@hyperlane-xyz/core/contracts/token/extensions/4626.md

Core solidity contracts for Hyperlane

# Yield Routes

Yield routes are a mechanism to transfer yield-bearing assets across chains using the ERC4626 standard.

`HypERC4626Collateral` is a contract that implements `ERC4626` deposits upon transfer and withdrawal upon transfer back.

`HypERC4646` is a contract that implements a rebasing `ERC20`. Balances are virtualized as vault shares times the total assets over the total shares in the `ERC4626` vault (on the collateral chain).

## `HypERC4626Collateral.transferRemote`

```mermaid
sequenceDiagram
    participant User
    participant ERC20
    participant ERC4626
    participant WarpRoute
    participant Mailbox

    User->>WarpRoute: transferRemote(dest, recipient, amount)
    WarpRoute->>ERC20: transferFrom(User, WarpRoute, amount)
    WarpRoute->>ERC20: approve(ERC4626, amount)
    WarpRoute->>ERC4626: deposit(amount, WarpRoute)
    ERC4626-->>WarpRoute: shares
    WarpRoute->>ERC4626: convertToAssets(PRECISION)
    ERC4626-->>WarpRoute: exchangeRate
    WarpRoute->>WarpRoute: nonce += 1

    WarpRoute->>Mailbox: dispatch(dest, router[dest], {recipient, shares, exchangeRate, nonce})
```

## `HypERC4626.handle`

```mermaid
sequenceDiagram
    participant Recipient
    participant WarpRoute
    participant Mailbox

    Mailbox->>WarpRoute: handle(origin, sender, {recipient, shares, exchangeRate, nonce})
    alt nonce > latestNonce && origin = collateralChain
        WarpRoute->>WarpRoute: latestNonce = nonce
        WarpRoute->>WarpRoute: latestExchangeRate = exchangeRate
    end

    WarpRoute->>WarpRoute: mint(shares, recipient)
    WarpRoute->>WarpRoute: balance[recipient] = shares
    Recipient->>WarpRoute: balanceOf(recipient)
    WarpRoute-->>WarpRoute: balance[recipient] * latestExchangeRate
    WarpRoute-->>Recipient: amount
```

## `HypERC4626.transferRemote`

```mermaid
sequenceDiagram
    participant User
    participant WarpRoute
    participant Mailbox

    User->>WarpRoute: transferRemote(dest, recipient, amount)
    WarpRoute-->>WarpRoute: burn(shares, User)
    WarpRoute->>Mailbox: dispatch(dest, router[dest], {recipient, shares})
```

## `HypERC4626Collateral.handle`

```mermaid
sequenceDiagram
    participant Recipient
    participant ERC20
    participant ERC4626
    participant WarpRoute
    participant Mailbox

    Mailbox->>WarpRoute: handle(orgn, sender, {recipient, shares})
    WarpRoute->>ERC4626: redeem(shares, recipient, WarpRoute)
    ERC4626-->>WarpRoute: amount
    WarpRoute->>ERC20: transfer(recipient, amount)
    ERC20-->>Recipient: amount
```