According to the Ethereum protocol developer meeting on January 16, 2025, if there are no major vulnerabilities, the Ethereum Pectra upgrade will be launched on the Ethereum mainnet in early to mid-March 2025. This upgrade involves the implementation of a number of Ethereum Improvement Proposals (EIPs), including a series of proposals for validator operations and mainnet performance improvements. Among them, EIP-3764 has received a lot of attention as one of them.
About EIP-3764
EIP-3764 is a standard in the Ethereum Improvement Proposal, which proposes to wrap the Ethereum native Token (ETH) into a new Token format (i.e. Wrapped ETH or similar) to improve the efficiency of on-chain interactions, reduce Gas costs, and provide greater flexibility for complex interactions in specific scenarios.
△ Image source: The Block
The main problem solved by EIP-3764
Currently, DeFi protocols have poor interoperability in handling position management (such as lending, staking, or providing liquidity). EIP-3764 proposes that positions can be abstracted into a unified token form through "Wrapped Position Tokens" (WPTs), thereby achieving standardization and enhancing compatibility between protocols. Therefore, EIP-3764 will play a role in the following current problems and propose improvements:
Gas costs are high. In DeFi, many operations such as deposits, pledges, and transactions require native tokens to interact with smart contracts. This usually involves multiple steps and has high gas costs.
Poor compatibility. The interfaces of current packaged native tokens (such as WETH) vary, resulting in additional development and adjustments for integration between protocols, increasing complexity and time costs.
Inadequate user experience. When interacting with complex DeFi protocols, users need to understand the specific mechanisms of each protocol. Interactions on the chain require frequent signatures and multiple approvals, and the process is complicated. Different protocols have different ways of calculating returns, making it difficult for users to compare.
How to implement EIP-3764?
Core Mechanism:EIP-3764 proposes to implement a new smart contract standard, introducing the "wrapped native token" Wrapped Position Token standard, which supports users to convert ETH into wrapped tokens and redeem native ETH when needed.
Wrapped Native Tokens (WPTs)
Abstract complex positions into a tradable ERC-4626 Token. Users only need to interact with the Token without having to care about the specific details of the underlying protocol.
Standardized Tokens can be freely traded, thereby enhancing liquidity; at the same time, it can also support more DeFi combination innovations, such as serving as collateral, participating in aggregated yield agreements, etc., to enhance composability.
Through a standardized revenue tracking interface, a more transparent and verifiable revenue management method is provided, which facilitates users to calculate and track unified revenue.
1. Generation of Wrapped Tokens:
Users deposit ETH into the EIP-3764 contract.
The contract casts an equivalent amount of wrapped tokens and returns them to the user.
2. Redemption of Wrapped Tokens:
Users send wrapped tokens back to the contract.
The contract destroys these tokens and releases the equivalent amount of native ETH.
Standardized interface:EIP-3764 defines a set of standardized functions and events for the management of wrapped tokens, for example:
deposit: deposit ETH and generate wrapped tokens.
withdraw: destroy wrapped tokens and withdraw ETH.
Event notification: Wrapping and redemption operations trigger standard events.
As of now, although EIP-3764 is still in the proposal stage and has not yet been officially implemented in the Ethereum mainnet, it can be seen that this proposal is of great significance to the long-term development of DeFi and the blockchain ecosystem, especially in high-frequency interactions and complex operation scenarios.
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