From ERC20, 721, 1155 to 3525: The Path of RWA Towards Large-Scale Landing in Web3

Since the advent of blockchain technology in 2008, the crypto market has experienced rapid development. However, the total market capitalization of the entire crypto market has yet to exceed that of Apple Inc., and Web3 still lacks practical applications in the real world. However, Citibank's latest research report "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, suggesting that it could have a significant impact on the development of Web3, driving the blockchain and Web3 industry to acquire the next billion users and potentially bringing about tens of trillions of dollars in economic activity.

In the grand narrative of RWA, the ERC-3525 standard shows immense potential. As a semi-fungible token (SFT) standard, it combines the characteristics of ERC-20, ERC-721, and ERC-1155, enabling more effective representation and management of complex assets such as bonds, coupons, invoices, futures, options, and ABS. In this way, ERC-3525 is expected to promote the development of RWA and drive 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 concepts of ERC-3525 from three perspectives, and finally, look forward to the future application areas of ERC-3525 that are worth paying attention to.

Background Introduction

Before introducing ERC-3525, let's briefly introduce EIP and ERC:

EIP stands for Ethereum Improvement Proposals(, which is a framework that allows anyone in the Ethereum community to suggest improvements or updates to the Ethereum network. These proposals can relate to the Ethereum protocol itself, relevant client APIs, or provide standards for other projects within the Ethereum ecosystem.

ERC stands for Ethereum Request For Comment), which is a special type of EIP, focusing mainly on standards at the application layer, such as smart contract design patterns, interface definitions, etc. ERC usually provides 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 protocols.

ERC-3525 was created by core members of Solv Protocol on December 1, 2020, with support from the core developers of the Ethereum community. From the initial proposal to the final acceptance by the community, it took 20 months, going through several drafts for improvement, and was officially established as an ERC token standard in September 2022. As an Ethereum standard created by a team of core members who are Chinese, ERC-3525 has sparked a new wave of interest in the industry.

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

ERC-3525 is a semi-fungible token standard (SFT). Many people may initially think it is a hybrid of ERC-20 and ERC-721. However, in reality, ERC-3525 is a foundational universal standard that has significant advantages over ERC-20, ERC-721, and ERC-1155 in certain areas. The following will help understand ERC-3525 by comparing key components of other token standards ( while ignoring names, symbols, and other attributes ) and their pros and cons.

( ERC-20

ERC-20 is one of the most widely used token standards on Ethereum, which refers to fungible tokens, meaning that each token is equal in function and value, with no distinctions. This is why they are referred to as "fungible." Stablecoins are important examples of ERC-20 applications; each stablecoin is fungible and can be exchanged for one another, representing the same value.

Key components: address and value. The address specifies the asset owner's address, and value represents the number of tokens owned by that address. Under the ERC-20 standard, each address )Address### can be associated with a balance (Value), representing the number of tokens held by that address, and all balances are the same with no distinction.

Feature Advantages: ERC-20 tokens correspond to interchangeable assets, such as traditional currencies or shares, which 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 allows for non-integer splits, so you can 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.

( ERC-721

When it comes to ERC-721, we must mention the non-fungible token )NFT, Non-Fungible Tokens ###. Well-known NFTs such as Bored Ape, Azuki, etc. 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 it an ideal choice for representing unique digital or real-world assets such as art, real estate, collectibles, etc. The earliest NFT, CryptoPunk, was not based on the ERC-721 standard, but rather the ERC-20 standard. However, the emergence of CryptoPunk prompted the birth of ERC-721, becoming the cornerstone for many valuable applications like NFTs.

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

Feature Advantages: ERC-721 tokens are non-fungible, with each token being unique. This makes them particularly suitable for representing unique items or assets, such as artworks, collectibles, real estate, or other unique assets. It 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 fungible assets such as currencies or shares, lack advantages in liquidity, have poor composability, and are indivisible; you cannot own 0.5 of an ERC-721 token.

( ERC-1155

ERC-1155 is a multi-instance token standard that combines the features of ERC-20 and ERC-721, aiming to handle multiple different 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 creating a new token necessitates deploying a new contract, 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 method for managing multiple types of 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 kinds of weapons, such as sticks, knives, and guns, where each weapon within a specific type is fungible; for instance, knife number 1 and knife number 10 are completely identical and fungible, but knives and guns are different and non-fungible.

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 weapon type ) ID ( is the Value, and the Value ) of the weapons under each type is the same.

Key Advantages: ERC-1155 tokens can simultaneously represent both fungible and non-fungible assets, making them very useful in a range of applications. For example, a game might use ERC-1155 tokens to represent the types of gear a player has as non-fungible ### and the quantity of gear as 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. Additionally, it cannot represent partially exchangeable assets, such as bonds or futures, and 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 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, and insurance strategies, making it more composable compared to other token standards. ERC-3525 represents a modeling idea of the digital world, which can be understood from three levels: a split-composable super NFT, a universal digital container, and a visualized smart contract.

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

Address represents an address that possesses Slots and IDs, where each address can own any number and type of IDs and Slots. What distinguishes the Slot attribute is that the Values of different IDs with the same Slot can be transferred and exchanged, while transfers and exchanges are not possible between different Slots. One 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 there can be many IDs within the same Slot. Although each ID is different and has its own Value, different IDs within the same Slot can be considered the same and can be exchanged, combined, or split. Taking membership cards as an example, suppose there are two Slots for membership cards: KFC and McDonald's. Each membership card for KFC and McDonald's has different IDs representing different people's cards, such as Satoshi Nakamoto's card and Vitalik Buterin's card, and each person's membership card has a Value representing their points.

In the same Slot, which is 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 a main card and a sub-card with two different IDs (, freely allocating points Value), and can also merge the main card and sub-card back together.

In different slots, KFC and McDonald's are two different companies, so KFC's points cannot be transferred to McDonald's points card, which naturally means there is no transferability, exchangeability, and combinability between Value and ID.

Feature Advantages: ERC-3525, due to its more complex structure, can represent various complex digital structures such as securities, bonds, options, futures, swaps, insurance strategies, 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. Moreover, due to the existence of Slots, ERC-3525 can facilitate transfers from ID to ID, just like Satoshi's points card transferring points to Vitalik's points card, and it also supports non-integer splitting and combination.

Limitations: The complex structure of ERC-3525 results in a higher understanding threshold. Due to the existence of Slots, there are more centralized characteristics in its technical structure. The development difficulty is high.

![Newcomer Guide丨From ERC20, 721, 1155 to 3525, detailing RWA