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 an Ethereum Improvement Proposal ), which proposes to wrap Ethereum’s native Token (ETH) into a new Token format (i.e. Wrapped ETH or similar) to improve the efficiency of on-chain interactions and reduce Gas cost, and provide greater flexibility for complex interactions in specific scenarios.

△ Image source: The Block

Main issues addressed by EIP-3764

Currently, DeFi protocols have problems handling position management (such as lending, staking, or providing liquidity) Poor interoperability issues. 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 in the following current problems:

Gas cost is high. In DeFi, many operations (such as deposits, staking, and trading) require native tokens and smart contract interaction. 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. useWhen 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 to implement a new smart contract standard, introducing the "wrapped native Token" Wrapped Position Token standard to support users to convert ETH to Wrap the token and redeem native ETH when needed.

Wrapped Position Tokens (WPTs)

Abstract 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 Token can be freely traded, thereby enhancing liquidity; at the same time, it can also support more DeFi portfolio innovations, such as being used as collateral products, participate in aggregation revenue agreements, etc. to enhance composability.

Provides a more transparent and verifiable revenue management method through a standardized revenue tracking interface to facilitate users to conduct unified revenue calculation and tracking .

1. Generation of packaging token:

User deposits ETH into the EIP-3764 contract .

The contract casts a packaging token of equal value and returns it to the user.

2. Redemption of wrapped Token:

The user sends the wrapped Token back to the contract.

The contract destroys these Tokens and releases the equivalent native ETH.

Standardized interface: EIP-3764 defines aA set of standardized functions and events for the management of packaging tokens, for example:

deposit: Deposit ETH and generate packaging tokens.

withdraw: Destroy the wrapping Token and withdraw ETH.

Event notification: packaging 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 very important for DeFi and The long-term development of the blockchain ecosystem, especially in high-frequency interactions and complex operation scenarios, is of great significance.