Abstract

This standard is an extension of the ERC-4626 spec with an identical interface and behavioral overrides for handling Ether or any native asset as the underlying.

Motivation

A standard for tokenized ETH Vaults has the same benefits as ERC-4626, particularly in the case of Liquid Staking Tokens, (i.e. fungible ERC-20 wrappers around ETH staking).

Maintaining the same exact interface as ERC-4626 further amplifies the benefits as the standard will be maximally compatible with existing ERC-4626 tooling and protocols.

Specification

All ERC-7535 tokenized Vaults MUST implement ERC-4626 (and by extension ERC-20) with behavioral overrides for the methods asset, deposit, and mint specified below.

ERC-4626 Breaking Changes

  • Any assets quantity refers to wei of Ether rather than ERC-20 balances.
  • Any ERC-20 transfer calls are replaced by Ether transfer (send or call)
  • Any ERC-20 transferFrom approval flows for asset are not implemented
  • deposit and mint have state mutability payable
  • deposit uses msg.value as the primary input and MAY ignore assets

Methods

asset

MUST return 0xEeeeeEeeeEeEeeEeEeEeeEEEeeeeEeeeeeeeEEeE per ERC-7528.

- name: asset
  type: function
  stateMutability: view

  inputs: []

  outputs:
    - name: assetTokenAddress
      type: address

deposit

Mints shares Vault shares to receiver by depositing exactly msg.value of Ether.

MUST have state mutability of payable.

MUST use msg.value as the primary input parameter for calculating the shares output. I.e. MAY ignore assets parameter as an input.

MUST emit the Deposit event.

MUST revert if all of msg.value cannot be deposited (due to deposit limit being reached, slippage, etc).

- name: deposit
  type: function
  stateMutability: payable

  inputs:
    - name: assets
      type: uint256
    - name: receiver
      type: address

  outputs:
    - name: shares
      type: uint256

mint

Mints exactly shares Vault shares to receiver by depositing assets of ETH.

MUST have state mutability of payable.

MUST emit the Deposit event.

MUST revert if all of shares cannot be minted (due to deposit limit being reached, slippage, the user not sending a large enough msg.value of Ether to the Vault contract, etc).

- name: mint
  type: function
  stateMutability: payable

  inputs:
    - name: shares
      type: uint256
    - name: receiver
      type: address

  outputs:
    - name: assets
      type: uint256

Events

The event usage MUST be identical to ERC-4626.

Wrapped ETH

Any ERC-4626 Vault that uses a Wrapped ETH ERC-20 as the asset MUST NOT implement ERC-7535. ERC-7535 only applies to native ETH.

Rationale

This standard was designed to maximize compatibility with ERC-4626 while minimizing additional opinionated details on the interface. Examples of this decision rationale are described below:

  • maintaining the redundant assets input to the deposit function while making its usage optional
  • not enforcing a relationship between msg.value and assets in a mint call
  • not enforcing any behaviors or lack thereof for fallback/__default__ methods, payability on additional vault functions, or handling ETH forcibly sent to the contract

All breaking implementation level changes with ERC-4626 are purely to accomodate for the usage of Ether or any native asset instead of an ERC-20 token.

Allowing assets Parameter to be Ignored in a Deposit

msg.value must always be passed anyway to fund a deposit, therefore it may as well be treated as the primary input number. Allowing assets to be used either forces a strict equality and extra unnecessary gas overhead for redundancy, or allows different values which could cause footguns and undefined behavior.

The last option which could work is to require that assets MUST be 0, but this still requires gas to enforce at the implementation level and can more easily be left unspecified, as the input is functionally ignorable in the spec as written.

Allowing msg.value to Not Equal assets Output in a Mint

There may be many cases where a user deposits slightly too much Ether in a mint call. In these cases, enforcing msg.value to equal assets would cause unnecessary reversions. It is up to the vault implementer to decide whether to refund or absorb any excess Ether, and up to depositors to deposit as close to the exact amount as possible.

Backwards Compatibility

ERC-7535 is fully backward compatible with ERC-4626 at the function interface level. Certain implementation behaviors are different due to the fact that ETH is not ERC-20 compliant, such as the priority of msg.value over assets.

It has no known compatibility issues with other standards.

Security Considerations

In addition to all security considerations of ERC-4626, there are security implications of having ETH as the Vault asset.

call vs send

Contracts should take care when using call to transfer ETH, as this allows additional reentrancy vulnerabilities and arbitrary code execution beyond what is possible with trusted ERC-20 tokens.

It is safer to simply send ETH with a small gas stipend.

Implementers should take extra precautions when deciding how to transfer ETH.

Forceful ETH transfers

ETH can be forced into any Vault through the SELFDESTRUCT opcode. Implementers should validate that this does not disrupt Vault accounting in any way.

Similarly, any additional payable methods should be checked to ensure they do not disrupt Vault accounting.

Wrapped ETH

Smart contract systems which implement ERC-4626 should consider only supporting ERC-20 underlying assets, and default to using a Wrapped ETH ERC-20 instead of implementing ERC-7535 for handling ETH.

The subtle differences between ERC-4626 and ERC-7535 can introduce code fragmentation and security concerns.

Cleaner use cases for ERC-7535 are ETH exclusive, such as Wrapped ETH and Liquid Staking Tokens.

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