From ERC20, 721, 1155 to 3525: Analyzing 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 capitalization of the entire crypto market has still not surpassed that of Apple Inc., and Web3 still lacks practical applications in the real world. However, Citibank's recent research report "Money, Tokens, and Games" may change this situation. The report views the tokenization of real-world assets (RWA) as the next major narrative, believing it could have a huge impact on the development of Web3, driving the blockchain and Web3 industries to gain the next billion users and potentially bringing tens of trillions of dollars in economic activity.

In the grand narrative of RWA, the ERC-3525 standard shows great potential. As a semi-fungible token standard SFT(, it combines the features of ERC-20, ERC-721, and ERC-1155, allowing for 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 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, helping 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 attention.

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

) 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. Stablecoins are an important example of ERC-20 applications, as 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 the value represents the number of tokens owned by that address. Under the ERC-20 standard, each address can be associated with a balance, representing the number of tokens held, 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 serving as trading pairs on DEXs. ERC-20 is also widely used in DeFi applications, such as lending platforms and liquidity mining, and can be split into non-integer amounts.

Limitations: Due to being fully fungible, ERC-20 tokens cannot be used to represent unique or non-fungible assets, such as artworks or collectibles.

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) ERC-721

ERC-721 represents non-fungible token ###NFT(, which describes how NFTs are created and managed on the Ethereum blockchain. Unlike ERC-20 tokens where each unit is equivalent, each unit of an ERC-721 token is unique and non-replaceable, making it suitable for representing unique digital or real-world assets ) such as artwork, real estate, collectibles, etc. (.

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 distinct and unique, differentiated by the ID attribute, with each ID associated with an owner.

Features and Advantages: ERC-721 tokens are non-fungible, with each token being unique. This makes them highly suitable for representing unique items or assets, such as works of art, 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 their non-fungible characteristics, ERC-721 tokens cannot effectively represent interchangeable assets such as currencies or shares, lacking advantages in liquidity, having poor composability and being non-divisible.

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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. ERC-1155 provides a way to manage multiple tokens within a single smart contract, where each token can be fungible like ERC-20 tokens ### or non-fungible like ERC-721 tokens (.

Key components: id, value, and owner. Id is the 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.

Advantages of features: ERC-1155 tokens can represent both fungible and non-fungible assets simultaneously, making them very useful in a variety of applications. For example, a game might use ERC-1155 tokens to represent the types of equipment that players have, with non-fungible assets ) and the quantity of equipment as fungible assets (.

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, and it cannot represent assets that can be partially exchanged, such as bonds or futures, as well as those that cannot be split into non-integer parts.

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) 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, and insurance strategies. It offers more composability compared to other token standards. ERC-3525 represents a modeling concept of the digital world, which can be understood from three levels: splittable and combinable super NFTs, universal digital containers, and visualized smart contracts.

Key components: id, value, Slot, and Address. Each SFT has an id attribute equivalent to ERC-721, allowing it to be recognized as a globally unique entity. 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 hold any number and type of IDs and Slots. What sets it apart is the Slot attribute; the Values of different IDs with the same Slot can be transferred and exchanged, while transfers and exchanges cannot occur between different Slots. A Slot can have many types of IDs, whereas different IDs can only have one Slot.

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, 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 and can also support non-integer splitting and combining.

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

Understanding ERC-3525 as a Digital World Modeling Concept from Three Perspectives

ERC-3525, due to its more complex structure compared to other token standards, serves as a universal token standard that enables the creation of various complex token structures in the digital world through the composability of its data structure. Just like using LEGO bricks in the real world to create various complex models, ERC-3525 can be said to represent a modeling concept in the digital world. To deeply understand ERC-3525, one can approach it from three aspects: the split-combinable super NFT, the universal digital container, and the visualized smart contract.

Splitable and Combinable Super NFT

ERC-3525 only needs to convert its attributes to simultaneously express the three token standards ERC-20, ERC-721, and ERC-1155, for example:

The value can represent fungible tokens in the case of the same ID for ERC-20:Slot.

Expressing ERC-721: Unlike Slot, it can represent non-fungible tokens with only one ID.

Expressing ERC-1155: Slots are different, and when having multiple different IDs, it can represent multiple instance tokens.

But ERC-3525 is not just that; on top of this, ERC-3525 can achieve the splitting of non-fungible tokens. For example, a Bored Ape can truly be split into several parts rather than achieving NFT fragmentation through an additional contract. For most people who are learning about ERC-3525 for the first time, the common understanding might be to see ERC-3525 as a super NFT that is combinable and splittable. From this perspective, there is no problem understanding ERC-3525, but this is just the tip of the iceberg and does not fully grasp the greater potential of ERC-3525.

( Universal Digital Container

To understand that ERC-3525 is a universal digital container at this level, it is essential to realize that ERC-3525 is a form of account abstraction )Account Abstraction###. As mentioned in the case of membership cards, ERC-3525 can facilitate transfers between IDs, where the internal ID is essentially an account that has the functionality to receive, store, and send, much like a basket filled with various digital assets. Since ERC-3525 is an abstract account, it also means that we can decouple the operational permissions of an ID in a particular slot and grant them to other wallet addresses, rather than 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 signing rights and ownership of smart contract wallets, allowing for the use of custom signing methods for operations, such as implementing traditional account password operations for wallets, etc. In contrast, the account abstraction of ERC-3525 still relies on the EOA wallet account (, which operates using the private key of the wallet ), and one ID can only receive assets within the same Slot.

If the ID of ERC-3525 is understood as an account with receiving, storing, and sending functionalities, it means that it can serve as a container for digital assets. Any digital asset can be poured into this universal digital container to become a uniform solution, at which point the Value of this ID turns into a share of a basket of assets.

For example, in a Slot, Container A ### ID: A( was poured with 100 bitcoins and 10 ethers. Once the bitcoins and ethers enter the container as a solution, they will become a uniform solution. If the Value of Container A is evenly divided into ten parts, then each split container will equally contain 10 bitcoins and 1 ether.

At this time, if the container is to combine with another container that has a solution of different components )100 Doge (, the solution in the new container will represent 10 Bitcoins, 1 Ethereum, and 100 Doge. Similarly, this container can continue to split and combine, and the solution inside ) Value ( represents the share of this basket of assets.

Understanding this layer allows you to 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 nesting dolls, where many layers of assets can be repeatedly nested within a container. This is particularly suitable for expressing structured financial assets such as ABS, MBS, etc.

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