The Ethereum Community Approves ERC-3643 as a Tokenization Standard
The Ethereum community has officially endorsed the ERC-3643 Ethereum Improvement Proposal (EIP) as a recognized standard for compliant tokenization of real-world assets (RWAs). This proposal has undergone a thorough review, discussion, and agreement process within the Ethereum community, similar to the establishment of other popular standards like ERC-20.
Understanding ERC-3643: A Standard for Tokenization
ERC-3643 is a standard that facilitates the tokenization of securities, payment systems, loyalty programs, and RWAs. It utilizes a self-sovereign identity (SSI) framework to verify users’ eligibility for tokens, ensuring anonymous yet verifiable credentials. The approved standard, proposed in 2021, builds on ERC-20 and incorporates two permission layers to enhance security and compliance.
The Two Permission Layers of ERC-3643
The first permission layer focuses on verifying the identity and eligibility of token receivers using ERC 734/735 standards. It checks if the necessary claims are present on the identity and authenticated by trusted claim issuers. The second layer imposes global restrictions on the token itself, such as daily volume limits and maximum token holders, enabling controlled and regulated circulation.
The Benefits and Applications of Asset Tokenization
Asset tokenization involves converting the value of physical or digital assets into digital tokens on a blockchain or distributed ledger. This process offers benefits such as increased liquidity, faster settlements, transparency, and accessibility to various markets. Real-world applications include fractional trading of real estate, art, financial assets, and intellectual property.
According to management consulting firm Roland Berger’s estimates, asset tokenization will grow into a $10 trillion market by 2030 from its current value of around $300 billion. Traditional and crypto-native firms, including JPMorgan, Goldman Sachs, and Société Générale, are exploring asset tokenization as a significant trend in finance.
The Growing Market for Tokenized Real-World Assets
Data from VanEck Research shows that the total market capitalization for RWAs reached $342 billion in September, indicating the increasing adoption of asset tokenization despite challenges faced by the crypto industry.
Hot Take: ERC-3643 Establishes a New Standard for Tokenization
The Ethereum community’s approval of ERC-3643 as a tokenization standard is a significant milestone for the blockchain ecosystem. This standardized approach to tokenizing real-world assets will bring greater security, compliance, and efficiency to asset markets. With the potential benefits of increased liquidity, faster settlements, and accessibility to various markets, asset tokenization is poised to revolutionize traditional finance and unlock new opportunities for investors. As the market for tokenized assets continues to grow, it is crucial for industry players to embrace these advancements and explore the potential they offer.
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