From ERC20, 721, 1155 to 3525, detailing the path of RWA towards large-scale landing in Web3

Since the birth of blockchain technology in 2008, the crypto market has experienced rapid development. However, the total market value of the entire crypto market has yet to surpass that of Apple Inc., and Web3 still lacks practical applications in the real world. However, a recent research report from Citibank titled "Money, Tokens, and Games" may change this situation. The report views the tokenization of real-world assets (RWA) as the main narrative for the next stage, believing that it could have a significant impact on the development of Web3, potentially leading the blockchain and Web3 industry to the next billion users and possibly generating economic activities worth trillions of dollars.

In the grand narrative of RWA, the ERC-3525 standard demonstrates immense potential. As a semi-fungible token standard, it combines the features of ERC-20, ERC-721, and ERC-1155, allowing for more efficient representation and management of complex assets such as bonds, coupons, invoices, futures, options, and ABS, among others. In this way, ERC-3525 is expected to facilitate the development of RWA and promote 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 readers understand the differences between these token standards. It will then explore the digital world modeling concept of ERC-3525 from three perspectives, and finally look forward to the application areas of ERC-3525 that are worth paying attention to in the future.

Background Introduction

Before introducing ERC-3525, let's first understand EIP and ERC.

EIP stands for Ethereum Improvement Proposals(, which are proposals for improvements to the Ethereum network within the Ethereum community. These proposals can involve the Ethereum protocol itself, related client APIs, or provide standards for other projects in the Ethereum ecosystem.

ERC stands for Ethereum Request For Comment ), which is a special type of EIP, focusing mainly on standards at the application level, such as smart contract design patterns, interface definitions, and so on. These ERCs typically provide standard templates for Ethereum application developers to ensure interoperability between different projects and applications. In short, all ERCs are EIPs, but not all EIPs are ERCs. EIPs cover a broader scope, including changes to the underlying protocol.

ERC-3525 was proposed by core members of the Solv Protocol on December 1, 2020, and received support from core developers of the Ethereum community. It took 20 months from the initial proposal to final acceptance by the community. During this period, it underwent multiple revisions and improvements, and was officially approved as an ERC token standard in September 2022. As a standard created by core members of a Chinese team, ERC-3525 has sparked a new wave of attention in the industry.

Comparison of Existing ERC Token Standards - How to Understand ERC-3525?

ERC-3525 is a semi-fungible token standard. Many people may initially think that ERC-3525 is a hybrid of ERC-20 and ERC-721, but in fact, ERC-3525 is a fundamental universal standard that can even have advantages over ERC-20, ERC-721, and ERC-1155 in certain areas. Next, we will understand ERC-3525 by comparing the key components of other token standards while ignoring other attributes such as names, symbols, etc.

( ERC-20

ERC-20 is one of the most widely used token standards on Ethereum, representing fungible tokens. Each token is equal in function and value, with no differences. This is why they are referred to as "fungible." Stablecoins are an important example of ERC-20 applications, where each stablecoin is fungible, interchangeable, and represents the same value.

Key components: address and value. The address specifies the owner's address of the asset, and the 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, with no distinction.

Feature advantages: ERC-20 tokens correspond to interchangeable assets, such as traditional currencies or shares, and are very useful in many applications, such as representing company shares or as trading pairs for decentralized exchanges ) DEX (. ERC-20 is also widely used in DeFi applications, such as lending platforms and liquidity mining, and ERC-20 can be split into non-integer amounts, allowing you to own 0.5 ERC-20 tokens.

Limitations: Because ERC-20 tokens are fully interchangeable, they cannot be used to represent unique or non-fungible assets, such as artwork or collectibles.

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( ERC-721

When it comes to ERC-721, we must mention Non-Fungible Tokens )NFT, Non-Fungible Tokens (. The well-known NFTs such as Bored Apes and Azuki belong to the ERC-721 standard, which describes how non-fungible tokens are 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-fungible, making them an ideal choice for representing unique digital or real-world assets such as artworks, real estate, collectibles, etc. The earliest NFT, CryptoPunk, was not based on the ERC-721 standard but rather on the ERC-20 standard. However, the emergence of CryptoPunk spurred the creation of ERC-721, which became the cornerstone for many valuable applications like NFTs.

Key components: tokenId and owner. The tokenId is a unique identifier used to distinguish different ERC-721 tokens, and the owner is the address of the token holder. Under the ERC-721 standard, each token is different and unique, distinguished by the ID attribute, and each ID is associated with an owner.

Features and Advantages: ERC-721 tokens are non-fungible, meaning each token is unique. This makes them particularly suitable for representing unique items or assets, such as artworks, collectibles, real estate, or other unique assets. This also gives them significant value in the creation and trading of 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 advantages in liquidity, have poor composability, and cannot be divided; you cannot own 0.5 of an ERC-721 token.

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) ERC-1155

ERC-1155 is a multi-instance token standard that combines the features of ERC-20 and ERC-721, aiming to handle various 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 can lead to redundant code and expensive gas fees. Additionally, different contracts may also need to handle complex interactions.

ERC-1155 provides a method for managing multiple tokens within a single smart contract, where each token can be 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 that are non-fungible, such as sticks, knives, and guns, while each weapon within a specific type is fungible; for instance, knife number 1 and knife number 10 are exactly the same, but knives and guns are different.

Key components: id, value, and owner. The id is a unique identifier used to distinguish different ERC-1155 tokens, value represents the quantity of tokens for a specific id, and owner is the address of the token holder. Using the example of weapons, different types of weapons represent different IDs, and the quantity of weapons under each type (ID) is the Value, with the weapons ###Value( being the same under each type.

Features and Advantages: ERC-1155 tokens can simultaneously represent both fungible and non-fungible assets, making them highly useful across a range of applications. For example, a game might use ERC-1155 tokens to represent the types of equipment ) non-fungible ( and the quantity of equipment ) fungible (.

Limitations: Although the flexibility of ERC-1155 tokens makes them useful in many situations, this flexibility can also make understanding and implementing ERC-1155 more complex than ERC-20 or ERC-721. Moreover, it cannot represent assets that can be partially exchanged, such as bonds or futures, and it cannot be non-integer split; you cannot own 0.5 of an ERC-1155 token.

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( ERC-3525

ERC-3525 is a semi-fungible token )SFT, Semi-fungible Token ( standard, which combines features of ERC-20, ERC-721, and ERC-1155. It is more complex than ERC-1155 but can be used to represent and manage complex digital financial assets such as securities, bonds, options, futures, swaps, insurance strategies, etc., and offers greater composability compared to other token standards. ERC-3525 represents a modeling concept of the digital world that can be understood from three levels: splittable and combinable super NFTs, universal digital containers, and visual smart contracts.

Key components: id, value, Slot, and Address. Each SFT has an id attribute equivalent to ERC-721, allowing it to be identified as a globally unique entity, so that SFTs can be transferred and approved between addresses in a manner compatible with ERC-721. Additionally, each token also includes a value attribute, representing the quantity nature of the token, similar to the "balance" attribute of ERC-20 tokens.

Address represents an address that has Slots and IDs, where each address can have any number and type of IDs and Slots. What is unique is the Slot attribute, where the Values of different IDs with the same Slot can be transferred and exchanged, while transfers and exchanges cannot be made between different Slots. A Slot can have many types of IDs, while different IDs can only have one Slot.

The key point of ERC-3525 is the Slot. Simply put, a Slot represents a category, and within the same Slot, there can be many IDs. Although each ID is different and has its own Value, different IDs in the same Slot can be considered interchangeable and combinable. For example, let's take membership cards. Suppose there are two Slots for membership cards, one for KFC and one for McDonald's. Each KFC and McDonald's membership card has different IDs representing different individuals’ cards, such as Satoshi Nakamoto's card and Vitalik Buterin's card. Each person's membership card has a Value that represents their points.

In the same Slot, that is, in the KFC membership card, the points in the Satoshi card and the points in the Vitalik card are considered the same thing. Satoshi can transfer points to the Vitalik card and can also receive points sent from the Vitalik card. Satoshi can also split the points in his points card into two different IDs: the main card and the sub-card ), and allocate points Value( arbitrarily, as well as merge the main card and sub-card back together.

In different slots, KFC and McDonald's, being two different companies, means that KFC's points cannot be transferred to McDonald's points card, and naturally, they do not possess the transferability, exchangeability, and combinability between Value and ID.

Feature Advantages: ERC-3525, due to its more complex structure, can be used to represent various complex digital structures such as securities, bonds, options, futures, swaps, insurance strategies, membership cards, etc. In addition,