Pectra upgrade notice: Analysis of EIP-3764 innovative ideas

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. The upgrade involves the implementation of a batch 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 form) to improve the efficiency of on-chain interactions. , reducing Gas costs and providing greater flexibility for complex interactions in specific scenarios.

△ Image source: The Block

Main problems solved by EIP-3764

Currently, DeFi protocols suffer from poor interoperability when it comes to 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)" to achieve standardization and enhance compatibility between protocols. Therefore, EIP-3764 will play a role in proposing improvements to the following current problems:

• Gas costs are high. In DeFi, many operations (such as deposits, staking, and transactions) require interaction between native tokens and smart contracts. This usually involves multiple steps and has a high gas cost.

• Poor compatibility. The current interfaces for packaging native tokens (such as WETH) are different, causing the integration between protocols to require additional development and adjustment, increasing complexity and time costs.

• Insufficient user experience. When users interact with complex DeFi protocols, they need to understand the specific mechanisms of each protocol. Interactions on the chain require frequent signatures and multiple approvals, making the process complex. The income calculation methods of different protocols are different, making it difficult for users to compare.

How to implement EIP-3764?

Core mechanism: EIP-3764 proposes the implementation of a new smart contract standard, introducing the "wrapped native Token" Wrapped Position Token standard to support users to convert ETH into wrapped Token and redeem native ETH when needed.

Wrapped native tokens (Wrapped Position Tokens, WPTs)

• Abstracting complex positions into a tradable ERC-4626 Token, users only need to interact with the Token without caring about the specific details of the underlying protocol.

• Standardized Tokens can be freely traded, thus enhancing liquidity; at the same time, they can also support more DeFi portfolio innovations, such as serving as collateral, participating in aggregate income protocols, etc., to enhance composability.

• Through the standardized revenue tracking interface, a more transparent and verifiable revenue management method is provided to facilitate users to conduct unified revenue calculation and tracking.

1. Generation of packaging token:

• Users deposit ETH into the EIP-3764 contract.

• The contract casts a wrapped Token of equal value and returns it to the user.

2. Redemption of packaged Token:

• The user sends the wrapped Token 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 packaging Token management, such as:

• deposit: Deposit ETH and generate wrapping Token.

• withdraw: Destroy the wrapped Token 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 been officially implemented into the Ethereum main network, it can be seen that this proposal is beneficial to the long-term development of DeFi and blockchain ecology, especially in high-frequency interactions and complex operations. scene, it is of great significance.