Author: Spinach!
ERC-3525 has shown significant advantages in the future trends of Web3. Whether it is real-world assets (RWA), customer loyalty programs, or games, ERC-3525 has significant potential.
Since the birth of blockchain technology in 2008, the cryptocurrency market has experienced rapid development. However, the total market value of the entire cryptocurrency market is still not higher than that of Apple, and Web3 still lacks practical applications in the real world. However, a new research report from Citibank, “Money, Tokens and Games,” may change this situation. In the report, Citibank identifies the tokenization of real-world assets (RWA) as the next major narrative stage and believes that it may have a huge impact on the development of Web3, which will drive the blockchain and Web3 industries to have the next billion users and potentially bring trillions of dollars in economic activity to the market.
In the narrative of tokenizing real-world assets (RWA), the author of this article, Wanwu researcher Spinach, believes that the ERC-3525 standard has great potential. This is a semi-homogeneous token (SFT) standard that combines the characteristics of ERC-20, ERC-721, and ERC-1155, making it more effective in representing and managing more complex assets such as bonds, coupons, invoices, futures, options, and ABS. In this way, ERC-3525 has great potential to promote the development of tokenizing real-world assets (RWA), thereby promoting the widespread application of Web3 in the real world.
This article will compare the components of ERC-20, ERC-721, ERC-1155, and ERC-3525 to help you understand the differences between these token standards, and then explore the digital world modeling ideas of ERC-3525 from three levels, and finally look to the future to see which fields ERC-3525 is worth paying attention to.
Special thanks to Samo teacher for his careful polishing and optimization of this article
-
Table of Contents
-
Background Introduction
-
Comparison of existing ERC token standards-How to understand ERC-3525?
-
ERC-20
-
ERC-721
-
ERC-1155
-
ERC-3525
-
Understanding ERC-3525 as a Digital World Modeling Idea from Three Levels
-
Super NFTs with Separable Combination
-
Universal Digital Container
-
Visual Smart Contract
-
What are the ERC-3525 application areas worth paying attention to in the future?
-
Real-World Assets (RWA) on the chain
-
Virtual assets or commodities
-
Social, identity fields, and tokenized accounts
-
Summary
Background Introduction
Before introducing ERC-3525, let’s first introduce what EIP and ERC are:
EIP, Ethereum Improvement Proposals, is a framework in the Ethereum community that allows anyone to propose improvements or updates to the Ethereum network. These proposals may involve the Ethereum protocol itself, related client APIs, or provide standards for other projects in the Ethereum ecosystem.
ERC, Ethereum Request For Comment, is a special type of EIP that focuses on application-level standards, such as smart contract design patterns, interface definitions, etc. These ERCs typically provide a standard template for Ethereum application developers to ensure that different projects and applications can have a shared interface or standard. Simply put, all ERCs are EIPs, but not all EIPs are ERCs. EIPs cover a wider range, including changes to the underlying protocol, etc.
ERC-3525 was created on December 1, 2020, designed by core members of the Solv Protocol, and supported by core Ethereum developers. From the initial proposal to the final community acceptance, this process took 20 months, during which several drafts were refined, and finally became an ERC token standard in September 2022. As an Ethereum standard created by a team with Chinese members, ERC-3525 has also ushered in a new round of attention in the industry.
Comparison of Existing ERC Token Standards – How to Understand ERC-3525?
ERC-3525 is a semi-fungible token (SFT) standard. Many people who first learn about ERC-3525 may think it is a hybrid of ERC-20 and ERC-721, but in fact, ERC-3525 is a cornerstone universal standard, and even in some areas, it has overwhelming advantages over ERC-20, ERC-721, and ERC-1155. Next, we will help you understand ERC-3525 by comparing the key components of other token standards (ignoring other attributes such as names and symbols) and their advantages and disadvantages.
Image source: solv.finance PPT
ERC-20
ERC-20 is one of the most widely used token standards for Ethereum applications, which means it is a fungible token, which means that each token is equal in function and value, with no difference. This is why they are called “fungible”. Stablecoins are an important example of ERC-20 applications, where each stablecoin is fungible and can be exchanged with each other, representing the same value.
Key components: address and value. Address specifies the address of the asset owner, and value represents the number of tokens that the address owns. Under the ERC-20 standard, each address can be associated with a balance (Value), which represents the number of tokens that the address holds. All balances are the same and there is no difference.
Advantages: ERC-20 tokens correspond to interchangeable assets, like traditional currencies or shares, which makes ERC-20 very useful in many applications, such as representing company shares or serving as trading pairs for decentralized exchanges (DEX). ERC-20 is also widely used in DeFi applications such as lending platforms and liquidity mining. ERC-20 can also be split into non-integer parts, so you can own 0.5 ERC-20 tokens.
Limitations: Since ERC-20 tokens are completely interchangeable, they cannot be used to represent unique or non-fungible assets, such as artworks or collectibles.
ERC-721
When it comes to ERC-721, we have to mention non-fungible tokens (NFTs). Well-known NFTs such as Bored Ape Yacht Club and Azuki all belong to the ERC-721 standard, which describes how non-fungible tokens should be created and managed on the Ethereum blockchain.
Unlike ERC-20 tokens, where each unit is identical and interchangeable, each unit of an ERC-721 token is unique and non-fungible, making them an ideal choice for representing unique digital or real-world assets (such as artwork, real estate, collectibles, etc.). The earliest NFT CryptoPunks were not based on the ERC-721 standard but rather on the ERC-20 standard. However, the emergence of CryptoPunks led to the creation of the ERC-721 standard, which became the cornerstone for many valuable applications of NFTs.
Key components: tokenId and owner. The tokenId is a unique identifier used to differentiate between different ERC-721 tokens, and the owner is the address of the token owner. Under the ERC-721 standard, each token is distinct and unique, distinguished by its ID property, and each ID is associated with an owner.
Features and benefits: ERC-721 tokens are non-fungible, with each token being one-of-a-kind. This makes them ideal for representing unique items or assets, such as artwork, collectibles, real estate, or other unique assets. This also makes them highly valuable for creating and trading digital art and other unique digital assets.
Limitations: Due to the non-fungible nature of ERC-721 tokens, they cannot be effectively used to represent interchangeable assets such as currency or shares, lack liquidity advantages, have poor composability, and cannot be divided into fractional units, i.e., you can’t own 0.5 of an ERC-721 token.
ERC-1155
ERC-1155 is a multi-token standard that combines the features of ERC-20 and ERC-721, designed to handle multiple types of tokens more efficiently and flexibly. In the previous ERC-20 and ERC-721 standards, each different token required the deployment of a new smart contract. This means that if you want to create a new token, you need to deploy a new contract, which may result in duplicated code and expensive gas costs. Moreover, there may be complex interactions between different contracts.
ERC-1155 provides a way to manage multiple types of tokens in a single smart contract, where each token can be either fungible (like ERC-20 tokens) or non-fungible (like ERC-721 tokens). For example, in a game, you can create different types of weapons (non-fungible) using ERC-1155, such as a stick, a knife, and a gun, and each weapon type (non-fungible) can have many identical weapons (fungible) underneath. For instance, the No.1 and No.10 knives are exactly the same (fungible), but knives and guns are different (non-fungible).
Key components: id, value, and owner. The id is a unique identifier used to distinguish between different ERC-1155 tokens, value represents the number of tokens for a specific id, and owner is the address of the token holder. In the example of weapons, different types of weapons represent different IDs, and the number of weapons (Value) for each weapon type (ID) is the same.
Advantages: ERC-1155 tokens can represent both interchangeable and non-fungible assets simultaneously, making them useful across a range of applications. For example, a game might use ERC-1155 tokens to represent both the type (non-fungible) and quantity (fungible) of a player’s equipment.
Limitations: While the flexibility of ERC-1155 tokens makes them useful in many cases, this same flexibility also makes understanding and implementing ERC-1155 potentially more complicated than ERC-20 or ERC-721. They cannot represent partially exchangeable assets such as bonds or futures and cannot be split into non-integer amounts, meaning you cannot own 0.5 ERC-1155 tokens.
ERC-3525
ERC-3525 is a semi-fungible token (SFT) standard that combines the features of ERC-20, ERC-721, and ERC-1155. It is more complex than ERC-1155 but can be used to express and manage complex digital financial assets such as securities, bonds, options, futures, swaps, insurance policies, etc. It is more composable than other token standards and represents a digital world modeling concept that can be understood from three levels: super NFT with split and combination properties, general-purpose digital container, and visual smart contract.
Key components: id, value, Slot, and Address. Each SFT has an id property equivalent to ERC-721 to identify it as a globally unique entity, allowing SFT to be transferred and approved between addresses in a way compatible with ERC-721. Additionally, each token contains a value property that represents the token’s quantity attribute, similar to the “balance” property of ERC-20 tokens. Address represents the address that owns the Slot and ID. Each address can have any number and type of IDs and Slots. What sets it apart is the Slot property, where different IDs with the same Slot can be transferred and exchanged, while different Slots cannot be transferred and exchanged. A Slot can have many kinds of IDs, but different IDs can only have one Slot.
The focus of ERC-3525 is on Slots. Simply put, a Slot represents a category, and there will be many IDs under the same Slot. Each ID, although different, has its own Value, but under the same Slot, different IDs can be considered the same and can be exchanged, combined, and split. Taking a membership card as an example, suppose the membership card has two Slots, KFC and McDonald’s. Each KFC and McDonald’s membership card has a different ID representing different people’s membership cards, such as Nakamoto’s card and V God’s card. Each person’s membership card has a Value to represent his or her points.
So, in the same Slot, which is the KFC membership card, the points in Nakamoto’s card and V God’s card are considered the same thing. Nakamoto can transfer points to V God’s card or receive points sent from V God’s card. Nakamoto can also split the points in his or her main card and secondary card (two different IDs with arbitrarily assigned point Values) or combine the main card and secondary card back together.
However, in different Slots, KFC and McDonald’s, because they are two different companies, KFC’s points cannot be transferred to McDonald’s membership card, so they do not have the transferability, exchangeability, and combinability between Value and ID.
Characteristics and advantages: Due to its more complex structure, ERC-3525 can be used to represent various complex digital structures such as securities, bonds, options, futures, swaps, insurance policies, membership cards, etc. In addition, because it is a semi-homogeneous token, each token can have its own characteristics and rules, making this standard very flexible and powerful. Also, due to the existence of Slots, ERC-3525 can achieve transfer from ID to ID, just like Nakamoto’s points card transfers points to V God’s points card, and it also supports non-integer splitting and combination.
Limitations: ERC-3525’s complex structure makes it more difficult to understand. Due to the existence of Slots, there are more centralized features in the technical structure. It is difficult to develop.
Understanding ERC-3525 as a Digital Modeling Concept from Three Perspectives
Due to its more complex structure compared to other token standards, ERC-3525, as a universal token standard, has the ability to create various complex token structures in the digital world through the composability of its data structure, just like using Lego blocks to create various complex models in the real world. It can be said that ERC-3525 represents a digital modeling concept. To gain a deeper understanding of ERC-3525, it can be understood from three perspectives: super-splitable combinable NFTs, universal digital containers, and visual smart contracts.
Super-splitable combinable NFTs:
ERC-3525 can express the three token standards of ERC-20, ERC-721, and ERC-1155 at the same time by only converting its attributes, for example:
Expressing ERC-20: When the Slot is the same, the Value under only one ID can represent homogeneous tokens
Expressing ERC-721: When the Slot is different, only one ID can represent non-homogeneous tokens
Expressing ERC-1155: When the Slot is different and there are multiple different IDs, it can represent multi-instance tokens
But ERC-3525 is more than that. On top of this, ERC-3525 can achieve the splitting of non-homogeneous tokens, for example, a bored ape can be truly split into several pieces rather than being fragmented through an additional contract to achieve NFT fragmentation. For most people who first learn about ERC-3525, the common understanding may be to understand ERC-3525 as a super-splitable combinable NFT, which is not a problem at this level of understanding, but this is only the tip of the iceberg, and it does not fully understand the greater potential of ERC-3525.
Universal digital container:
To understand that ERC-3525 is a universal digital container, it is necessary to understand that ERC-3525 is an account abstraction. As mentioned earlier in the membership card example, ERC-3525 can achieve the transfer between IDs. The ID inside it is essentially an account, which has the functions of receiving, storing, and sending, just like a basket filled with various digital assets. Since ERC-3525 is an abstract account, it also means that we can separate the operational permissions of an ID in a certain Slot and grant them to other wallet addresses, not just the owner of this ERC-3525 smart contract.
The difference between the account abstraction of ERC-3525 and the account abstraction of ERC-4337 is that ERC-4337 decouples the signature rights and ownership of the smart contract wallet, allowing for custom signature methods such as traditional account password operation of the wallet, while the account abstraction of ERC-3525 still relies on EOA wallet accounts (wallets operated using private keys) for operation, and an ID can only receive assets under the same Slot.
If the ID of ERC-3525 is understood as an account with receiving, storing, and sending functions, it means that it can serve as a digital asset container, and any digital asset can be poured into this universal digital container to become a uniform solution. At this point, the Value of this ID becomes a share of a basket of assets.
For example, in a Slot, container A (ID: A) is filled with 100 bitcoins and 10 ethers. When bitcoin and ether are poured into the container as a solution, if the Value of container A is evenly divided into ten parts, then each divided container will have the same 10 bitcoins and 1 ether.
At this point, if this container needs to be combined with another container with a different solution (100 Doge), the solution in the new container represents 10 bitcoins, 1 ether, and 100 Doge. Similarly, this container can continue to be divided and combined, and the solution inside (Value) represents the share of this basket of assets.
Understanding this layer can feel the magic of ERC-3525. With its complex data structure and flexible composability, you can create countless complex token structures in the digital world, just like Russian nesting dolls nested in many layers of assets in the container, which is very suitable for expressing some structured financial assets such as ABS, MBS, and so on.
Visual Smart Contract:
“ERC-3525 as a visual smart contract” is not difficult to understand. Similarly, if ERC-3525 is compared to a container, it is like installing a real-time updated display screen on the container, showing all the information content and changes in the container, such as what components are included in the solution (which assets and what proportions). The visual feature makes it easier to manage and more transparent.
Although it only seems to be a visualization of a smart contract and looks very simple, the significance behind it is not simple. If ERC-3525 technology existed before 2008 and was widely used, perhaps the financial crisis would not have occurred. This must be started from one of the ignitions of the 08 financial crisis, which is the chaos of financial derivatives.
After the burst of the internet bubble, the United States opened a loose monetary policy with low interest rates to stimulate the economy, and low interest rates for loans would lead to more people borrowing money. If you have seen a movie called “The Big Short”, you should be impressed by a scene in the movie: a person can get a loan to buy a house without any collateral even in the name of his dog. Why can such ridiculous situations happen? Are banks not afraid that these people will not repay the money? In fact, the bank is really not afraid, because there is a financial derivative called MBS.
Mortgage-backed securities (Mortgage-Backed Securities, referred to as MBS) are asset-backed securities, and their income streams come from a group of mortgage loan assets, such as residential or commercial mortgage loans. These loans are packaged and sold to special purpose entities (SPEs) by loan providers (such as banks), which then convert them into securities that can be sold to investors.
This mode of operation essentially packages a group of mortgage loans into a new financial product and sells it to investors. For banks, this operation can transfer the original loan risk and obtain cash by selling these packaged mortgage loans to earn interest rate spreads. Those loans rated as high risk, such as loans without income or collateral, are called subprime loans. This is why the 2008 financial crisis is called the “subprime crisis”, because many defaults of subprime loans led to the collapse of the MBS market.
Since mortgage loans can be packaged into financial assets, other loans (such as student loans, car loans, and credit card loans) can naturally be packaged into financial assets. These assets are usually called asset-backed securities (ABS). The underlying logic of the revenue of these financial derivatives such as MBS and ABS comes from the interest and principal repaid by the borrower. These financial derivatives seem to have high returns, attracting many investors to enter the market, and problems follow.
In this model where risk can be transferred, banks only focus on increasing the quantity of loans, ignoring the importance of loan quality. Many high-risk subprime loans were packaged into ABS and MBS, and with the popularity of ABS and MBS, financial institutions even began producing more complex financial derivatives – collateralized debt obligations (CDOs).
If ABS and MBS are financial assets that package many loans, then CDOs are financial assets packaged from ABS and MBS, forming more hierarchical financial products. Packaging assets of different qualities increases the diversity of the investment portfolio and sets different payment levels such as inferior (higher yield but first to bear principal loss in default) and superior (lower yield but relatively safer principal in default), theoretically increasing the overall stability of the investment portfolio and obtaining a better Sharpe ratio (risk-reward ratio).
However, this complex financial product makes it more difficult for investors to understand its true risks, and the moral hazard of rating agencies further exacerbates the problem. Some rating agencies will rate assets that should belong to higher risk levels as low risk levels in order to grab clients, further increasing risk.
With credit default swaps (CDS) and other insurance products that further insure, split, and repackage different levels of CDOs, mixing other assets such as CDS into new CDOs, they are called synthetic CDOs, and in the end, people have been completely unable to know which assets support the nested financial derivatives behind them. Many subprime loans were mixed into many so-called low-risk financial derivatives due to distorted ratings, and high-risk assets were paired with extremely low premiums, sold to various securities firms and investors after being packaged layer by layer, and the leverage ratio of the entire financial system was rapidly increasing, becoming increasingly precarious.
As the United States began to raise interest rates, the growth of loan interest rates caused many borrowers to default. This problem was initially most evident in the subprime loan market, but because subprime loans were packaged in ABS, MBS, and even CDOs, this problem quickly spread throughout the financial market. Many financial derivatives that seemed to have high grades and low risks suddenly exposed high default risks, and investors had no idea of the true risks of these derivatives. Market confidence was severely hit, and there was a large-scale sell-off in the financial market, which was one of the main triggers of the 2008 financial crisis.
This situation is caused by the disorderly, opaque, and overly complex structure of the financial market. However, the ERC-3525 visual smart contract is able to solve this problem. ERC-3525 can realize complex financial derivatives, such as nested ABS, MBS, and CDO. More importantly, its visual features enable people to directly see the specific components included in these complex nested products, which is important for risk control.
Put in the context of 2008, no matter how complex the asset securitization product is, it can calculate real-time and objective ratings based on the yield rate and default rate of its underlying assets. The improvement of this transparency, combined with the automatic execution of blockchain smart contracts, enhances the security and trustworthiness of transactions and prevents the accumulation of systemic risks.
If ERC-3525 had been applied before 2008, every investor and market participant could have a clear understanding of the specific situation of their investment, and perhaps the crisis would not have occurred. It can be seen that the visual smart contract of ERC-3525 has such great significance for the asset management of real-world assets on the chain (RWA) in the future.
What ERC-3525 application areas are worth paying attention to in the future?
As a super NFT that can be split and combined, a universal digital container, and having the characteristics of a visual smart contract, the core competitiveness of ERC-3525 lies in its ability to achieve unparalleled flexibility and composability through data structure conversion, as well as the ultimate transparency and execution convenience brought by its visual function. This innovative structure endows ERC-3525 with huge advantages in some fields, including but not limited to:
Real-World Assets on the Chain (RWA):
For the definition of real-world assets (RWA), we can simply understand it as all assets outside the blockchain system, including but not limited to securities such as currency, stocks, bonds, commodities, and funds, as well as non-securities such as real estate, art and collectibles, agriculture, climate assets, and intangible assets such as carbon credits and intellectual property.
According to the latest research report “Money, Tokens and Games” by Citigroup, up to $5 trillion in funds may flow into new forms of digital currencies such as central bank digital currencies (CBDCs) and stablecoins by 2030, and about half of the funds may be based on blockchain distributed ledger technology. This prediction focuses on the continued innovation of law and technology, and the tokenization of real-world assets (RWA) is seen as a key driving factor for the blockchain industry to enter the trillion-dollar market. In fact, any asset that can be assigned value, whether it is red wine or financial assets, may be tokenized, and liquidity can be greatly improved and globalized through blockchain technology.
ERC-3525 has significant advantages in real-world securities. As a general-purpose digital container, ERC-3525 can express almost all types of financial assets in the real world. Through the visualization function of smart contracts, it can clearly reveal the internal structure of these financial assets, greatly improving their transparency and presenting risks intuitively.
In addition, in addition to traditional financial assets, ERC-3525 also demonstrates a new possibility in supply chain finance. With its unique attributes, ERC-3525 can tokenize various assets in the supply chain, including raw materials, production equipment, inventory, accounts receivable, etc. As one of the major narratives of blockchain, supply chain is a disruptive application of ERC-3525 in supply chain finance:
In supply chain finance, accounts receivable factoring is a common business model. It allows companies to sell accounts receivable to third parties (usually factoring companies) at a certain discount price, in order to obtain necessary financing and improve their cash flow. However, in the traditional supply chain finance model, this factoring service is usually only available to large companies and some reputable small and medium-sized enterprises, and most small and medium-sized enterprises often find it difficult to enjoy this service.
The fundamental reason for this problem is the difficult problem of counterfeiting bills. Small and medium-sized enterprises generally lack sufficient credit support, and investors cannot reasonably control a large number of small and medium-sized enterprises. This leads to a general financing problem for small and medium-sized enterprises in reality. If small and medium-sized enterprises cannot accept delayed payments on the accounts, it is difficult to receive orders from large enterprises; but accepting orders from large enterprises will cause the company’s liquidity to be tight and increase the risk of cash flow interruption.
Imagine if we tokenize payments in this scenario. Through ERC-3525, we can create a pair of accounts: a blocking account and a receivable account. These two accounts form a payment channel similar to quantum entanglement, as long as the buyer remits to the payment account, the funds will be automatically distributed to the receivable account through the smart contract. This means that no matter how many parts the accounts receivable are split into and no matter who finally receives them, they will be transferred to the receivable account according to the predetermined proportion, which greatly increases the liquidity and composability of the supply chain finance factoring business.
In traditional supply chain finance and factoring, identifying the authenticity of bills has always been a challenge. In Western countries, bills are usually printed by individual companies rather than through a unified channel, making it difficult to identify their authenticity. At the same time, it is difficult for banks to use accounts receivable bills as collateral, because every time collateral is required, two companies need to sign a contract to pledge the receivables rights of the bills, and default involves the transfer of payment objects. This greatly impedes the development of factoring and financing for most small and medium-sized enterprises.
However, the application of blockchain technology can change this situation. Through smart contracts, we can add a confirmation step in the invoicing process. Once confirmed, the bill will be generated and attached with the confirmation signatures of both parties. This ensures that the bill is generated in a state that has been confirmed by both parties. Considering that the delay in account period is actually equivalent to a form of loan provided by the seller to the buyer, if we can effectively solve the problem of bill authenticity, the seller can rely on the buyer’s credit to sell the accounts receivable to the factoring institution at a certain discount rate, and thus obtain discounted funds.
For example, if a seller has an accounts receivable worth 1 million yuan, and the factoring institution is willing to purchase the accounts receivable at a discount rate of 90%, the seller can immediately obtain a cash flow of 900,000 yuan without waiting for the buyer’s payment. This process essentially accelerates the flow of cash flow by transferring credit risk, which can be achieved through ERC-3525 and blockchain technology.
With the traceability and transparency of blockchain, the automatic execution and verification of smart contracts, and the convenience of ERC-3525, we can see that ERC-3525 has significant advantages in the securitization of traditional financial assets, especially in supply chain finance. However, in the RWA track, the widespread application of blockchain technology requires the support of sovereign governments, regulated financial institutions, and large companies, but this also conforms to the relatively centralized characteristics of ERC-3525 in technical structure. With the continuous updating and improvement of middleware facilities such as oracles, the on-chain of real-world assets will be a big narrative of ERC-3525’s future, which is very worthy of sustained attention.
Virtual assets or commodities:
ERC-3525 can be used to represent not only financial assets, but also virtual digital goods or items such as virtual land, upgradeable/mergeable game items, virtual membership cards, gift cards, lottery tickets, etc. Among them, virtual land, game props, and membership cards are relatively noteworthy areas. For the existing game props and virtual land system, ERC-3525 demonstrates higher possibility and flexibility, and ERC-3525 is backward compatible with the ERC-721 standard, which means that all protocols, platforms, and wallets that support the ERC-721 standard will integrate ERC-3525 relatively easily. In the future, ERC-3525 has the potential to show higher playability in the combination of games and blockchain.
With the launch of Starbucks Odyssey Plan, the combination of customer loyalty programs and Web3 has attracted widespread attention. This can be understood as a points-based membership card system, and Starbucks has a globally leading customer loyalty program, with tens of millions of active members in the United States alone. It is worth noting that membership cards may become a key scenario for Web3 to achieve Mass Adoption, which will help attract a large number of users into the world of Web3.
From the earlier cases of KFC and McDonald’s, we can see that the ERC-3525 token standard has significant advantages in customer loyalty programs. It can achieve collection, transfer, and storage operations from ID to ID, and its Value can well represent the point value in the membership card ID. Therefore, ERC-3525 has high potential in this application scenario and may play a greater potential than other token standards in the future.
Social, Identity Field, and Tokenized Accounts:
Due to the composability of ERC-3525, it can express more data structures, which makes it more advantageous to use semi-fungible tokens (SFT) to express social graphs in the current Web3 social field, such as Lens protocol, than non-fungible tokens (NFT). In addition, by using ERC-3525 to achieve Soul-Binding Tokens (SBT), more attributes can be expressed, such as quantifying some specific data in SBT, such as the contribution of a certain person in a certain activity.
In addition, ERC-3525, as an account abstraction and digital container, can itself be used as a “wallet”, so in addition to having the functions of a normal blockchain wallet, ERC-3525 also leaves space for other more imaginative innovations.
Summary
ERC-3525 is positioned not to solve the problem of value creation, but to solve the problem of value packaging as a super NFT that can be split and combined, a universal digital asset container, and a visual smart contract. Digital assets can grow a dynamic and information-rich interface, and can be fragmented, merged, packaged, combined, and programmed.
ERC-3525 has shown significant advantages in the future trend of Web3. Whether it is real-world assets (RWA), customer loyalty programs, or games, ERC-3525 has significant potential. Especially in sub-sectors of real-world assets such as supply chain finance, ERC-3525 has overwhelming advantages over other standards. These development directions are worth our continued attention.
However, ERC-3525 currently faces some challenges and obstacles:
1. The high complexity leads to a higher cognitive threshold, which hinders people’s general understanding and acceptance of ERC-3525.
2. The development difficulty of ERC-3525 is higher than that of ERC-20, ERC-721, and ERC-1155, and it has higher requirements for entrepreneurial teams.
3. The application scenarios of ERC-3525 may involve sovereign governments and centralized guarantors, belong to the semi-centralized zone, and may conflict with the absolute spirit of decentralization, and the impact on the values of the blockchain world is still unknown.
In any case, because ERC-3525 has not yet attracted market attention and has great potential, it is more worthy of our close attention. We look forward to ERC-3525 playing an important role in the Mass adoption of Web3 in the future.
Reference:
[1]https://icg.citi.com/icghome/what-we-think/citigps/insights/money-tokens-and-games
[2]https://eips.ethereum.org/EIPS/eip-3525
[3]https://mp.weixin.qq.com/s/cf8_oDVGBSwXYqEWYmv8uA
[4]https://research.web3caff.com/zh/archives/1996
[5]https://sftlabs.io/2022/09/27/everything-about-fungible-semi-fungible-non-fungible-tokens/
[6]https://www.binance.com/zh-CN/news/top/7221255
Like what you're reading? Subscribe to our top stories.
We will continue to update Gambling Chain; if you have any questions or suggestions, please contact us!
