From ERC20, 721, 1155 to 3525: A Detailed Explanation of RWA’s Path to Web3 Mass Adoption
RWA's Path to Web3 Mass Adoption: From ERC20 to 3525
Since the emergence of blockchain technology in 2008, the cryptocurrency market has experienced rapid growth. However, the total market value of the entire cryptocurrency market is still not as high as 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 sees the tokenization of real-world assets (RWA) as the next major narrative phase and believes it could have a huge impact on the development of Web3, enabling the blockchain and Web3 industries to reach the next billion users and potentially bring trillions of dollars of economic activity to the market.
Within the narrative of tokenizing real-world assets (RWA), the author of this article, a researcher at Everything, believes 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 at 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 tokenized real-world assets (RWA) and promote the widespread application of Web3 in the real world.
This article compares the composition of ERC-20, ERC-721, ERC-1155, and ERC-3525 to help readers understand the differences between these token standards. It then explores the digital world modeling ideas of ERC-3525 from three levels, and finally looks at which areas of ERC-3525 are worth paying attention to in the future.
Table of Contents
Comparison of existing ERC token standards – How to understand ERC-3525?
Understanding ERC-3525 as a digital world modeling idea from three levels
Super NFTs that can be separated and combined
Universal digital container
Visual smart contract
Which areas of ERC-3525 are worth paying attention to in the future?
Real-World Assets (RWA)
Virtual assets or goods
Social, identity fields, and tokenized accounts
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 suggest improvements or updates to the Ethereum network. These proposals can 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-layer standards, such as smart contract design patterns, interface definitions, etc. These ERCs usually provide a standard template for Ethereum application developers to ensure that different projects and applications can have a shared interface or standard. To put it simply, all ERCs are EIPs, but not all EIPs are ERCs. EIPs cover a wider range, including changes to underlying protocols, and so on.
ERC-3525 was created on December 1, 2020, designed by the core members of Solv Protocol, and supported by core developers in the Ethereum community. From the initial proposal to the final acceptance by the community, this process took 20 months, during which several drafts were perfected, and finally, in September 2022, it was officially accepted as an ERC token standard. As an Ethereum standard created by a team of Chinese core members, ERC-3525 has also ushered in a new round of attention in the industry.
Comparison with Existing ERC Token Standards-Understanding ERC-3525
ERC-3525 is a semi-fungible token (SFT) standard. Many people may first think that ERC-3525 is a patchwork 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 compare the key components of other token standards (ignoring other attributes such as names and symbols) and the advantages and disadvantages of ERC-3525.
Image source: solv.finance PPT
ERC-20 is one of the most widely used token standards for Ethereum applications, which is a homogeneous token, meaning that each token is functionally and monetarily equivalent with no distinction between them. This is why they are referred to as “homogeneous.” Stablecoins are an important example of ERC-20 applications, where each stablecoin is homogeneous and can be exchanged for one another, representing the same value.
Key components: address and value. Address refers to the address of the asset owner, and value represents the number of tokens held by that address. Under the ERC-20 standard, each address (Address) can be associated with a balance (Value), which represents the number of tokens held by that address. All balances are the same and indistinguishable.
Features and advantages: ERC-20 tokens correspond to interchangeable assets, like traditional currencies or stocks, making them very useful in many applications, such as representing company shares or being used as trading pairs for decentralized exchanges (DEXs). ERC-20 is also widely used in DeFi applications, such as lending platforms and liquidity mining, and ERC-20 tokens can be split into non-integer values, 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 art or collectibles.
When it comes to ERC-721, non-fungible tokens (NFTs) must be mentioned. 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 equivalent, each unit of ERC-721 tokens is unique and non-interchangeable, making them an ideal choice for representing unique digital or real-world assets (such as art, real estate, and collectibles). The earliest NFT, CryptoPunk, was not based on the ERC-721 standard but on the ERC-20 standard. However, the emergence of CryptoPunk prompted the birth of ERC-721, which has become the cornerstone of many valuable applications such as NFTs.
Key components: tokenId and owner. TokenId is a unique identifier used to distinguish different ERC-721 tokens, while owner is the address of the token owner. Under the ERC-721 standard, each token is different and unique, distinguished by the ID attribute, and each ID is associated with an owner.
Characteristics and Advantages: ERC-721 tokens are non-fungible and each token is unique, making them ideal for representing unique items or assets such as artwork, collectibles, real estate, or other unique assets. This also makes them highly valuable in creating and trading digital art and other unique digital assets.
Limitations: Due to the non-fungible nature of ERC-721 tokens, they are not effective for representing interchangeable assets such as currency or stocks, lack liquidity in terms of exchange, have poor composability, and cannot be divided – you cannot own 0.5 ERC-721 tokens.
ERC-1155 is a multi-instance token standard that combines the characteristics of ERC-20 and ERC-721 to more efficiently and flexibly handle multiple types of tokens. In previous ERC-20 and ERC-721 standards, each different token required a new smart contract to be deployed. This means that if you want to create new tokens, you need to deploy new contracts, which can lead to duplicated code and expensive gas fees. Additionally, complex interactions may need to be handled between different contracts.
ERC-1155 provides a way to manage multiple types of tokens in a single smart contract, with each token being able to be either fungible (like ERC-20 tokens) or non-fungible (like ERC-721 tokens). For example, in a game, you can use ERC-1155 to create different types of weapons (non-fungible), such as sticks, knives, and guns, where each weapon under each weapon type (non-fungible) is fungible – the number 1 knife and the number 10 knife are exactly the same (fungible), but a knife and a gun are not (non-fungible).
Key Components: id, value, and owner. id is a unique identifier for distinguishing different ERC-1155 tokens, value represents the number of tokens of a specific id, and owner is the address of the token owner. In the example of weapons, different types of weapons represent different IDs, and the number of weapons under each type (ID) is the Value. Each weapon under each type (Value) is the same.
Characteristics and Advantages: ERC-1155 tokens can represent both interchangeable and non-fungible assets simultaneously, making them very useful in a range of applications. For example, a game may use ERC-1155 tokens to represent a player’s equipment type (non-fungible) and the number of equipment pieces (fungible).
Limitations: Although the flexibility of ERC-1155 tokens makes them useful in many cases, this flexibility also makes understanding and implementing ERC-1155 potentially more complex than ERC-20 or ERC-721. Additionally, ERC-1155 tokens cannot represent partially exchangeable assets such as bonds or futures, and non-integer splits are not possible. It is not possible to own 0.5 ERC-1155 tokens.
ERC-3525 is a semi-fungible token (SFT) standard that combines the characteristics 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. ERC-3525 represents a digital world modeling concept that can be understood from three levels: super NFTs that can be split and combined, universal digital containers, and visual smart contracts.
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 it to be transferred and approved between addresses in an ERC-721 compatible manner. Additionally, each token contains a value property representing the quantity of the token, similar to the “balance” property of ERC-20 tokens.
Address represents the address that owns the Slot and ID. Each address can own any number and type of IDs and Slots. The distinguishing feature is the Slot property. Values with different IDs but the same Slot can be transferred and exchanged, while values with different Slots cannot. A Slot can have many types of IDs, but different IDs can only have one Slot.
The focus of ERC-3525 is on Slot. In short, Slot represents a category. There will be many IDs under the same Slot, and each ID, although different, has its own value. But under the same Slot, different IDs can be recognized as the same and can be exchanged, combined, and split. Taking membership cards as an example, suppose a membership card has two Slots, KFC and McDonald’s, and each KFC and McDonald’s membership card has a different ID representing the membership card of different people, such as Satoshi Nakamoto’s card and Vitalik Buterin’s card. Each person’s membership card has a Value to represent their points.
Take a membership card as an example. Suppose the membership card has two slots for KFC and McDonald’s respectively. Each KFC and McDonald’s membership card has a different ID representing different people’s membership cards, such as Satoshi Nakamoto’s card and V God’s card. Each person’s membership card has a Value to represent their accumulated points.
So, in the same slot, which is the KFC membership card, the points in Satoshi Nakamoto’s card and V God’s card are considered the same thing. Satoshi Nakamoto can transfer points from V God’s card, and he can also receive points sent from V God’s card. Additionally, Satoshi Nakamoto can split the points in his main card and sub-card (two different IDs with arbitrarily assigned point Values) or combine the main and sub-cards back together.
However, in different slots, KFC and McDonald’s, since they are two different companies, KFC’s points cannot be transferred to McDonald’s membership card, thus not possessing the transferability, exchangeability, and combinability between Value and ID.
Feature 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-fungible token, each token can have its own characteristics and rules, making this standard very flexible and powerful. Additionally, due to the existence of slots, ERC-3525 can achieve transfers from ID to ID, just like the transfer of points from Satoshi Nakamoto’s membership card to V God’s membership card, and also support non-integer splitting and combination.
Limitations: The complex structure of ERC-3525 leads to a higher understanding threshold. Due to the existence of slots, there are more centralized technical features in its technical structure. The development difficulty is high.
Understanding ERC-3525 as a digital world modeling concept from three perspectives
Due to its more complex structure compared to other token standards, ERC-3525, as a general-purpose token standard, has the ability to create various complex token structures in the digital world through the combinability of its data structure, just like using LEGO to create various complex models in the real world. It can be said that ERC-3525 represents a digital world modeling concept. To gain a deeper understanding of ERC-3525, it can be understood from three perspectives: a super NFT that can be split and combined, a universal digital container, and a visual smart contract.
Super NFTs with separable compositions:
ERC-3525 can express three token standards, ERC-20, ERC-721, and ERC-1155, simply by converting their attributes. For example:
Expressing ERC-20: If the slot is the same, the value of only one ID can represent homogeneous tokens.
Expressing ERC-721: If the slot is different, only one ID can represent non-fungible tokens.
Expressing ERC-1155: If the slot is different and there are multiple different IDs, it can represent multi-instance tokens.
But ERC-3525 is not limited to this. On top of this, ERC-3525 can achieve the splitting of non-fungible tokens, such as a bored monkey being truly split into several pieces instead of being fragmented through an additional contract to implement NFT. For most people who first learn about ERC-3525, the common understanding may be that ERC-3525 is a super NFT with separable compositions, and there is no problem in understanding ERC-3525 from this perspective. However, this is just 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, you need to understand that ERC-3525 is an account abstraction. As mentioned earlier in the case of membership cards, ERC-3525 can implement transfer between IDs. The ID inside it is essentially an account that can receive, store, and send like a basket filled with various digital assets. Since ERC-3525 is an abstract account, it means that we can separate and grant the operation permissions of ID in a certain slot to other wallet addresses, not just the owner of this ERC-3525 smart contract.
The difference between ERC-3525’s account abstraction and ERC-4337’s account abstraction is that ERC-4337 can use custom signature methods for operation after decoupling the signature rights and ownership of the smart contract wallet, such as implementing traditional account password operation wallet, etc., while ERC-3525’s account abstraction still relies on EOA wallet accounts (wallets operated with private keys), 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 container for digital assets. Any digital asset can be poured into this universal digital container as a solution and become a uniform solution. At this time, the value of this ID becomes a share of a basket of assets.
For example, in a slot, container A (ID: A) is poured with 100 bitcoins and 10 ethers. After bitcoins and ethers are poured into the container as a solution, if the value of container A is evenly divided into ten parts, then each split container will have the same 10 bitcoins and 1 ether.
At this time, if the container wants to be combined with another container with a different component solution (100 Dogecoins), the solution in the new container will represent 10 bitcoins, 1 ether, and 100 Dogecoins. Similarly, this container can be further split and combined, and the solution (Value) inside represents the share of this basket of assets.
Understanding this level can feel the magic of ERC-3525. Through its complex data structure and flexible composability, you can create countless complex token structures in the digital world. Just like Russian dolls, many layers of assets can be nested repeatedly in the container, which is very suitable for expressing structured financial assets such as ABS, MBS, etc.
Visual Smart Contract:
“ERC-3525 as a visual smart contract” is not difficult to understand. Similarly, comparing ERC-3525 to a container is like installing a real-time updated display screen on the container. It displays all the information and changes in the container, such as what ingredients the solution contains (which assets and what proportion). The visual characteristics make it easier to manage and more transparent.
Although only a visualized smart contract has been implemented, it looks very simple, but the meaning behind it is not simple. If there was ERC-3525 technology widely used before 2008, perhaps the financial crisis would not have occurred. This needs to be traced back to one of the leading causes of the 08 financial crisis, which is the chaos of financial derivatives.
After the burst of the internet bubble, the United States opened up a loose monetary policy with low interest rates to stimulate the economy, and low-interest loans would lead to more people borrowing. If you have seen a movie called “The Big Short”, you should be impressed by a scene in the movie: a person can borrow money from a bank even without any collateral or even in the name of his dog. Why can such an outrageous situation happen? Are banks not afraid that these people will not repay the money? In fact, banks really don’t worry. This is because there is a financial derivative called MBS.
Mortgage-Backed Securities (MBS) is an asset-backed security whose income stream comes from a group of mortgage assets, such as residential or commercial mortgages. These loans are packaged and sold to special purpose entities (SPEs), which then convert them into securities that can be sold to investors.
This operation essentially packages a group of mortgage loans into a new financial product sold 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. Loans that are rated as high risk, such as loans without income or collateral, are called subprime loans. That’s 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 mortgages can be packaged into financial assets, other loans (such as student loans, auto loans, and credit card loans) can naturally be packaged into financial assets. These assets are typically called asset-backed securities (ABS), and the underlying logic of the returns from MBS and ABS comes from the interest and principal repayments of borrowers. These financial derivatives seem to have high returns, attracting a large number of investors to enter, and problems follow.
Under this model, in which risk can be transferred, banks only focus on increasing the number of loans and ignore the importance of loan quality. Many higher-risk subprime loans were packaged into ABS and MBS, and as ABS and MBS became popular, financial institutions even began to create more complex financial derivatives—collateralized debt obligations (CDOs).
If ABS and MBS are financial assets created by bundling many loans together, then CDO is a financial asset created by bundling ABS and MBS, forming a more complex financial product with multiple layers. By bundling assets of different qualities, the diversity of the investment portfolio is increased, and different payment levels are set for subordinated (higher yield but first to bear principal losses in the event of default) and senior tranches (lower yield but relatively safer in the event of default), which theoretically can increase the overall stability of the investment portfolio and achieve a better Sharpe ratio (risk-return 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 this problem. Some rating agencies would rate assets that should have been in a higher risk category as low risk in order to attract clients, further increasing the risk.
In addition, insurance products such as credit default swaps (CDS) further insure, split, and repackage the different levels of CDOs, mixing other assets such as CDS into new CDOs, known as synthetic CDOs. In the end, people can no longer know which assets are behind the nested financial derivatives. Many subprime loans were mixed into so-called low-risk financial derivatives, and distorted ratings allowed high-risk assets to be paired with extremely low premiums. After being bundled and sold to various brokerages and investors, the leverage of the entire financial system increased rapidly, becoming increasingly unstable.
As the United States began to raise interest rates, the increase in loan interest rates caused many borrowers to begin to default. This problem was initially most pronounced in the subprime loan market, but because subprime loans were packaged in ABS, MBS, and even CDO, the problem quickly spread throughout the financial market. Many seemingly high-rated, low-risk financial derivatives suddenly exposed high default risks, and investors knew nothing about the true risks of these derivatives. Market confidence was severely hit, and the financial market experienced large-scale selling, which was one of the main triggers of the 2008 financial crisis.
This situation is exactly caused by the disorderly, opaque, and overly complex structure of the financial market. However, ERC-3525, this visual smart contract, can solve this problem. ERC-3525 can realize complex financial derivatives, such as nested ABS, MBS, and CDO. More importantly, its visual features can directly show the specific components of these complex nested products, which plays an important role in risk control.
Placed in the context of 2008, even the most complex asset securitization products can calculate real-time and objective ratings based on the yield and default rate of their underlying assets. The increase in transparency, combined with the automatic execution of blockchain smart contracts, improves the security and trust 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 that year. It can be seen that the visual smart contract of ERC-3525 has such important significance for the asset management of real-world assets on the chain (RWA) in the future.
Which 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 a visual smart contract, the core competitiveness of ERC-3525 lies in its incredible flexibility, composability, ultimate transparency, and ease of execution through data structure transformation. This innovative structure endows ERC-3525 with tremendous advantages in some fields, including but not limited to:
Real-World Asset Tokenization (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, funds, etc., as well as real estate, art collections, agriculture, climate assets, and intangible assets (such as carbon credits and intellectual property rights).
According to Citibank’s latest research report “Money, Tokens and Games”, up to $5 trillion of funds may flow into new digital currency forms, 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 continuous innovation of law and technology. The tokenization of real-world assets (Real-World Asset Tokenization, referred to as RWA) is seen as a key driving factor leading the blockchain industry into a market worth trillions of dollars. In fact, any asset that can be assigned value, whether it is red wine or financial assets, may be tokenized, achieving a significant increase in liquidity and globalization of transactions through blockchain technology.
ERC-3525 has significant advantages in real-world securities assets. As a universal 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 finance is demonstrated with an actual application example to illustrate the subversive role 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 a third party (usually a factoring company) at a certain discount price, thereby obtaining necessary financing and improving its own 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 cannot enjoy this service.
The fundamental problem with this issue is the problem of falsification of bills. Small and medium-sized enterprises generally lack sufficient credit support, and investors cannot conduct reasonable risk control on a large number of small and medium-sized enterprises. This results in widespread financing problems for small and medium-sized enterprises in reality. If small and medium-sized enterprises cannot accept delayed payment of accounts, it is difficult to receive orders from large enterprises; but accepting orders from large enterprises will cause the enterprise’s liquidity to be tight, increasing the risk of cash flow fracture.
Imagine if we tokenize the payment notes in this scenario. Through ERC-3525, we can create a pair of accounts: blockingyable payment account and receivable account. Between these two accounts, a payment channel similar to quantum entanglement is formed, and as long as the buyer remits to the payment account, the funds will be automatically distributed to the receivable account through a smart contract. This means that no matter how many parts the accounts receivable are split into, no matter who eventually receives them, they will be transferred to the receivable account according to the predetermined ratio, which greatly increases the liquidity and composability of the supply chain finance factoring business.
In traditional supply chain finance factoring business, identifying the authenticity of bills has always been a problem. In Western countries, bills are usually printed by individual companies rather than through a unified channel, making it difficult to distinguish the authenticity of bills. At the same time, it is difficult for banks to use accounts receivable bills as collateral, because each collateral requires two companies to sign a contract to pledge the right to receive bills. Default involves the transfer of payment objects. This greatly hinders the factoring business and financing of most small and medium-sized enterprises.
However, the application of blockchain technology can change this situation. Through smart contracts, we can add a confirmation (Confirm) step in the invoicing process. Once confirmed, the bill will be generated and attached with the confirmation signature of both parties. This ensures that the bill is generated in the state confirmed by both parties. Considering that account period arrears are 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, thereby obtaining a discount payment.
For example, if a seller has an accounts receivable with a face value of 1 million yuan, and the factoring institution is willing to purchase this account 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 is essentially to accelerate the flow of cash flow by transferring credit risk, which can be realized 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 execution, we can see that ERC-3525 has significant advantages in the tokenization 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, and with middleware facilities such as prediction machines Continuously updated and improved, the on-chain of real-world assets will be a big narrative of ERC-3525 in the future, which is worth continuing to pay attention to.
Virtual assets or commodities:
Aside from representing financial assets, ERC-3525 can also be used to represent virtual digital goods or items, such as virtual land, upgradeable/mergeable game items, virtual membership cards, gift cards, raffle tickets, and more. Among them, virtual land, game props, and membership cards are the more noteworthy fields. For the existing game props and virtual land system, ERC-3525 demonstrates higher potential 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 can integrate ERC-3525 more easily. In the future combination of games and blockchain, ERC-3525 has the potential to show higher playability.
With the launch of the Starbucks Odyssey program, the combination of customer loyalty programs and Web3 has attracted widespread attention. This can be understood as a points membership card system, and Starbucks has a leading customer loyalty program globally, 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 the collection, transfer, and storage of ID-to-ID operations, 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 have greater potential than other token standards in the future.
Social, Identity, and Tokenized Account Fields:
As ERC-3525 has composability, 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 in protocols like Lens, than non-fungible tokens (NFT). In addition, using ERC-3525 to achieve Soul-Binding Tokens (SBT) can also express more attributes, such as quantifying some specific data in SBT, such as someone’s contribution in a certain activity.
In addition, as an account abstraction and digital container, ERC-3525 itself can be used as a “wallet”, so in addition to having the functions of a normal blockchain wallet, ERC-3525 also leaves room for other more imaginative innovations.
As a super NFT that can be split and combined, a universal digital asset container, and a visual smart contract, ERC-3525 is actually positioned not to solve the problem of value creation, but to solve the problem of value packaging. Digital assets can grow a dynamic and rich interface that 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-fields of real-world assets such as supply chain finance, ERC-3525 has overwhelming advantages compared to other standards, and these development directions are worth our continued attention.
However, ERC-3525 currently faces some challenges and resistance:
1. The high complexity has led 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 guarantee agencies, which belong to the semi-centralized zone and may conflict with the absolute decentralized spirit, 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.