The Ethereum community has officially signed off on the ERC-3643 Ethereum Improvement Proposal (EIP), establishing it as the accepted standard for compatible tokenization of real-world assets (RWA).
The proposal has reached final status, according to a Dec. 15 announcement. This means that it has been officially reviewed, discussed, and agreed upon within the Ethereum community. This is a similar process to how ERC-20 and other widely used standards were established in the past.
Ethereum Community Approval #ERC3643 First #Tokenization standard
We are proud to announce that the ERC3643 standard has achieved ‘final’ status. #Ethereum Improvement suggestions(#EIP).
Find out more here: https://t.co/Z4XzijY6se#RWA pic.twitter.com/DhR3XmGrVU
— ERC3643.org (@ERC3643Org) December 15, 2023
ERC-3643 is a standard for securities tokenization, RWA, payment systems, and loyalty programs. The proposal verifies a user’s eligibility for tokens through a Self-Sovereign Identity (SSI) framework and provides anonymous but verifiable credentials, explained the association behind the proposal.
The approved standard proposed for 2021 builds on ERC-20 and incorporates two separate permission layers to enhance security and compliance.
The first layer focuses on the identity and qualifications of transaction recipients by leveraging the ERC-734/-735 standards to ensure that the required claims exist in their identity and are authenticated by a trusted claim issuer. The second layer provides controlled and regulated token circulation by implementing global limits on the tokens themselves, such as daily token quantity limits and maximum number of token holders.
Asset tokenization involves converting the value of a physical or digital asset into a digital token on a blockchain or distributed ledger. Possible benefits of asset tokenization include increased liquidity, faster settlement, transparency, and access to various markets. Real-world applications include enabling fractional trading of real estate, artwork, financial assets, and intellectual property.
Management consulting firm Roland Berger estimates that asset tokenization will grow into a $10 trillion market by 2030. This is a significant increase from its current valuation of approximately $300 billion.
Asset tokenization is considered one of the major trends in finance by various traditional and cryptocurrency-based companies. Notable companies exploring this technology include JPMorgan, Goldman Sachs, and Societe Generale. According to data from VanEck Research, the total market capitalization of RWAs reached $342 billion in September despite headwinds in the cryptocurrency industry.
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