Decoding ERC Standards: A Conversation with 4626 Alliance

This is the Pool Together Community Podcast. Pool Together is the world's number one no-loss prize savings account. You can visit pooltogether.com to deposit.

You're listening to the Pool Together Community Podcast, V5 edition, and I'm your host, Millie Yearley, aka Hot Mike, aka Tim, aka Listen, I got a lot of Crocs. I got a lot of Crocs, and my name is Tim Cox, and I'm here with Joey from the 4626 Alliance, an Ethereum magician in the house. Joey, thanks for being here.

Hey, hey, hey. Glad to be here,

dude. So Joey, how does one become an Ethereum magician? How did you get there? Tell me your story.

Yeah, so I mean, the long story, the long version of the story is that I first heard about Ethereum In 2017 when I was in college at Duke University. And, you know, I was taking this class that was run by students and they taught about Bitcoin, they taught about Ethereum, you know, programmable money. And I at the time was making my transition from pre-med to software engineering, and I also had a lot of interest in personal finance and investing. So I was totally hooked. You know, it's a similar story I think you hear to a lot of crypto people. They're like, wait, you can write code on money and there's all these smart contracts and, you know, anti, like, you know, whatever, like all these different movements and motivations from like the early crypto crowd. And I was totally bought in. And then that was right at the time when, you know, the 2017 blow-off top, I was trading a bunch of shitcoins and whatever, but I was also learning Solidity programming. And so my heart was always in Ethereum. I have the vast majority of my crypto portfolio in Ether and my career, my building, my thoughts all like go towards Ethereum. So that's been the history and it, it's crazy. It's been, you know, 6, almost 7 years, I guess, of doing that. And throughout the history, You know, the early days it was just me like learning Solidity and teaching other Duke students about Ethereum. And then when I graduated, it was a lot of like hacking on side projects, but being kind of not super public. And like, I was working on content with, you know, some Duke connections, Cam Harvey, who's a professor there, kind of prolific in the traditional finance world and Ashwin Ramachandran, who was a research assistant for Cam like I was. So we worked on a book together called DeFi and the Future of Finance, and that was received very well and, you know, translated into multiple languages, et cetera. At the same time, I was getting a lot more involved in, you know, DeFi. This was maybe 2019, 2020 kind of DeFi summer. And I was, there was all these algo stablecoins that came out. I had some really cool ideas around that front, and I decided it was time to quit my software engineering job and go all, all in on crypto. So I started Fei Protocol, which was an algorithmic but fully collateralized stablecoin. And that project, there was a ton of innovation that came out of it, in particular the 4626 standard. which we're going to talk about a lot today. And I was always kind of in love with the open source contributions and kind of everyone's thought leadership pushing the space forward together. So when I decided to write this EIP for 4626, it was one of those things where I thought it should have existed as early as even 2017 or 2018 when I was a Compound Aave user. And I was like, why are B tokens and A tokens so different? And I know you guys have had that issue integrating the yield sources with PoolTogether, and it's so obvious that we need standardization there. So when I, when we released the standard, it really blew up. Every builder I knew was like, dude, we were thinking about this and working on this. And once Yearn kind of put the, their flag in the ground and said Yearn V3 is going to be 4626 all the way down. I think that all these other blue chip protocols started to take notice. Now MakerDAO's using it, Aave's using it. I think the only holdouts are like Compound and Lido, and even Lido's like interested now. So really the adoption of the standard was incredible. Can't wait to talk more about it. And the way that you become an Ethereum magician specifically is you just write an EIP and anyone can do that. So if you have an idea for, you know, you have some experience building protocols or smart contracts and you see some pattern or some standardization need that could be anywhere in the stack, really, my focus has always been DeFi, but if you have a contribution to make, you just make an EIP. All the processes are public. I can also talk through it with you. Feel free to DM me on Twitter or Telegram or whatever. And yeah, it's that then you're like, you get on the forum, you're technically an Ethereum magician, I guess. I actually got the Celestia airdrop because of that, which is kind of cool. But, you know, like obviously you do it because you have a genuine contribution that you want to make. And anyway, that's kind of the story. That's how we got to where I am today. I've got a couple EIPs cooking even that we're going to talk about. So I'm just really excited to share more and, you know, keep jamming.

I love your airdrop farming strategy that you just like submit EIPs for airdrops. Love that. That's good. Yeah,

that's

the

alpha for the

podcast for today. Oh, but I know from, you know, launching V5 and I do partnerships with the Pull Together community and now with Generation Software, which supports the Pull Together protocol and hearing about ERC-4626 vaults, And how we have like a vault factory now, and then like any ERC-4626 yield source can be turned into a PoolTogether Prize Vault. It's not that easy, but it's easier right now as far as like not all ERC-4626 vaults are created the same. They, they, there is still variation within the standard, correct? But as the standard progresses and as you add to it with these other EIPs, things kind of get honed more and more to where there's not too many surprises where you could easily create a pulled-together prize vault using the ERC-4626 vault. It's not that way today, but we're getting there and I'm excited about it. Am I right, Joey?

Yeah. I mean, the 4626, kind of like ERC-20, it's a pretty well-defined standard. So, but you could still have non-compliance, right? Somebody can go make an ERC-20 token that Either is blatantly non-compliant with the ERC-20 spec, because it's not just about the interface, it's also about the behavior of the contracts. And 4626 is admittedly a very complex standard with a wide range of use cases. So to your point, yeah, people are going to implement it. They're not all going to look the same. And so even if you integrate with all of the functions, some Contracts just are not going to act the same way. And I think that the ecosystem is figuring that out right now as people are writing vaults and writing integrations like PoolTogether. We're finding out what people are actually doing out in the wild and what works and what doesn't. So yeah, that's a really good point that you made.

And I think also like, you know, going to PoolTogether's decision to launch on Optimism, right? So L2, and then looking for those yield sources, And the 4626 yield source, or the vault standard started really on mainnet, and then now it's kind of like reaching out. And so PoolTogether is trying to beat the drum for 4626 on Optimism and try to encourage more vaults and more TVL in that way. And so we've launched with Aave and we're using a wrapper for the Aave vaults called YieldDaddy, but we're starting OG yield source. Safe and secure, you know, and the yield might not be the craziest, but, you know, this is fun. The whole point about PoolTogether is no loss. You can withdraw whenever you want. You're not going to lose any money and you're going to win some prizes, right? That's what we're after. And it's really cool that 4626 is allowing us to do that. And what's cool to me also is that it unlocks things like LP positions as yield sources now, you know, which is really cool. And some of these LP positions give get super complex. Like there's 17 tokens in that pool, BB. And so like, how can a user easily deposit into that 17-token liquidity position? And now I'm really excited about, and Joey, I didn't tell you I was going to talk to you about this, but I want to see if you have any thoughts on this, is routing or zapping and the ability for users to easily swap into LPs or like the 17-token LP position or whatever. I'm being hyperbolic here, but. But if you have ETH and you want to get into whatever, and you don't want to swap 17 times for different things, you can actually just use a router and do this. I'm really excited about the future of DeFi and the ease of use for users where suddenly chains become abstracted, even tokens become abstracted. It's like, what do I have in my wallet? What do I want? Route me there, baby, and don't feed me to death. So, I think 4626 helps this happen, right? But what are your thoughts on that, on routing, zapping, bridging, cross-chaining, abstracting away all of the hoops that a user might have to jump through and just using the swap feature and say your wallet?

Yeah, I'm so glad that you brought this up. I have 2 or 3 branching thoughts on this. Let's see. So the first one is that the original intention for the standard was twofold. One was everyone was rolling their own connectors to every yield source on the planet, which was just a hilarious waste of dev resources and security risk. So the composability aspect of DeFi, that was a big one for 4626. But the second biggest, and this was actually like the big vision for the standard for me at least, was being able to go from any one place in DeFi to any other place in DeFi in one click and have that be really easy. Not like use some janky Zapper custom connector thing. Like the vision was, I actually wrote a router contract that's been adapted in a lot of different protocols that's open source in the ERC-4626 GitHub repo. Now I have to, I still have some work to do on that to make it MIT licensed and make sure that it's super secure, but You know, there's a code example out there, getting it to production's another task. And then talking, like you said, about cross-chain and whatever. So routing is a big piece of 4626, and LP tokens are a very complicated use case for the standard. They weren't like the canonical use case, but people can try to do LP positions. And you just gave me a really cool idea, which was, you know, intents are a very powerful primitive that is being built right now, Uniswap X and CowSwap and whatever. So I'm imagining like these 17-token LP positions and someone says, I have this much ETH, I want to get as much LP tokens as possible for this ETH. And so some like filler might go swap the ETH into like certain tokens, but not all of them because of slippage or because of the weights in the pool or whatever. But whoever can quote you the best Outcome in terms of LP tokens gets to fill the order, which is very similar. Like LP tokens are really just another token, but how you get them is you have to deposit to the pool. So that's a cool use case that I thought of.

Yeah. And then, no, I love that, that we're like ideating here. Why am I ideating with an Ethereum magician? But, and the same thing, it's like, so PoolTogether, I, When I talk about partnerships with wallets, let's say wallets are always like, hey, can we get our wallet in your connect to wallet modal thing, like featured? And I'm like, and it's, or can you add that? Like, can you add our SDK? Because we're a 4337 wallet and we need you to load our SDK so that we can give the user the best experience. And there's all these like, hey, you integrate us. And it's the Spider-Man meme with everybody pointing and saying, build it, build it, build it, or integrate us, integrate us, integrate us, you know? And so one rejection of that, primarily for user experience, is to be like, hey, maybe PoolTogether doesn't need anybody to come to a dApp in a dApp browser because that experience is less than ideal. And the connect, like, why do I have to connect my wallet? Like, why do I have to, you know, and also I don't want a wallet dev to build a new experience just for PoolTogether native in wallet. That'd be awesome. But it, but if everybody got that, the wallets would be impossible to navigate and it would just be a dApp browser. So that's the reason for the swap is like, hey, could we— first, this is our distribution strategy with PullTogether. It's like we're going to reach people in wallets and we're going to incentivize liquidity at first because that's how swaps work right now in most major wallets is using AMMs or DEX aggregators and that stuff. But Soon they'll be able to interact with smart contracts directly. So you wouldn't need liquidity for these prize tokens for PoolTogether. That's my dream state. Am I— I just want somebody to tell me I'm wrong, and I feel like people are scared to do that, but that's what I see, Joey. Am I Don Quixote? Like, am I just like going off in my vision and crypto's going another way?

I mean, I'm not totally sure exactly what these wallets are going to do, But I think it makes a lot of sense for users to be able to interact directly with protocols, or at least with more variety of protocols or swapping mechanisms, and things are going to be abstracted from the user. So to that extent, there's going to be more functionality, more contracts, more ways to route tokens. And I think you're totally right on that front.

Nice.

Yeah. And we'll, I mean, we'll see like exactly how that looks. from a user perspective. Like, I don't think it's going to feel like users are interacting with some crazy random 2020-style food coin DeFi project, but I think the complexity of behavior is going to get more complex, but the user experience is going to get more simple. So that's maybe how I would think about it.

I love that. And I got to give a shout out to David and G Loco in the chat pumping those ETHOS bags. G Loco, created PoolTogether's EthOS app. And so, yeah, I mean, not only are we going to get adoption for crypto, but crypto software, crypto OS, that's going to happen. But my idea is like, hey, I feel like if we get enough people, just like with 4626, if we get enough people saying 4626, then people do 4626. And the same thing with wallets and like actually being able to interact directly with the 4626 vaults from the swap would be cool. But, you know, we'll see. Time will tell. So Joey, you're doing additions to 4626. What is, is your initial commit not enough? Do we need, what is it? What are these other numbers that I'm going to have to memorize and know how to say correctly that, that I'm pulling up right now? 735, 7535 and 7540. So 7535 and 7540. What are those?

Yeah. So in my opinion, I don't think that these 2, you need to have the numbers memorized because they're truly extensions of 4626. So I would call 7530 the native asset 4626 or the native asset vault, and I would call 7540 the asynchronous vault or asynchronous 4626. So that extra qualifier is kind of The point of the extension. And 7535 is very tame. It's just an adaptation of 4626 to allow for native EVM assets to be used as the underlying. And so when you have a 4626 vault, it relies on ERC-20 extremely heavily. The underlying asset has to itself be an ERC-20, so it needs to have Transfer approval functionality. It needs to have an address. It needs to have a supply that's knowable and balances that are queryable. So native assets don't have all of these functions. Like ETH doesn't even have an address, right? It's not a smart contract, it's a different thing. So it's a little bit funny that ETH itself is not ERC-20. And so some vaults might want to use ETH as the underlying You should probably use wrapped Ether for most use cases. And I, and I mentioned that in the standard, but for things like wrapped Ether itself, which can't use wrapped Ether, then otherwise it's like turtles all the way down. You might want to have that have a defined interface because wrapped Ether really is just a vault of Ether that's 1-to-1. And also particularly important for 75/35 is liquid staking tokens. I think it's going to be so much better for staking diversity and for integrations and yield aggregators to have liquid staking tokens all conform to the same interface. So in my opinion, that interface should be 75/35. And actually it's technically going to be a combination of the two. So I'll walk you through, you guys are getting a sneak peek. I'm actually working on an article to publish to kind of tie the vision of all of these standards together. So in in short, there's actually a third EIP called 7528, and that one is really simple. It just says every time you want to treat ETH like an ERC-20, it gives ETH an address, which is O X E E E E E E. And someone on Twitter called it the dolphin address, which I think is hilarious because it sounds like you sound like a dolphin when you're saying it. So that's the address that you would use to say I'm using Ether right now. As opposed to wrapped Ether. And then that allows ERC-7535 to take in Ether, give Ether an address, treat Ether like a token. And then the asynchronous piece is much more complicated, but how it ties into liquid staking tokens specifically is that when you withdraw, you have to first like request a withdrawal and then wait for some validator to release your tokens. So, because it's a 2-step process, you can't use 4626. You have to define a 2-step flow, an asynchronous flow. So, that's what 7540 is. When you tie all of these together, you get a standard for how to make a liquid staking token. And the reason it's modular is because modular is the way to do everything. Like when you have one vertical of functionality, you define that, but you don't overcomplicate the standard. Like if I tried to make one standard for liquid staking tokens, it would've been less useful than one standard for how do we use ETH in a 4626 and one standard for how do we have a 2-step deposit or a 2-step withdrawal or both, because that's also used for real-world assets, which is actually the team who was working on this. So many teams have worked on asynchronous vaults, but the team that published this version of the standard that I contributed to for 7540, with Centrifuge and the Superforum team. So the 3 of us all collaborated on that one. And I think it's really good so far. All of them are in draft right now versus 4626, which is final. But I think that they're pretty strong and the community is bringing in good feedback. So I think they're going to become final, maybe with some tweaks, and then we can blow up the TVL and whatever.

But when is that? What's the timeline? Because I've got like some wrappers in the works right now for some liquid staking tokens, but if we could use this, it sounds even better.

Yeah. So please, please, please use, use, try to use the existing draft versions of 7535 and 7540, and then tell me if it sucks and if we need to change the standard for your use case. Because if it doesn't suck, if it works, then that means we did something right. And if it sucks, that means that maybe we need a, either an additional standard or to tweak the current one before it becomes final. So the, for timelines, I think—

So people can be building with this now.

Please use it. I'm begging you.

But I'm not, but I, I just run the podcast. I'm not coding, but yes, I will talk to the people that are coding and be like, hey, let's use this. But that's, I love that. Yeah. Use it now. Let's try it out. Let's see how it goes. See how it is to work, work with it. And then, you know, we can iterate. David Silverman was talking about how this is the new wrapped ETH. What does that mean?

Yeah. So I'm working on writing a new version of Wrapped ETH specifically for Polygon for their new wrapped POL token. And that's going to use 7535 primarily as the underlying standard. And then it's going to do some cool stuff with like permitTo and, you know, whatever, that kind of thing. So I'm really, I think that's going to be a very solid token and I'm going to put a lot of effort into that and hopefully it becomes kind of a new standard for Rollups, at least it'll probably— wrapped ETH on mainnet has too much Lindy. So my guess is that it probably won't ever become surpassed. But if, you know, maybe Uniswap adopts this new WETH, which they might, but maybe we'll see, maybe this becomes a new wrapped ether. I'm certainly really excited about that potential. I think it's going to add a ton of functionality that's going to really help ether itself kind of take off, so to speak. And then what was I going to say in terms of actually building with the standard? Oh, you asked me about timelines. So 4626, we came up with the idea for writing this as a standard in like November or December of 2021. And then we, I think it was December, we published the draft spec in like early January and the standard was final in, I want to say April or May. So it was like 4 to 5 months of time between publishing the standard and as draft and having it go to final. That was admittedly a little bit rushed or a lot rushed depending on your perspective, because it, like at the time we were building the Tribe DAO and we had like this huge roadmap. We had Tribe Turbo, we had all these cool products like Fuse plugins that we wanted to really use the standard and go all in, but we didn't want to go all in before the standard was final, which is kind of the catch-22 of building these kinds of things. So there's maybe one or two things that we would've changed about the standard in retrospect after having seen a lot of people build with it. But I think the standard is really solid and it's achieved an extremely wide range of use cases given those timelines. And So in that sense, you could think about similar timelines for 7535 and 7540. I will say that 7535 is kind of a no-brainer and there's really not too many ways to change it. Um, so I think that one could actually be faster going to final depending on collaborating with EIP editors. Okay. There hasn't really been any substantial feedback on it at all. Nobody really said anything about it. It's just kind of like, yep, this makes sense. But for 7540, there's so many permutations and there's already been like 4 or 5 teams with significant TVL in vaults that look kind of like this, and everyone's got a different implementation. It's a really tricky process because you add the complexity of 4626, but then you add asynchronicity, the deposits and/or withdrawals. I expect that one to not be final for at least 6 months, if not 12. And I think that's good because there's no reason to rush something like that. It has major implications for DeFi because the primary use case is liquid staking and real-world assets, which are going to be, you know, probably the catalysts of the next bull market. So hopefully we'll get a lot of trial and error over the next 6 to 12 months, and then we can use that to finalize a really solid standard that will carry us on, you know, into the future. And that's kind of the vision for that.

So another harebrained scheme that I have is the ability to hold tokens and then use them as other tokens at point of sale. So the, this is like, goes on like with liquid staking, maybe I'm getting into the weeds here, but like ideally I want to hold all of my, you know, my allowance for myself to spend on synthesizers and fast food, or not fast food, I'm vegan. You know, there's not really, anyway, you know, fun stuff. I want to hold it in pool together and win prizes and then only spend it when I'm actually spending it. But up until the moment I spend it, it's now It's, you know, the, it's in a 4626 vault. Is that doable? Is that, are we close to that?

I've thought a lot about this and my opinion on it has changed over time. I think when I started building in crypto, I wanted like all the cool hair, like you said, hair braid kind of use cases. I wanted them all to exist. I was like, I want to put all of my assets in like, you know, leveraged call options and then Only swap them into USD when I need it. And then you think about the economics of that, right? So depending on the liquidity of the asset that you're holding, you know, you're paying 30 basis points or 1% or whatever to swap out of it at any given time. So that's like another tax on your point of sale transactions. What's the opportunity cost, right? Let's say you hold liquidity of like, you know, a couple You know, a couple thousand bucks to whatever you need for that month or that week to spend. And that's your, that's in your bank account and everything else is like all in on, you know, Indexed Co-op 2x leverage fly ETH or something, right? Like you can, you're not missing out on that extra liquidity buffer that you have in your bank account. And it's probably better for you to like make bigger swaps or keep a liquidity reserve. Rather than have just that tiny extra bit of money, or not tiny, but you know, it depends on what your portfolio looks like. But the cash drag as a function of what are you solving, are you actually making that much more money versus losing it to all these like random swaps that you're making at point of sale? So that's like, it's really like a financial problem more than a— Right. The technical solution is there. You could do it. But I think the economics actually don't—

it's just not financially wise. It doesn't really make sense paying for the convenience of it.

Yeah, exactly.

Yeah, right. So we do have a solution coming out that where you could have a spending card and then you would just basically at certain points swap, give yourself an allowance of like $500 USD or something at a moment, which is better than $5 cold brew or something and swapping there. But ideally, right, we're trying to get away from fees with crypto, trying to get away from banks. Ideally, it's those microtransactions that, like, you're trying to race to the bottom on fees there too for people to use it. But I understand, I understand. It's, I can't have everything that I want.

Well, fees are never going to, like, people thought that DeFi was going to get rid of all the fees, but what's actually going to happen is that you're going to be able to express way more Composability and financial, you can financialize everything at the cost of there being more fees. And the fees are still going to be competitively low, but they're not going to be like zero because in order to get liquidity for a complex financial transaction, you got to pay somebody. You're paying a market maker, you're going to pay a protocol. There's going to be more fees and like way more fees, but you get so much more utility and so much more financial education from that. That's my opinion on where things are going.

Yeah, it's, I mean, it's the office space of fees, right? Like that with the volume, the fees can get lower because people are making more money anyway, but still there's just going to be fees everywhere and I have to be okay with it. But one, no loss. We need to add this to PoolTogether values because it's true. No loss, withdraw anytime, no fee. So that's another thing that at least PoolTogether does. But the way, anyway, how you interact with it might have fees. Joey, We have 3 minutes left. I want you to talk about anything else that you want to talk about because I have questions and I can give them to you, but you're the magician. And what are your parting words to the PoolTogether community as we carry this 4626 mantle into Base and into zkEVM, into zkSync era, into mainnet? Well, it's already there, but we're also another voice in that Mantle carrying thing, mixed metaphor, go.

Yeah, I wish we could talk forever. PoolTogether is one of my favorite DeFi projects. I feel like it's something that only could exist in DeFi, kind of like a flash loan where you try to do something like this in TradFi and you just can't do it, right? So I was always really inspired by PoolTogether and the team, and I think 4626 is such an elegant roadmap for V5, so I love it. I'm really excited to see you guys build more. And I had a lot of like ideas around PoolTogether because I was, you know, getting ready for the podcast. And so I was tweeting a bunch of funny things today, like what if we put the winnings from the PoolTogether prize into the Powerball? Just like leverage.

Please, please.

So just, you know, anyway, I love PoolTogether. You know, thanks for having me on the podcast and I think Yeah, the more that the PoolTogether community comes and adopts these new standards and tries new things, the more we can feed that back in to create better standards and everybody wins. So yeah, like thanks again for having me. It's been a really great chat.

Joey, thank— yeah, thanks for your hard work, man. We need to get you a delegation in PoolTogether, get you some prizes flowing your way and keep fighting the good fight. And we'll, I'll see you on the, on the, on the Farcaster with the memes, you know.

Hell yeah.

We did some memeing today. I love it.

Love the memes. Keep them coming. Take care. Thanks, Tim.

Yeah. See you. Bye. Thanks for listening to the PoolTogether Community Podcast. You can visit pooltogether.com to deposit, and we'd love to hear what you thought about today's episode. So visit the PoolTogether Discord and let us know.