With the official approval of the ERC-3643 Ethereum Improvement Proposal (EIP) by the Ethereum community, it is now accepted as a standard for the compliant tokenization of real-world assets (RWAs).The proposal acquired its final status on December 15, according to an announcement made by the Ethereum community. This means that it has undergone formal examination, discussion, and agreement.That’s akin to the previous methods used to create ERC-20 and other widely used standards.
The ERC-3643 standard is used by payment networks, loyalty schemes, RWAs, and securities tokenization.The proposal’s sponsoring organization clarified that it uses a self-sovereign identification (SSI) framework to verify users’ eligibility for tokens while offering anonymous yet authentic credentials.To improve security and compliance, the accepted standard—which was proposed in 2021—incorporates two separate authorization levels on top of ERC-20.
The first layer focuses on the recipient of the transaction’s identity and eligibility, using the ERC 734/735 standards to confirm that the required claims are present on the identification and have been verified by reliable claim issuers.To provide controlled and regulated token circulation, the second layer imposes global constraints on the token itself, such as daily volume limits and a maximum number of token holders.The process of turning a digital or physical asset’s value into a digital token for use on a distributed ledger or blockchain is known as asset tokenization.Increased liquidity, quicker settlements, greater accessibility to a variety of marketplaces, and transparency are among potential advantages of asset tokenization.Applications in the real world include making it possible to trade intellectual property, financial assets, art, and real estate fractionally.
Asset tokenization is expected to reach a market value of $10 trillion by 2030, according to management consulting firm Roland Berger. This is a substantial increase from the current market value of about $300 billion. Many traditional and crypto-native organizations view asset tokenization as one of the major developments in the financial industry.Well-known businesses investigating the technology include Société Générale, JPMorgan, and Goldman Sachs.Despite the challenges facing the cryptocurrency industry, according to data from VanEck Research, the overall market value of RWAs hit $342 billion in September.