Essential EIPs & ERCs You Must Master to Design Secure DeFi

Introduction: DeFi Is Built on Standards, Not Hype

Decentralized Finance is often discussed in terms of yield, liquidity, and incentives. But in reality, DeFi is built on something far more fundamental: standards.

Every lending protocol, AMM, vault, derivative, or smart wallet is shaped by Ethereum Improvement Proposals (EIPs) and ERC standards that define how assets behave, how contracts interact, and how risks are controlled. These standards are not theoretical documents — they are the accumulated lessons of real exploits, failed designs, gas inefficiencies, and scalability limits.

For any Solidity developer aiming to advance into DeFi protocol engineering, understanding these EIPs is not optional. It is the difference between using DeFi and designing it.

This article presents a curated, ordered list of the most critical DeFi-related EIPs and ERCs, along with their purpose and required prerequisites.

1. ERC-20 — Fungible Token Standard (EIP-20)

🔗 https://eips.ethereum.org/EIPS/eip-20

ERC-20 defines the base abstraction of value in DeFi. Tokens, shares, debt positions, rewards, governance power — all of them ultimately reduce to this interface.

Beyond simple transfers, ERC-20 teaches fundamental lessons about:

• Event-based accounting
• Allowance mechanics and approval risks
• Composability between independent protocols

Prerequisites: Solidity basics, mappings, events.

2. ERC-165 — Standard Interface Detection

🔗 https://eips.ethereum.org/EIPS/eip-165

ERC-165 allows contracts to declare which interfaces they support through supportsInterface(bytes4). This is a cornerstone of safe composability in DeFi.

Without ERC-165, protocols would rely on fragile assumptions about counterparty behavior — a common source of integration failures.

Prerequisites: ABI encoding, function selectors, bytes4.

3. EIP-712 — Typed Structured Data Hashing

🔗 https://eips.ethereum.org/EIPS/eip-712

EIP-712 enables secure, human-readable off-chain signatures that can be verified on-chain. This proposal is the cryptographic backbone of modern DeFi UX.

It enables:

• Gasless interactions
• Meta-transactions
• Permit-style approvals

Prerequisites: keccak256, ecrecover, ABI encoding.

4. ERC-2612 — permit()

🔗 https://eips.ethereum.org/EIPS/eip-2612

ERC-2612 extends ERC-20 by allowing approvals via signatures instead of on-chain transactions. This dramatically improves UX and reduces friction in DeFi flows.

Most modern DeFi protocols rely on permit() to minimize user interactions and gas costs.

Prerequisites:

• ERC-20
• EIP-712
• Nonce management

5. ERC-3156 — Flash Loan Standard

🔗 https://eips.ethereum.org/EIPS/eip-3156

ERC-3156 standardizes flash loans — atomic, uncollateralized loans that must be repaid within the same transaction.

Understanding this EIP is critical not only for using flash loans, but for defending against flash-loan-based attacks, which dominate DeFi exploit history.

Prerequisites:

• ERC-20
• Transaction atomicity
• Reentrancy awareness

6. ERC-777 — Advanced Token Standard

🔗 https://eips.ethereum.org/EIPS/eip-777

ERC-777 introduces hooks that allow contracts to react automatically to token transfers. While powerful, it also explains many historical DeFi exploits.

Studying ERC-777 teaches why implicit execution is dangerous and why defensive design patterns matter.

Prerequisites:

• ERC-20
• Reentrancy concepts
• ERC-1820

7. ERC-1820 — Pseudo-Introspection Registry

🔗 https://eips.ethereum.org/EIPS/eip-1820

ERC-1820 defines a global registry for interface implementations. It enables dynamic discovery of contract capabilities and is heavily used by ERC-777.

This EIP highlights the trade-offs between flexibility and global state dependencies.

Prerequisites:

• ERC-165
• Registry-based architectures

8. ERC-4626 — Tokenized Vault Standard

🔗 https://eips.ethereum.org/EIPS/eip-4626

ERC-4626 formalizes yield-bearing vaults — one of the most important abstractions in DeFi.

It standardizes:

• Share ↔ asset conversion
• Deposits, withdrawals, and accounting
• Yield composability across protocols

Prerequisites:

• ERC-20
• Fixed-point math
• Precision and rounding awareness

9. ERC-721 — Non-Fungible Token Standard

🔗 https://eips.ethereum.org/EIPS/eip-721

In DeFi, ERC-721 is not just about NFTs. It is widely used to represent:

• LP positions
• Collateralized debt positions
• Options and structured products

Prerequisites:

• ERC-165
• Ownership and transfer models

10. ERC-1155 — Multi-Token Standard

🔗 https://eips.ethereum.org/EIPS/eip-1155

ERC-1155 enables efficient management of multiple asset types within a single contract. It is especially useful for complex DeFi systems and derivatives platforms.

Batch operations and reduced gas costs make it a powerful architectural tool.

Prerequisites:

• ERC-165
• Batch execution patterns

11. EIP-1967 — Proxy Storage Slots

🔗 https://eips.ethereum.org/EIPS/eip-1967

EIP-1967 standardizes storage slots for proxy contracts, preventing storage collisions during upgrades.

For long-lived DeFi protocols, this EIP is essential to avoid catastrophic state corruption.

Prerequisites:

• delegatecall
• Solidity storage layout rules

12. EIP-1822 — UUPS Proxy Standard

🔗 https://eips.ethereum.org/EIPS/eip-1822

UUPS moves upgrade logic into the implementation contract, reducing gas costs and increasing flexibility.

It also introduces new risks — making this EIP a must-read for understanding upgrade authority and governance failures.

Prerequisites:

• EIP-1967
• Access control design

13. EIP-2535 — Diamond Standard

🔗 https://eips.ethereum.org/EIPS/eip-2535

The Diamond Standard enables modular, upgradeable smart contract systems composed of multiple facets.

Large-scale DeFi protocols increasingly rely on this pattern to manage complexity without sacrificing upgradeability.

Prerequisites:

• delegatecall
• Function selector routing
• Advanced storage patterns

14. EIP-2929 — Gas Cost Increases for State Access

🔗 https://eips.ethereum.org/EIPS/eip-2929

EIP-2929 introduces the concept of cold and warm storage access, significantly impacting gas optimization and attack surfaces.

Understanding this EIP is critical for writing gas-efficient and attack-resistant DeFi contracts.

Prerequisites:

• EVM gas model
• Storage access patterns

15. EIP-4337 — Account Abstraction

🔗 https://eips.ethereum.org/EIPS/eip-4337

EIP-4337 redefines Ethereum accounts by enabling smart contract wallets without protocol-level changes.

For DeFi, this unlocks:

• Gas sponsorship
• Batched execution
• Custom validation logic
• Safer user experiences

Prerequisites:

• Signature verification
• Nonce management
• EntryPoint architecture

Conclusion

DeFi mastery is not achieved by copying protocol code or optimizing APRs.

It comes from understanding why these standards exist, what problems they solved, and how they compose together.

Every major DeFi protocol is, at its core, a carefully chosen combination of EIPs. If you understand the standards, you understand DeFi.

Good Luck,
GM.