ERC-4626 (tokenized vault)

ERC-4626 extends ERC-20 to describe a vault. A user deposits an underlying token, such as a stablecoin, and receives shares that represent a slice of the vault's holdings. The standard fixes the function names and behaviour for deposit, mint, withdraw and redeem, and for reporting total assets and the conversion rate between shares and assets. Whatever strategy the vault runs, the outside interface is the same.

Before the standard, every yield protocol had its own vault design, so aggregators, lending markets and dashboards needed custom code for each one. With ERC-4626, a vault share can be plugged into other protocols almost automatically, which is why lending curators, savings-rate tokens and yield aggregators across Ethereum and its layer 2s adopted it widely. It also gives wallets and analytics tools a consistent way to show yield.

The standard defines an interface, not safety. A compliant vault can still lose money through a bad strategy or a bug, and poorly built empty vaults have been hit by share-price inflation attacks on the first depositor. Rounding rules and fees vary between implementations.