2 Ottobre 2023
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ERC-3525 new Ethereum standard
Ethereum

Token Erc 3525 the new fungible token for financial markets

Andrea Belvedere 1078 Views , 

ERC-3525 new Ethereum standard

Solv Protocol, which builds a decentralized marketplace for financial NFTs, announced ERC-3525 new Ethereum standard (ETH) .

ERC (Ethereum Request for Comments)-3525 reinforces the traditional NFTs (non-fungible tokens) represented by ERC-721. It is a token standard suitable for representing financial products such as insurance policies and bonds.

Background on ERC Token 3525

Tokenization is one of the most important trends with which to use and control digital resources in cryptography. Traditionally, there have been two approaches to do this: fungible and non-fungible tokens. Fungible tokens generally use the EIP-20 standard, in which each unit of an asset is identical to each other. EIP-20 is a flexible and efficient way to manipulate fungible tokens. Non-fungible tokens are predominantly EIP-721 tokens, a standard that can distinguish digital assets from each other based on identity.

Both have significant disadvantages.

For example, EIP-20 requires users to create a separate EIP-20 contract for each individual data structure or combination of customizable properties. In practice, this results in an extraordinarily large amount of EIP-20 contracts that must be created.

On the other hand, EIP-721 tokens do not provide any quantitative features, greatly reducing their computability, liquidity and manageability. For example, if financial instruments such as bonds, insurance policies, or investing plans are created using EIP-721, no standard interfaces are available to control the value, making it impossible, for example, to transfer part of the equity in the contract represented by the token.

CHARACTERISTICS OF THE SEMI-FUNGIBLE TOKEN ERC3525

A more intuitive and direct way to solve this problem is to create a semi-fungible token that has the quantitative characteristics of EIP-20 and the qualitative attributes of EIP-721.

NFTs (Non-Fungible Tokens) have unique IDs indicating their identity and represent unique digital objects such as game objects, music, domain names, and graphics.

ERC-3525 incorporates a new “data type (SLOT)” in the NFT, so that if the NFT has the same SLOT, even if the ID is different, the value (worth) can be “divided or merged (quantitative operation)” .

Solv Protocol co-founder Yan Meng says:

Assuming there are banknotes issued in ERC-3525, a $5 bill and a $10 bill (with different IDs) can be summed (because they have the same SLOT), but cannot be summed with Euro bills (because they have different SLOTs). It cannot.

THE DIFFERENCES BETWEEN ERC 3525 AND ERC 1155

ERC-3525 is defined as “SFT (semi-fungible token)” like the existing ERC-1155, but the difference is in quantitative performance (addition and subtraction are possible).

Currently, ERC-1155 has a two-level structure that handles “ID, VALUE” and is particularly used in the game industry where there are alternative elements such as game currency, collectibles, and items such as weapons.

Primarily for application developers, it features the convenience of collectively updating similar tokens.

Because ERC-3525 has a three-tiered structure of “ID, SLOT, VALUE,” it is possible to merge and split as described above and it is possible to transfer some of the shares held. Meng said it can “provide tremendous flexibility” for innovation in financial products.

Designed by Solv Protocol, ERC-3525 received support from many Ethereum developers and was refined in 20 months from proposal to finalization.

Since 2018, when ERC-721 was established, the NFT market has grown to a scale of tens of billions of dollars (by the end of 2021), but ERC-3525 envisions new use cases and market development of tokenized financial products.

Links to the post and insights

https://mobile.twitter.com/myantokengeek
https://linktr.ee/SolvProtocol
https://solv.finance/home
https://github.com/ethereum/EIPs/blob/master/EIPS/eip-3525.md
https://ethereum-magicians.org/t/eip-3525-the-semi-fungible-token/9770/2
https://eips.ethereum.org/EIPS/eip-3525

 

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