way. ERC-4626 provides a standard so that all of these different tokens across multiple blockchains can talk to each other. Ultimately, ERC-4626 can revolutionize the way users and platforms stake their tokens and collect their yields. This will expand the possibilities of the cryptosphere and will become an incentive for financial innovation. According to a Twitter thread posted by Yearn Finance this week, several protocols, including Alchemix, Balancer, Rari Capital, Fei Protocol, and OpenZeppelin, are already planning to implement the finalized ERC-4626 standard. https://twitter.com/iearnfinance/status/1511444228089565184
Yearn Finance Aims to Promote the New Standard
Yearn Finance is a popular yield aggregator in the DeFi space which maximizes profits for yield farmers by placing their staked assets in the place where they will generate the most money. Commenting on the innovation, Yearn Finance noted that ERC-4626 will become the gold standard for interest-bearing tokens. Additionally, the platform vouches to encourage the adoption of this standard, even if individual developers do not actively use it.