What is an ERC-4626 tokenized vault?
ERC-4626 is the standard for tokenized vaults: contracts that take in one ERC-20 token and give back shares.1 Each share is a claim on part of everything the vault holds.1
What a vault is
In ERC-4626, a vault holds one underlying ERC-20 token, called the asset.1 When you put the asset in, the vault gives you shares. Shares are the vault's own ERC-20 token.1 Vault shares are a claim on part of the vault's holdings.1
ERC-4626 names lending markets, aggregators and interest-bearing tokens as examples of vaults.1 Before ERC-4626, each built them differently. That made vaults hard to connect, and each protocol wrote its own adapters, which were prone to errors.1 ethereum.org describes ERC-4626 as a standard for vaults that earn a yield.2
ERC-4626 was created in December 2021, and its official page shows the status Final.1
Four ways in and out
Shares are created (minted) when you go in, and destroyed (burned) when you come out.1
| Function | You choose | What happens |
|---|---|---|
| deposit | How many assets to put in | The vault mints shares for you.1 |
| mint | How many shares you want | The vault takes the assets needed.1 |
| withdraw | How many assets to take out | The vault burns the shares needed.1 |
| redeem | How many shares to hand back | The vault burns them and sends you assets.1 |
The exchange rate
How many shares you get depends on how much you put in and on the vault's exchange rate.3 That rate depends on what the vault holds right now.3 The vault's total assets SHOULD include any yield it has earned.1 So when the vault's holdings grow, each share is a claim on more assets.1
Two functions estimate the rate: convertToShares and convertToAssets. They ignore fees and always round down.1 The standard calls them estimates for display.1 For a closer figure that includes fees, each action has a matching "preview" function.1
The standard says rounding should favour the vault over its users, because that is considered most secure.1
- Assets per share = the vault's total assets ÷ its total shares.
- Shares you get = assets you deposit ÷ assets per share.
- Assets you get back = shares you redeem × assets per share.
- These ignore fees and rounding, as the convert functions do.
What the standard leaves out
ERC-4626 deliberately does not say how a vault uses its deposits.1 Vaults are meant to be treated as black boxes on-chain and checked off-chain before use.1 The standard warns that a harmful vault could match the interface without following the rules. It recommends that apps building on a vault review its code first.1
OpenZeppelin describes one known trick, an "inflation attack". An attacker gives assets to a nearly empty vault to push the rate up.3 A later small deposit can then round down to zero shares, which is in effect a gift to the vault.3 OpenZeppelin calls the risk low and describes a defence.3
Later standards extend ERC-4626. ERC-7540 covers vaults where deposits and withdrawals happen later, not at once. ERC-7575 covers vaults with several assets.4
- ERC-4626: Tokenized Vaults. Ethereum Improvement Proposals (Joey Santoro, t11s, Jet Jadeja, Alberto Cuesta Cañada, Señor Doggo), created 22 December 2021, status Final.
- Ethereum development standards. ethereum.org developer docs, page updated 26 September 2025.
- ERC-4626 (security concern: inflation attack). OpenZeppelin Contracts 5.x documentation.
- ERC-4626 Tokenized Vault Standard. ethereum.org developer docs, page updated 9 July 2026.
General education built from the publicly available sources listed above. Not financial, legal, tax or investment advice. Naming a company, project or regulator is not an endorsement either way. Last checked 2026-10-22. Terms and disclaimer.