From ERC20, 721, 1155 to 3525: A Detailed Discussion on the Path of RWA Towards Large-Scale Implementation in Web3

Since the birth of blockchain technology in 2008, the cryptocurrency market has experienced rapid development. However, the total market value of the entire cryptocurrency market is still lower than that of Apple Inc., and Web3 lacks practical applications in the real world. However, a recent research report by 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 huge impact on the development of Web3, with the potential to drive the blockchain and Web3 industry towards the next billion users and possibly bring about 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 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 drive the development of RWA, thereby promoting 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 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 relate to the Ethereum protocol itself, client APIs, or provide relevant standards for other projects within the Ethereum ecosystem.

ERC stands for Ethereum Request For Comment ), which is a special type of EIP that mainly focuses on application-level standards such as smart contract design patterns, interface definitions, etc. These ERCs typically provide standard templates for Ethereum application developers to ensure that there are shared interfaces or standards among different projects and applications. In short, all ERCs are EIPs, but not all EIPs are ERCs. EIPs cover a broader range of topics, including changes to the underlying protocols.

ERC-3525 was created on December 1, 2020, designed by core members of the Solv Protocol, and supported by core developers of the Ethereum community. The process from initial proposal to final acceptance by the community lasted 20 months. During this period, several drafts were refined, and it was officially approved as an ERC token standard in September 2022. As an Ethereum standard created by a team for the Chinese community, ERC-3525 has welcomed a new peak 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 reality, ERC-3525 is a fundamental universal standard that has advantages over ERC-20, ERC-721, and ERC-1155 in certain areas. Below, we will understand ERC-3525 by comparing the key components of other token standards while ignoring names, symbols, and other attributes, as well as their advantages and disadvantages.

( ERC-20

ERC-20 is one of the most widely used token standards on Ethereum, which are fungible tokens, meaning that 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, as each stablecoin is fungible and interchangeable, 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(, which represents 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, similar to traditional currencies or shares, which makes ERC-20 very useful in many applications, such as representing shares of a company or serving 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 non-integer split, 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 art or collectibles.

![Newcomer Introduction丨From ERC20, 721, 1155 to 3525, detailing the large-scale landing of RWA into Web3])https://img-cdn.gateio.im/webp-social/moments-f8c0a22438e086fc25cedcd858c060ca.webp###

( 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 and Azuki fall under 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-fungible, making them 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 on the ERC-20 standard. However, the emergence of CryptoPunk spurred the creation of ERC-721, which became the cornerstone for many valuable applications including 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 distinct 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 very suitable for representing unique items or assets, such as artworks, collectibles, real estate, or other unique assets. This also gives them significant value in creating and trading 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 currencies or shares, lack advantages in liquidity, have poor composability, and are indivisible; you cannot own 0.5 of an ERC-721 token.

![Newcomer Science Popularization丨From ERC20, 721, 1155 to 3525, detailing the path of RWA towards large-scale landing in Web3])https://img-cdn.gateio.im/webp-social/moments-41b67ba9e6d2661edb1c45c71c245991.webp(

) ERC-1155

ERC-1155 is a multi-token standard that combines the features of ERC-20 and ERC-721, aiming to handle multiple 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, complex interactions may need to be handled between different contracts.

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 (. 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, where each weapon within the same type ) is fungible, meaning that knife number 1 and knife number 10 are exactly the same ( fungible ), but a knife and a gun are different ### non-fungible (.

Key components: id, value, and owner. 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 owner. Taking 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 quantity of weapons under each type being the same )Value(.

Advantages of Features: ERC-1155 tokens can simultaneously represent fungible and non-fungible assets, making them very useful in a range of applications. For example, a game may use ERC-1155 tokens to represent the type 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 also makes understanding and implementing ERC-1155 potentially more complex than ERC-20 or ERC-721, and it cannot represent assets that can be partially exchanged, such as bonds or futures, and non-integer splitting is not possible; you cannot own 0.5 of an ERC-1155 token.

![Newcomer Science Popularization丨From ERC20, 721, 1155 to 3525, a detailed description of the path for RWA to achieve large-scale landing in Web3])https://img-cdn.gateio.im/webp-social/moments-4a1eb86c7df685e777e2ac997bb30487.webp(

) ERC-3525

ERC-3525 is a semi-fungible token (SFT, Semi-fungible Token ) standard, which 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, insurance strategies, etc., and has greater composability compared to other token standards. ERC-3525 represents a modeling thought 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, enabling SFTs to 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.

An Address represents an address that owns Slots and IDs, and each address can possess an arbitrary number and type of IDs and Slots. What sets apart the Slot attribute is that the Values of different IDs with the same Slot are transferable and interchangeable, while transfers and exchanges cannot occur between different Slots. A Slot can have many types of IDs, but 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 under the same Slot. Although each ID is different and has its own Value, different IDs under the same Slot can be regarded as the same and can be exchanged, combined, or split. Taking membership cards as an example, suppose there are two Slots for the membership cards: KFC and McDonald's. Each KFC and McDonald's membership card has a different ID representing different people's membership 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 V God card are regarded as the same thing. Satoshi can transfer points to the V God card and can also receive points sent from the V God card. Satoshi can also split the points in his own points card into two different IDs: the main card and the sub card (, allocating the points Value) as desired, and can also merge the main card and sub card back together.

In different Slots, KFC and McDonald's are two different companies, and KFC's points cannot be transferred to McDonald's points card, so they naturally do not have the transferability, exchangeability, and combinability between Value and ID.

Feature Advantages: ERC