What Is ERC-4626?
ERC-4626 is the Ethereum standard for tokenized vaults. Deposit an ERC-20, receive shares that represent your slice of the vault, withdraw by turning shares back into the asset. Because the functions are the same everywhere, wallets and aggregators can display "your USDC in vault X" without a custom integration for each farm. It is ERC-20 thinking applied to vaults.
How It Actually Works
- previewDeposit and convertToAssets let you see the exchange rate before you click. Share price should drift up if the strategy works, down if it loses.
- Composability is the point: another protocol can accept 4626 shares as collateral without knowing the inner farm. That is convenient. It also stacks risk in a wrapper people treat as "just USDC."
Risks and Common Mistakes
- A standard is a plug shape, not a safety rating. A 4626 vault can still be a three-person proxy into a toy strategy.
- Using shares as if they were the underlying in a crash. Liquidity for the shares can vanish while the vault is "fine" on paper.
When It Matters
Reading a vault UI that talks about shares, and any time an app says "ERC-4626 compatible" as if that were a Good Housekeeping seal.
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