The (ERC) Ethereum Upgrade Process w/ Joey Santoro (4626 Alliance)

**Speaker A:** Hello and welcome back to the Strange Water Podcast. Today we are talking with Joey Santoro, one of the more prominent builders during the DeFi 2.0 era of the last cycle. When Joey agreed to come on Strangewater, I was so excited because there's so much to talk with him about building one of the hottest protocols of 2021, successfully pulling off one of crypto's first major mergers, leading an organization through controversy, and so much more. But of all the things I wanted to talk to Joey about, there was something clearly at the top of my list. ERC4626. We'll unpack what ERC4626 is and how it came to be during the upcoming conversation. But for now, all you need to know is that ERC 4626 is a specification that has been explicitly accepted by the Ethereum community and can now be considered part of the Ethereum Protocol. And that's why I'm so excited to talk to Joey about ERC 4626, because ERC 4626 not only represents a tool that Joey and Fay Protocol needed, but it also represents an organic, community led contribution to the standards and norms that form the world computer. On top of being a successful entrepreneur and builder, Joey has earned one of the most precious titles, Ethereum Contributor. While this conversation is a deep dive on all things ERC4626, including the history, the challenges and the future developments, it is also a bigger picture conversation about how to directly contribute to and improve Ethereum. Just like it's always been from the start. The magic of Ethereum is about how a decentralized community can come together to build. And I hope this conversation helps you see what that actually means in practice. One more thing before we begin. Please do not take financial advice from this or any podcast. Ethereum will change the world one day, but you can easily lose all of your money between now and then. All right, without further ado, Joey Santoro. **Speaker B:** Joey, thank you so much for joining us on the Strangewater podcast. **Speaker C:** Yeah, thanks for having me here Rex. **Speaker B:** Man, I. I'm really excited about this one. Like, I have to. I think your kind of like the beginning of your moment in the sun was like just when I was entering crypto and I remember like one of the more impactful bankless episodes I listened to was like you and whoever was on the RARI side but talking about that, the merger, and then again like your epicenter podcast, talking about like just your. That's when I Realized that you guys are doing protocol on liquidity and like some of these things I thought were related to Olympus style first. So anyway, blah, blah, blah, blah. But I'm just super excited to talk to you and yeah, I guess. Thanks for joining me on the pod. **Speaker C:** Yeah, of course. It's going to be fun. **Speaker B:** Cool. So before I like eventually where we want to get this conversation to is like how you've become like the so deeply passionate about contributing to Ethereum through the ERC process. But like let's like kind of walk through your journey a little bit through there. So like number one, how you find crypto, find Ethereum and then like maybe talk through your journey to like starting Faye. **Speaker C:** Yeah, so like a lot of people in the space, I kind of found crypto early on, maybe like 2017. So that cycle. So I wasn't like the Super OGs who made it in one of the two cycles before that. But right around when Ethereum and Defi and smart contracts were starting to become a thing. I mean this was before even the term defi existed but, but there were some cool protocols like Makerdao. The DAO hack had already happened. So this was like right in like that really cool time. The price of everything started ripping up. So I was in college at the time at Duke and I took a class, I was taught by students because this was still so early, there was no professor led courses. I mean there was some in the business school. I actually worked really closely with a profess, Professor Cam Harvey at Duke, but there was no undergrad courses taught by professors at that time. And so the students taught them because Duke had this cool program where students can teach classes. So I learned about bitcoin, I learned about Ethereum and Ethereum always just captured my heart. Like a lot of people, the idea of a fully compute infrastructure that you can build tokens on, open defi, whatever, smart contracts. All of this really captured my intellectual curiosity between computer science, which was my major, and I had a lot of interest in personal finance and finance in general. So from there I started learning solidity, started teaching. I taught a course actually the same style, but focus on development. And then eventually, you know, that led down the line. **Speaker B:** First of all, I went to Stanford and so I want to say we're joining the acc. So I guess we're now rivals. **Speaker C:** Oh hell yeah. Best conference I know. **Speaker B:** Yeah, well, I guess that's how I feel now too. But anyway the. So I, and I, I've been really involved with Stanford postgrad and something that I've really noticed is that while there's more and more focus in computer science in like undergraduate it, it's not like clear that there's a ton of energy in crypto and like Stanford there is, but like the real black hole of interest is in like AI and a lot of AI stuff. So to you is like what in that moment of like undergrad and explore and like you could have been taken by anything from like, you know, cryptography for the sake of like, you know, NSA defense stuff to AI to like the. Where you landed in this like somewhat amazing, somewhat like skeevy part of the Internet. **Speaker C:** Yeah. I mean as you, you know, you could see by my story or anybody else's story, I feel like crypto is the lowest time to impact out of any industry, especially in 2017. I mean everything was just written by 20 year olds and like kids who had just graduated from college and like you know, some of the most famous devs were even in high school at the time. It was like just a crazy space because you know, in retrospect looking at all the risks that people didn't talk about, there's a reason why it was only the most idealistic, bright eyed, you know, people who were building in the space. But yeah, that, that's how I ended up in crypto. I was interested in finance, I had a computer science background and I wanted to make an impact like a lot of my peers. And so crypto was a space to do that especially. Yeah, around that time. So that's, that's why. And now a lot of people are pivoting and doing whatever. I'm not going anywhere. Crypto is where I see myself for the foreseeable future, probably not forever, but I still feel like there's a lot of work to do and you know, and it's fun and exciting for sure. **Speaker B:** I mean I think the mark that like the, this industry is really matured and has lost like whatever specialness is left is when like it's not really leaving crypto or entering crypto. Like we're just part of like the tech landscape. You know, no one talks about like someone leaving like a fintech to go to a biotech or that kind of thing or, or consumer web to this part of like SAP SaaS, you know, CRM. It's I think like the mark of adoption will be that this isn't like something weird and like something for misfits. It'll be like just something that you know, as part of a job you take. **Speaker C:** Got it. So you're saying that that's not the current state of affairs. That's when we made it. **Speaker B:** Yeah, yeah, yeah, yeah. **Speaker C:** Got it. Yeah, I agree. Yeah. I think for now it's like, oh, staying in, staying out. But AI is like that. And I think there's some tribalism. Like, that's more of a feature of the Internet than, like, you know, like, if you. If you leave a domain of tech, you, like, you leave health tech, you leave what? I still feel like there's a community around each of these subdomains of technology where it feels like you're leaving, you're leaving your discipline. And so tech. Tech is the substrate. That's the common denominator, but the actual applied knowledge and the field is where you get these tribes, you get, you know, whatever. And so to me, I feel like defi is that it's like finance tech, but the future of. It's literally the future of fintech in my mind. And so maybe we blur the lines between normal fintech and defi at a certain point, but if someone leaves, I still hope we're sad, you know, if someone goes and pivots to, like, Fred Hirsham just the other day tweeted that he's going to longevity, which I. I think it's awesome because that's my second favorite thing after crypto. But, you know, still, you know, we're losing a titan, I guess. **Speaker B:** Yeah, I know. Fair enough. And I. I'll eat those words immediately. I was just thinking about one of my buddies who works for, like, a. Like, creating tools for developers for Web2 companies. And I just saw him post like, that. He's, like, hosting a talk on LinkedIn. And it was just. I didn't understand any of the acronyms. And I'm like, you know what? I guess, like, everyone has their audience. **Speaker C:** Yeah, exactly. And yeah. Yeah, that's funny. **Speaker B:** Yeah. So anyway, let's move us back to our story. So you were at Duke. You, like, took a class that was kind of student run, then you taught a class that was obviously student run for how long between, like, your first kind of entrepreneurial venture and graduating. And you know what. What do you think it kind of took to get there? **Speaker C:** Yeah, so the timeline there was. It was my. The end of my first year at Duke when I first started hearing about crypto. And then I was only there for three years. So by my last year, I was teaching that course. And then I was also a research assistant for the professor I mentioned, Cam Harvey, and we wrote a book called Defi and the Future of Finance that was actually my first public initiative in crypto, I guess, because before it was like my personal projects and like Duke stuff, which is kind of in a bubble. So I worked on that book. That was in 2019 where we started writing the first drafts of it. Because Defi at that point was just a total renaissance. It was like compound and AAVE and synthetics and all these new yield protocol white papers coming out all the time. Some of like the most classic white papers that were not L1 protocol white papers, but more like defi layer I think all came out around 2019 in that era. So that was obviously really awesome. And so we took a lot of those ideas, put them in the book. And then while I was writing the book, I had this idea for a yield aggregator, obviously because I was an active compound aave dydx user@ the time that that was before DYDX did futures trading with perpetual futures. But they were doing that like basically exactly what AAVE and compound were doing with like margin trading. And so they all were very similar. I was like, let me make a yield aggregator. And I wrote a white paper and I started writing some solidity, but I didn't have any like full stack experience or front end, so. And I was working as a software engineer at Okta. It's like Web2SaaS, whatever. And so I kind of gave up on the project because I couldn't make a UI that worked and I had all these like dev environment issues and whatever. But I really enjoyed like the mechanism design, the math behind how do we make a protocol that was totally decentralized, that you could rebalance and do like a discounted cash flow on the yield update to create a bounty for a keeper. Like it was no admin keys at all. Was like the philosophy behind this. It's actually funny that that was my first idea in crypto and then I ended up writing the 4626 standard, which would have made the yield aggregator way easier to develop. Now that I think about it, it's kind of funny. But anyway, Yearn launched literally like three weeks later or not maybe like months later, but it was around that time became like a billion dollar project or something crazy within months of launching. So I was like, okay, the next time I have a good idea, I'm quitting my job, I'm going to, you know, I'm going to go into crypto full time. This is where my heart is. And that was kind of the what it took. So lo and behold, my next good idea was a stablecoin and that ended up turning into state protocol. And I've told the story on many podcasts about how I got in there, but it involved, like, basically all of the algo stables of late 2020 and how I thought that they were all going to die and that we needed to make a better one and that that's. The ideas of protocol owned liquidity and then some of the other early Fae ideas that didn't end up staying in the protocol as we continue to evolve. But yeah, that's. That's sort of the linear progression, or maybe it's not linear, but that's the progression anyway, of how I got into the space fully. **Speaker B:** That's, like, super cool. And because not only is that a, you know, story of you, you know, recognizing trends and like, kind of figuring out what. Where opportunity is and just, you know, like, kind of the blocking and tackling of entrepreneurship, but I guess, like, the difference between some crypto Twitter influencer and like, a founder is like, the willingness to, and, and just like, the conviction to take the leap and to invest and like, you know, put all the chips down on, like, the thing that, you know, is going to change the world. And like, what entrepreneurship is not really about, like, the wins. When you're, like, looking back, it's like the, the, the journey that you took to get there and like, how it turns you into someone today. So, you know, I, There's. I have listened to most of them. There's like a thousand podcasts out there that you've done about, like, Fey Protocol and like, kind of the legacy of that. And so love to give you an opportunity to talk about that if you want. But what I'm interested in is, like, the thing that I guess has been most resilient about the feature protocol was this, like, ERC 44626. Yeah, 4626. The vault standard. Right. And so I guess, like, before I unpack, like, why I think that. And, and we talk a little bit more about that. Can you, one, say anything you want to say about Faye? But two, talk about, like, what was the moment where you guys realized that the problem that you're having is so large that, like, you need to make sure that all of Ethereum, like, comes together and solves it and this is not just like kind of a product or a feature that you guys need to deploy? **Speaker C:** Yeah, totally. So there, There are kind of. There's two interesting threads that came together to create this ip. One was my college dream of writing an EIP from when I first learned about the Ethereum process. I was like, one day I'm going to write one and it's going to be awesome. Little did I know. And then, but, but you know, practically speaking, the real reason and throughout the Fade journey, like you mentioned, FE was kind of an epic journey. There were so many different moments that the project had good, bad, ugly and we really tried everything. We wanted to stay on the edge. That's kind of always like you mentioned in my, my lens on entrepreneurship, it's making the thing that doesn't exist yet that needs to exist and seeing the trends and seeing. So we had a ton of innovations in stablecoins obviously, but also in how Daos can operate. And you know, some of the ideas were ours, some of the ideas were other people's that we borrowed. Like Optimistic Governance was a really cool idea that we took from the Gyro Stable team and now they're on mainnet and they're doing great. So everyone's kind of just like, we're trying to put the pieces together to make something that works. And so when we were. So when we were building the kind of the most. The best ideas that we had were the ones that were kind of obvious but no one had done yet. So, you know, in a certain sense, like that was kind of the Yield aggregator idea. Like I pitched one of my friends who is a VC back, you know, in 2019 and he was like, dude, we get this pitch like every week. So it wasn't like a. It wasn't like I was a genius for coming up with that. It was a completely obvious thing, but it was the details. It was doing it right, getting it out there, that. And that's what entrepreneurship is. So that was 4626. That was, I firmly believe, my greatest creation in the project. And it wasn't just me, there was four other authors from the Fae Rari team and from Yield and from Yearn. We all came together and we made this standard that is now being used heavily. That's like a huge percentage of DeFi TVL is now in 4626 vaults. And I think that number is going to be only going up because it has such product market fit, I guess is not the right term. It's like interface developer fit or whatever. But yeah, and that idea was something that was absolutely necessary and nobody just really like put their nose to the grindstone and had the. I think it was kind of a beautiful thing because between the Tribe Dao, Yield protocol and Yearn, we had enough mind share and Community adoption and distribution even it really is a distribution problem. Anyone can go write an eipro, but if you don't have the connections to the teams that are building these things and the brand to back it up, then it's probably not going to get adopted. So it was kind of a perfect storm where the tribe dao is big enough and yearn and all these other protocols and everyone agreed it was such an obvious standard that everyone needed because everyone's rolling. So maybe we can zoom out. But to kind of put a pin in this thought, 4626 was definitely our greatest contribution. And so it's going to be really cool to kind of unpack why that is and how it got there and why it didn't exist before. So maybe I could pause? **Speaker B:** No, for sure. Let's tell this narratively, right? In retrospect, it's obvious that, okay, there's so many that are these yield farms opportunities. Let's standardize it and create a way for this to become like, composable and all the magic that is defi. Right. But what. What was going on in that moment? What were you guys trying to build where you realize that it doesn't. Like, this is a bigger problem than our developers that like, can just contribute to inter. You know, like duct taping, A solution that just like, gets the thing into something that works for us. Like how. How do you as a leader recognize, like, this is something that like, requires like the whole community and not like a problem that is within my organization. **Speaker C:** Yeah. So like I mentioned, it wasn't even a hindsight that it was obvious. It was literally every single team that had anything that smelled like a token vault either had already thought about writing this VIP themselves, which is didn't actually allocate the bandwidth to do it, or they immediately recognized that it was necessary. So it was. I guess what I would say is there. So I'll speak generally and then specifically about, like the narrative of how we came up with it. So generally there's two types of people who would use 4626. There's someone who would implement it at the base layer. So that would be like a lending protocol like compound or aave. And the concept of a tokenized vault was essentially the C token compound came up with the idea of having a token that holds another token that really didn't exist in defi before because they were so early. This was compound V2. And they did a ton of innovation in compound V2, but I think the biggest one was the C token itself, where you have a fungible representation of your lending position and that is essentially a vault. It's a vault that, it's a yield bearing vault that increases. The C token has an exchange rate relative to the underlying. It increases, whatever. And so there's all these implementers, AAVE is an implementer, but they did rebasing and then everybody, all these sushi yield farms are also synthetics, had a yield farm like everybody had a token vault. They all did basically the same thing with some modifications, but everyone rolled their own implementation. That's because every dev has their style and there's no naming conventions and parameter choices and the idiosyncrasies of your protocol. And everyone could congregate on the same standard, but everyone wants to make their gas optimization or add some feature or whatever, or have some naming that's like legally safe. This is a problem that we have with AAVE where we showed them the 4626 standard and they were like, why would you use these finance terms? You should use like token dao terms that you know, or like MakerDAO, where every word is like nonsense, like I suck the vat to rug the, you know, duck or whatever. Like yeah. So anyway, there's a lot of obvious reasons why implementers don't, you know, don't really. They rolled their own things. So the big piece was integrators. So there was if you have like a protocol that's built on top of a token vault, like tranching protocol where you can have junior and senior tranches or you can have literally a yield aggregator. You're in V3 today and Cove and some other projects are yield aggregators built on top of 4,626, which is a really obvious use case for it. So the integrators, once they get big enough, then people automatically use the standard because you get distribution and integrations for free. So the problem is like a chicken and egg. It's like any two sided marketplace where you need integrators to exist to make it worth it for implementers and then you need implementers to actually start implementing it to make it more obvious for new integrators to come in and build and then the ecosystem evolves this way. So that's the lens for why it didn't exist yet. And so in our case, I was working on Fuse with some of the RARI devs and they had a feature that they were coming out called plugins where you would take the idle liquidity from the Fuse pool and Put it into another yield source. And the way that they had implemented it, Fuse and Compound were very close to the bytecode limit on Ethereum, which is like if you're a solidity developer, this is like the bane of your existence where Ethereum only allows like 24 kilobytes for your smart contract. And if you go over that in terms of code size and you literally can't even deploy to mainnet and that's not a lot of room, especially if you want to have sufficiently complex functionality. So for Fuse they were at the bytecode limit and they wanted to add this plugins feature. And so I was kind of hacking away and I was like, what if we standardized an interface for this was internal standardized in an internal sense, not in like, oh, let's make any IP sense. What if we standardized a interface where we could send the liquidity to a vault literally that we could deposit and withdraw from and just abstract away tokens entering and leaving the vault, leaving the fuse pool. So we have this standard interface and then we develop these plugins that anyone can write and Fuse, it'll literally like a Lego. You plug in the Lego and all the plugins would be interoperable across the pools and it solves the bytecode problem because all we have to do is add one function call on withdrawal and one function call on deposit and that doesn't add a lot of code complexity to the vault. And I still had to like jigger some stuff around because we were that close to the, to the bytecode limit. But anyway, we had an implementation that worked and then we looked at our roadmap and we had literally rari vaults was on the roadmap. So we were going to make vaults that were going to plug into Fuse pools which we're going to plug into other stuff, all super fluid collateral, the kind of 2020 D5 summer mindset. So the vaults plugged into the fuse pools and then because of the merger we had this amazing product called Turbo that honestly I'm really sad never got to see its day because I think it would have been a really big. Well it also was kind of a zero interest rate phenomenon type of protocol. So I guess because the rates hike, maybe Turbo wouldn't be as successful today. But I still think it was a really cool protocol. And I don't think we could talk about. You could go look at the Turbo. We wrote articles and the repo's open source. If you want to go launch it, talk to me, I guess. But so we had Turbo, which was also basically Like a vault style, you deposit your token and start earning yield on it. So that would have been used in the yield aggregator and it would have been used as a plug in strategy for Fuse. So we had Turbo and then we had some other stuff down the line that. Well, just like ideas that we might have implemented. But that was enough for us. We were like we have a vault protocol, we have plugins, we have Turbo. Why don't we just write an erc? And then everyone in the Ethereum community can write, you know, vaults that are immediately like they integrate directly into our entire tech stack. And we just bet we went all in on 4626. So we wrote the first draft. It was like I was literally at home and my parents over Christmas break or could not Christmas break, but over Christmas like writing the first draft of it and on the phone with transmissions 11 like what do you think about this? You know, I think we need to add this parameter or whatever, whatever. We published the first draft in January and then the standard was final like three or four months later. Which in retrospect was way too fast for an EIP. And there are a couple pain points to 4626 that every standard does. People complain about ERC20 token approvals, people complain about a ton of things about the NFT721 standard. So no standard is perfect. And I think 4626 ended up being really great given everything. And clearly you know, the standard speaks for itself because now like basically all the blue chip protocols are using it. MakerDAO their first class Sdai Dai savings rate wrapper is 4626. Basically everything in the Frax ecosystem is 4626A has a first class wrapper for it. Yearn V3 is literally all 4626 and there's new projects that their entire project is built on top of the standard. So clearly we did something right. Like Cove recently just launched Simon advisor there Superform's another one. We have the 4626 Alliance. I think this would actually be a really good place to plug that which is basically like a group of projects and developers who come together to build tooling for the standard, developers new standards around it and just kind of do the nuts and bolts type of work and promotion and marketing to like make sure that everyone's using the standard, there's clear tooling information, whatever you need. So I've been pretty involved there recently and that's. I still think there's a Lot of work to do. So that's where, that's where I've been allocating most of my time in the Ethereum ecosystem these days. But that's the history and that's how we got to where we are now in terms of where the idea came from. **Speaker B:** For sure, for sure. But because like you say that I think this is like the chef doesn't have an appreciation for like cooking, right? Because like you say like, oh, it's just so obvious and someone had to do it, but like, man, no, no one did it. Right. And I think that the thing that I'm hearing in this, that like was just kind of like a detail of your story, but to me says everything is like you were running up against the bytecode limit, right? Like you had a real problem and you were like, first you're like, God, we just, we need to solve this problem for us because like, this is. Otherwise we're not going to be able to implement the things that we want to do. And then, you know, because you have like vision and because the entire everything about Ethereum is about open source and creating a better world computer, it made sense to like move into the scale that's ERC 20. But yeah, I don't know, I, I just hearing the history, it's like very clear to me that that that's the founder story and it's just, it's Ethereum. So like not every, I mean, although you just said that there's an organization, so it literally is a founder story. **Speaker C:** Yeah, I mean, I didn't found the 4636 alliance actually. That was a superform team and, and morpho. So they came together and made this alliance. But obviously as one of the authors of the standard, I got pretty involved. So that's. That. That's so cool, right? It's like these guys started this alliance and none of the 4,626 authors were even part of the formation of this project. But now everybody's all pretty involved, so. And, and also there's this kind of funny piece of irony where the, the 4626 standard has too many methods almost. So for integrators or for implementers to implement the standard, they have to write conformant implementation for all of these methods. There's like I think maybe 12 or 14 methods in the ERC standard itself. No, there's more than that. It's at least 14 because there's four mutable methods, four max functions, four preview functions, two conversions, and a couple other simpler ones. Like metadata. So there's a lot of code that you need to write for 4626 and so a lot of teams who implement it say do we have to implement every method we're running up against the bytecode limit. So we kind of, we kind of created that problem for everybody else. Which is, which is pretty funny. **Speaker B:** Yeah, there, there. I guess there's lessons learned there but you know it's always the answer with computer science. Right. Is like if you're running into a problem, whether it's with space or with complexity or whatever you just abstracted into a new function and make it different developers problem. **Speaker C:** Yeah, exactly. Yep. That's how we do it. **Speaker B:** Yeah. Cool. So while we're still in this story, can you reflect a little bit on like the process to take this internal thing that you're doing to the Ethereum community? Like how did you, you know, I guess first you took it to your community of essentially yield aggregators and I'm sure assuming got buy in. So can you talk about that process and then how you brought it to the Ethereum community and then what it's like to shepherd a change into the Ethereum protocol? **Speaker C:** Yeah, so like I guess I'll start at the very last thing that you said which is shepherd a change into the Ethereum protocol. So there are several different tracks for EIPs. Maybe the two most intuitive ones are core EIPs which actually go into the Ethereum protocol and change the clients have to re implement to maybe add some opcode or add some logic or pre compile or whatever. Those are core EIPs. And then you have the standards track ERCs where you've heard of all these different token standards and whatever those live at the application layer. They're interfaces for developers to coordinate around. And so I'm not smart enough to write core EIPs. I can only write the application standard style ones like ERC 4626. So that makes it a lot easier and I guess reflecting on the process, like if you're going to write an eip, writing a standard is a lower barrier to entry because you know all it needs, it needs to be well formed, it needs to be thought through there, there can't be any obvious glaring security flaws or incompatibilities with other standards. But if all that's true, you could go through the EIP process, you start in draft and then you go to review and then you go to last call and then you go to final and it's. You're basically at the whims of the EIP editors for that process. But at least you're not like haranguing all of the, you know, all the client teams to implement some standard. And in the core protocol I had all this testing and you know, that's a, that's a much more intense. And all the politics around actually getting included in a hard fork, you don't have to worry about any of that when you write an erc. So maybe that, that's a little alpha on ERC development for you. **Speaker B:** Yeah, well, I guess the flip side of that is that because you're not, you know, fighting to get it into the, you know, core like applications of Ethereum. It's, well, it's relatively easy to make a erc as you're saying, like then it comes the hard part, right, which is convincing people to actually use it. **Speaker C:** Yeah, that's a good point. So you actually kind of push the problem upstream where with the core eips, all the legwork is getting it included in a hard fork and then everybody has to use it. Unless Circle and Tether say no, I guess. But that's, that's a side tangent for sure. But yeah, you have to actually do the community building, consensus building after the fact to get people to use the standard. So the way that looked for, for us was I basically DM'd all of the teams that I knew would have an obvious need for the standard on the integrators and implementers side. And the funny thing is that the integrators always said yes. Immediately they were like, oh, like this is a no brainer, we're going to implement this in our next version. Like this is amazing because for an integrator it doesn't cost anything to build around a standard. And then even if the implementers don't use it, you still have to make the bespoke connector, but you're making a connector that now has Lindy everywhere and someone else might make the connector for you because of the standard. So it's like a vampire attack on implementers almost where the integrators are like saying, Yep, we want 4626 and if you don't like it, we're going to wrap your protocol anyway. So you might as well give it first class support in your next version. And we're seeing that now with Compound and aave, where AAVE just came out with a canonical wrapper. And I think their next version will probably just be natively 4626. If not, they'll have even more like first class support. Same with Lido, where Wrap Steve should be a 4626 already. Someone's going to make a good one that's going to get used in Spark protocol and then I think people are just going to be migrating. As new versions of blue chip protocols and new blue chip protocols come in, there's a slow wave towards the inevitable implementation of 4626 vaults. And the cat's pretty much out of the bag at this point. Not with the amount of TVL in the 4626 ecosystem. And just getting that started, I guess, was all us championing it, Yearn championing it, and everyone's saying, oh, this is happening. So one by one, integrators first, then implementers and the sdai. So the happiest moment for me was when Yearn made a big tweet thread that said, we're going all in on 4626. I actually quote tweeted it. I was like, this is the best day of my life. It wasn't actually the best day of my life, but it was one of my proudest moments as an Ethereum developer. And then maybe the second biggest moment for me was when I found out that the Spark DAI savings rate wrapper, SDAI Savings Dai is 4626. And that has over two thirds of all the DAI in the DSR is in SDAI or I don't know, but it's close. It's a huge number. And so that seeing that is just incredible because that means that there's a big reason for whales who hold a lot of SDAI to implement the standard. And now all these lending protocols where people are using SDAI and rehypothecating it to try to get some extra capital efficiency, it basically creates a ton of liquidity incentives for the standard because now you have this big token that has a shit ton of dye in it. **Speaker B:** So I mean, just to sum up that story into a strategy, even thinking about this, it's going to sound so obvious. So I guess my question to you is, do you have any real alpha on top of what I'm about to say? But it sounds like the first step to creating a successful change in Ethereum at the ERC level is one just getting it through the process, which honestly is doable, not that big a deal. The next step is getting it used, which is much harder. But it sounds like the path to success is to find the biggest guys and then convince them that they need to use it and then like focus your time on energy, on, you know, like really just the whales. Right? Whether that's TVL or whatever your metric is. But like convince the top, you know, five guys to use it and then trust then that, that like the benefits that you knew that you were creating will kind of build momentum and take off from there. So does that sound right? And do you have anything to add? **Speaker C:** Yeah, I think that's, that's very much correct. I would pattern match it to startups where the playbook is to like make a product, get the product live and then iterate, or you can't really iterate with ercs, but you can, I guess. Like that's what the draft review and last call stages are for. That's the iteration phase where you're gathering feedback from your potential customers, making the changes. And, and then the, you know, startups are just as easy as just like go find product market fit. It's the same. It's the same with the, you know, that's all you have to do, which is one step. Right. So that's obviously tongue in cheek, but. **Speaker B:** Well, I guess like, last thing in this kind of strategy conversation is how much do you, if you have to sequence finding you know, the implementers and the product market fit and the yearns of your story and actually pushing the ERC through the process with like, how do you think about sequencing that? Like, what happens first? Is it important to have the partner before you go into the ERC process? Is it vice versa? Like, how do you think about that? **Speaker C:** Yeah, I think that we're getting into the realm of, you know, narrative around a process that wasn't really as thought through as, you know, like there wasn't like this like intense strategy around how we're going to get 4,606 adopted. It was just kind of, it was very natural in terms of the strategy and even implementing the standard. But what I would say is that for things that look like this, startups writing standards, things that require community, require users and adoption always go outside the comfort zone for like the biggest reasonable win that you can go for. So like, if we at draft stage, we actually did this, we I dmed Robert Leshner and I was like, hey, you guys need to use this standard. And he was like, yeah, okay. They just kind of like, it was like, it's too early, you know, so like, compound's not going to go change, like, or aave, for example. They totally blew us off the first time because they were writing their V3. It had already like gone through two audits. And the standard, we just finalized it and we were like, hey, you guys should like edit your already audited production code to like conform to this. They were like, absolutely not. Right? So it was too early for the total blue chips in 2021 when the standard first became final. So we went to like the, you know, DeFi 2.0 crowd, right? And they were all super down for it because that was the level that the standard was at. It was like people were all trying to compete, not compete, but like make the best products and gain TVL and whatever. So it was a lot of pre production protocols and protocols that were more like not blue chips but DeFi 2.0 or whatever kind of Defi summer type of projects. They were all for it, they all loved it because that's where we were at the tribe Dao, right? And so we got all these guys to implement it and then that created enough brand share and mind share around the standard open Zeppelin wrote a 4626 open source whatever for everybody to use. Now it's out of the box. Soulmate had one Yearn was the first blue chip to really put their flag in the ground. And that was obviously, I think a lot from Fubulobu who was one of the authors of the standard. Did a lot of internal lobbying with Yearn and then Dante got behind it and Schlag and all the other devs for v3. So once they put the flag in the ground, now it's like there's a blue chip out there. And they were the lowest hanging blue chip. And then finally MakerDAO came in, everyone started just adopting and I think over the next two or three iterations of DeFi we'll see that it'll be pretty much everywhere. And yeah, I think that now is the time for some of the newer standards to add more specific functionality on top of 4,626 to keep kind of more utility, more diversity of use cases, more standardization. I think that's the, that's sort of how things ended up playing out. **Speaker B:** Well, I guess with that as a pivot point, like let's talk about some of the changes you're looking forward to and some of the ERCs that you're working on. So like I. I know we discussed briefly before we started recording that you are working on. I think you said three, right? So can you talk a little bit just about. Yeah. Why? What are the things that you're working on and why of all of the things you can be Doing to help like continue to boot up the world computer. Why these are the most exciting things for your time and energy right now. **Speaker C:** So 4626 itself I think covers a super wide range of use cases. And there are three really major extensions that everyone's kind of talking about. Again, kind of the obvious extensions. So the first one is having native ETH as the underlying asset. So 4626 is literally a token container. It's a token vault, it's a token strategy, whatever mental model helps you kind of imagine how you would use it. But you put a token inside of a container that some yield happens. Maybe it's you can't lose money. Maybe you can, but it's all denominated in the same. You can or can't, you know, right? Like the DSR is like risk free and DAI terms, but MakerDoc could blow up while your DAI is in there. So there are certain vaults that kind of always go up in terms of the underlying and other ones where you might lose some money because you're selling options or whatever. But having the token standard be a container for other tokens is great. But what if you want to use ether, which is not a token, it's its own native protocol asset. So for that I wrote ERC 7535. So that will take ETH as a native asset. That one's super non controversial. There's really only one way to do it. There's a couple details that are being discussed in the forums, but I don't think that one will take too long to end up becoming final. And the goal for that, that one's actually my favorite because there's two major use cases for it. One is a new version of wrapped ethereum which uses 4626 as a container. So WETH is cool because it's so minimal. Like wrapped eth9 is the one that uniswap v2 and basically all of DEFI uses. And it's very elegant, it's like not even 100 lines, but it's not super extensible and it doesn't have a ton of integration potential because it doesn't have some of the newer things like EIP 2612, message signing for permitting and it doesn't have the utilities for depositing to and from on behalf of other people. So it's really minimal for using it yourself as an eoa. But in terms of integration potential, there's a lot of extra steps and routing that's very inefficient versus being able to add in these extra parameters that are, that come by default with 4626. So I've been working on a new version of wrapped ether for Polygon for their new Paul token on their ZK chain. So that's going to be, I think, you know, if that gets a lot of Lindy and a lot of tvl, then that might even be able to port over to other rollups that are evm, which would be really cool. And even cooler than that is liquid staking tokens. So liquid staking tokens are literally just ether vault that earns yield. So Wrapsdeeth, Wreath, Coinbase, ETH, all of these should be 46, 26. And I'm not sure who is going to implement it first, but somebody will and then if they get big enough then everybody will. **Speaker B:** So do we need this new extension in order to like have to really like have 4626 vaults like represent Staked Eth better or is that just a matter of time? **Speaker C:** We need the extension. Yeah, because otherwise the details, there's slightly different ways to do it. And so you have a standard that says this is the way to do it and then there's no guesswork. So the standard I think was, will be the missing piece. Hopefully that's, that's, you know, that's the bet. **Speaker B:** Got it. And so for this one, what you're saying is it's so non controversial and it's so such an obvious win that like you're, you're confident that aside for some implementation details and maybe some typos or whatever that are being worked out, like this is a pretty smooth sail through the ERC process and like are you working with any, you know, major implementers to like to show that this is needed or are you able to just communicate that via what the ERC is? **Speaker C:** Yeah, I think it, it kind of speaks for itself. And the forums there is almost no. There's a couple questions and. But the discussions are really focused on like you said, the minutiae, the court, the need for the standard and the main interface and sort of strategy are all super clear and I think consensus, I think that the hard part is really going to be actually getting these mega liquid staking tokens to actually implement it. So that's the fun part that I get to work on. **Speaker B:** Let's call Sam Kazemian because I don't. I'm not sure if they've released Frax ETH v2 yet. I think there's still time. **Speaker C:** Well, staked fractif actually is 4626, but it's 4626 on top of frax eve. So if they, they have like two liquid staking tokens or they have one, I guess eth derivative called frax eth and then they stick that one. So. And that's basically the same model that we have with Lido with the caveat that I'm not sure if FRAX E3 bases or not, but anyway, yeah, so with Steve it does rebase, but with Rack Seeth it doesn't. So you have to go stake it. But the staking of it is 4626. So I think that that was probably their way of getting around the standard because otherwise there's. I don't know if there's a reason to have a ETH derivative that doesn't rebase. But anyway, we can talk to Sam about it, I guess. **Speaker B:** No, no, I mean you're right that because of their construction, which they do for economic reasons and well, that they kind of hack their way around this problem that you're just going to solve at the ERC level. So anyway, I think we've beaten that one to death. What are the other change, the other extensions that you're building? **Speaker C:** Yeah, so the. There was another one that the centrifuge team was working on with Superform for asynchronous vaults that have a two step deposit and withdrawal process. So you basically request a withdrawal or request a deposit and then it gets executed on the back end or the standard is actually not too opinionated on how the two step process gets done. It just provides an extra method for initiating the two step and then introspecting which stage you are of whether the request is still being pending or whether it's claimable. And then finally you can execute the claim once it's claimable to complete the process. So it's an asynchronous vault. **Speaker B:** So the idea here is that you might want to implement a vault in which today the only way to do it directly through the standard is like kind of you do deposits and withdrawals. But maybe you want to say like a deposit triggers a one week like unlock process and this new extension will build that directly into the standard. Is that what you're saying? **Speaker C:** Yeah, exactly. So this is useful for primarily real world assets where there's some centralized entity that has to go fulfill a request on the back end and there's not immediate liquidity and the core token or again liquid staking tokens. So you actually need both standards to do a liquid staking token. Right. Because 7535 on its own is basically just wrapped ether or like compound style. You can use it in lending markets and stuff, but if you have a withdrawal delay like you have with Lido or any other liquid staking token, you need to have a request for a withdrawal and then a withdrawal. So it's literally a two step withdrawal process. And so when you combine these two standards, you get a liquid staking token standard. So that, that's kind of the vision for both of them. And I think obviously liquid staking tokens are going to be huge in the next wave of DeFi. They're already huge. So having some extra standardization there I think can only help. **Speaker B:** Do you foresee that being difficult to usher through the process? Is there any controversy there? **Speaker C:** Yeah, actually there's a lot because asynchronicity is very difficult to implement. And a lot of teams have been thinking about, since the publication of 4626, they've been thinking about how do you do a two step 4626? So a lot of teams are like, well, we did it this way and we did it this way. And really the whole point is like coming to truth on what is the correct set of engineering trade offs for elegance, for simplicity. If your production implementation doesn't work, sorry, it just has to work for the next version. But if you have some unique insight that makes the standard better, then it gets included. And that's the kind of the beautiful process that happens with the EIPS. And it happened with 4626 too, where a lot of teams were like, well, can you add this thing that we have? And sometimes it was a yes, sometimes it was a no. **Speaker B:** Cool. All right, so what's the third and like the third extension you're working on? **Speaker C:** Yeah, so the third one is actually, it's a meta eip. So it's an EIP about extensions, which is the. Is the first one that I've written and this one I actually, I'm getting. I'm getting a much deeper look at the EIP process from the perspective of an EIP editor by trying to change the EIP process itself to include some definitions and some extra boilerplate around writing an extension. Because 7535 is an extension, 7540 is an extension, and in a certain sense, 4626 is an extension of ERC20. So this meta EAP defines what makes an extension and it adds some extra heading and metadata and conventions for actually writing an extension. So it's more of like a cool meta EIP that will make future extensions easier to write. I'm not even sure if this one will get included in any. What I think that what might happen is it might end up turning into a smaller edit of EIP1. So the only EIP that's allowed to change in any meaningful way is EIP1. Every other EIP has to become final and then stay final. It's like sort of immutable in the same way that the blockchain is immutable. But EIP1 is a living document that describes the most up to date EIP process. And so if you want to change the EIP process or add a category or whatever, then you edit EIP1. So this last EIP might actually turn out to get incorporated into the living ERC one, which would also be really cool. **Speaker B:** No, first of all, just on a personal level that would be like, like forget, you know, signing into the blockchain forever, like signing into the Pro into EIP1. Like that's huge. So good luck for that. And it sounds like that might be the appropriate place for a meta EIP anyway. So like it just interesting to hear kind of how all these things come together. **Speaker C:** Yeah, exactly. And all the core devs are really, you know, eager to give or not eager maybe is the wrong word. But they're extremely helpful with feedback, very candid, very. They've seen everything. So seeing putting your their hat on is very helpful for learning about the EIP process, seeing into the raw decentralization that is Ethereum. **Speaker B:** So I guess with our last few minutes here, as somebody who has so much experience like working, you know, through the process to, you know, actually implementing to getting other protocols on board to now to the point where you're writing meta eips and introspecting on you know, what the process is. Let's say taking like a young Joey Centauro from three years ago as like your target audience, but really anyone today who is trying to, who sees a problem and thinks this shouldn't just be something I solve this some. This is something that all of Ethereum can like really benefit and get like a one plus one equals three moment from like what are some like core insights and advice that you would like, like to share with anyone that's trying to change the chain. **Speaker C:** I would say that I still believe that crypto is one of the quickest times to impact where it's truly an Idea meritocracy. There's this culture of if you make something useful, people are going to use it. They might even fork you and compete with you. You know, it's. It's. It's like the platonic form of meritocracy and competition in sort of an economic sense. But that's very great for you because if you have really good ideas and you think that they need to exist, this is the industry for you. Like, get in there, write an EIP or write a protocol, write a white paper, circulate it. Everyone's looking for alpha, everyone's looking to boost each other up. Like, the space is just here. It's sort of this beautiful. This beautiful community where everyone's working to increase the value, increase every. All the efforts that we're working on. So, you know, I think there's some really positives there. Like, you go in, you can build, and if your idea is good, then it will get adopted. And then you'll also learn, if you have an idea why it might not be a good idea, you'll learn that really quickly, too. And then you'll. You'll. You'll be smarter for the next time that you have an idea. So that's sort of the beauty of building in the space, and I think it's a great opportunity for anybody who's interested in it. **Speaker B:** Yeah. And I think, I think you're so right to call out that this industry specifically is the industry for people who just, like, need to change the world. And there's, like, so little barrier to entry. And, you know, the. Through my personal story and, like, through the, the lens that I see, that is, this is the only industry that you can, like, enter the inner circles by, like, starting by writing threads on Twitter. Right. I don't know if that's going to be possible in the future, just because I don't know if Twitter is going to be here in the future. But I do know that wherever we're congregating as a community, there's an opportunity for, like, the next person to just start creating contract content and contributing to the Zeitgeist. And, like, that's whether that's, like, my story or many of the people I've interviewed on this show, like, that's Vitalik's story. Like, literally. His dad gave him, like, a. Some information about Bitcoin, and he started here by being a, like, writer and an editor for Bitcoin magazine. So whether you approach it from, like, the, the technical side or the content side or whatever, like, what is actually Special here is that the, the distance between like the periphery and like the, the molten core is. It's infinitesimal compared to the rest of tech and the rest of society. So, man, Joey, thank you so much. I, I really appreciate this talk when we didn't even get a chance to talk about like kind of what you're working on today and what you're excited about. About. So will you just give the audience like a little bit of like how to find you and if they want to follow more of what you're doing, like just the projects that you're putting your time in. **Speaker C:** Yeah. So my Twitter is Joey Santoro eth. And my telegram is Joey Santoro and my GitHub is Joey Santoro. And that's where I'm, that's where I'm the most active. So you could DM me, you could follow like what pull requests I'm making and whatever. Because really right now I'm kind of living in the 4626 alliance where you can find that, that Telegram chat at erc4626 on Twitter links to the Telegram. Join there. I'm pretty active and yeah, that's what I'm working on these days is like getting all these open source ideas and standards that I had in my head since 4626 was first written out there and then we'll see what kind of projects I find myself into after that. But that, that's where I've been kind of doing most of my stuff recently and that's where you can find me. **Speaker B:** Yeah, for sure, man. You got to get all the lessons that you learned, like building the last venture out of your head and into the, the ether, if you will, so that you got space for the next one. Right. And like, as you said in your story, like last time you wrote a paper, Urine came out a month later and you realized that like every time you have a big idea, like, you gotta jump off the cliff. So I'm just like really excited to see what the next jump is for you, man. **Speaker C:** Thanks, Rex. Yeah, I'm excited too. And thanks for having me on. It's been awesome jamming with you. **Speaker B:** Yeah, for sure, man. Like, really appreciate learning about the ERC process and can't wait to have you on when you start your next venture. So, joy, thank you so much and talk to you soon, man. **Speaker C:** Talk soon.