Multipli V2: Explaining ERC-4626 to a 10-year old

The recent X announcement of a Multipli V2 got us all super excited, Vault 4626 is coming to Multipli and it will make a wave of changes. Here are some of the potential upsides as pointed out by our Chef Shaaran:

• It makes xTokens more liquid.

• It makes Multipli instantly compatible with other chains and protocols like Euler, Pendle, Morpho, and so on.

• It reduces the redemption period of xTokens.

• It makes yield claiming automatic, enriching user experience.

But what really is ERC-4626 and how will it change your user experience? Read on to find out.

Why ERC-4626 was born

Any DeFi app adding yield-bearing tokens to their protocol must look into each token’s yield generation method, understand its structure, and adjust their codebase to accommodate the token. Two different tokens would need two different approaches to be onboarded to an application.

The disadvantages of this process is:

• Each code required its own custom code

• It was time-consuming

• Gas fee structures and UX was different for each token, which may cause a bad experience to users

ERC-4626 was the token standard that would fix these issues.

What is ERC-4626?

ERC-4626, also called as Tokenised Vault Standard, is an extension of ERC-20 token standard, and provides a unified framework for yield-bearing tokens. This led to

• A standardised way for tokens to generate yield.

• A standardised API to onboard all tokens.

It means that all tokens generate yield in the same way and there is no need for custom modifications to the codebase for each token.

Benefits of ERC-4626

• Interoperability: Because all ERC-4626 vaults follow the same rules, they can be plugged into DeFi protocols with minimal custom code. Wallets, aggregators, and yield platforms can integrate them more easily.

• Efficiency: Standardised logic reduces unnecessary gas usage and prevents the need for bespoke integration work.

• Transparency: Functions like totalAssets() and standardised share conversions make it clear how much value is in the vault and what a user’s shares are worth.

• Composability: Developers can stack vaults and other DeFi primitives on top of each other, unlocking more complex strategies with less friction.

How does this affect Multipli?

This is why ERC-4626 is a game-changer for Multipli:

• Instant DeFi compatibility — Plug-and-play with wallets, aggregators, and other protocols.

• Better composability — Multipli vault tokens can be used in other strategies.

• Improved UX — Standardised deposit/withdraw behaviour and clear yield tracking.

• Faster scaling — Easy to launch new vaults or go multi-chain without rework.

How exactly these features will improve your user experience, we will witness in due time.

Stay Tuned to Multipli

Follow us on our socials so you don’t miss the exciting Multipli V2 updates:

• Our X handle

• Our Discord communiti

• Our telegram channel to stay in the loop.

See you soon 🫡