ERC3525 is a new type of token based on the ERC721 and ERC20 standards. It aims to provide a standard for semi-fungible assets that sits between fungible and non-fungible tokens (NFTs). Unlike the ERC721 and ERC20 standards, ERC3525 is more flexible and compatible, making it suitable for a wider range of use cases.
The SFT (Smart Financial Token) token of ERC3525 focuses on defining the quantity and agreement relationship of assets. Its quantity is limited and can be verified and confirmed through a specific algorithm. SFT tokens can be used in various application scenarios, such as digital asset exchange, investment, tokenized financial instruments, etc.
Compared to the ERC721 and ERC20 standards, ERC3525's SFT tokens are more flexible and compatible. While ERC721 and ERC20 standards only support digital assets, ERC3525's SFT tokens can be used to tokenize various digital and real-world assets. This makes ERC3525's SFT tokens have a wide range of applications in digital asset management, digital art trading, digital real estate, and other fields.
In addition, ERC3525's SFT tokens can be integrated and interoperable with other ERC standards. For example, ERC3525's SFT tokens can be interoperable with ERC721 and ERC20 standards, allowing users to convert and trade between different tokens.
Traditional ERC20/ERC721 token standards mainly describe digital assets based on value to value/ID to ID, which is simple and easy to understand but cannot meet the requirements of the current application layer. Especially in cases involving complex asset repayment rules or multi-attribute assets, a more structured and scalable asset description method is needed.
ERC3525 protocol adopts a new asset structure to improve the scalability and compatibility of assets. SFT tokens are described by three dimensions: ID, SLOT, and value. ID is the same as the ID in the ERC721 standard, used to identify a unique asset. SLOT is used to describe the asset's attributes, and value represents the specific numerical value of the asset, similar to the value in the ERC20 standard.
By using the ERC3525 protocol, digital assets can be described in a more structured and scalable way to meet the needs of various application scenarios. This new asset description method also improves the compatibility of the ERC3525 protocol, making it possible to integrate and interoperate with other ERC standards.
In summary, looking forward from the present, ERC3525 not only solves some application-level problems but also has forward-looking implications:
ERC721 cannot support splitting and merging and cannot be used to calculate intrinsic attribute values, but SFT can achieve splitting and merging through value transfer.
The ERC20 token standard has limited category descriptions and cannot meet the needs of multi-category descriptions. Many types require deploying many smart contracts in a unified usage scenario, which wastes a lot of space and incurs high costs for executing programs and compatibility with various types, causing many troubles for developers. However, SFT completely avoids this problem.
The SLOT of ERC3525 confirms whether an asset belongs to the same category by a set of attributes, and assets under the same subclass are homogenous, while those under different subclasses are non-homogenous. A Slot is a label but can contain multiple conditions. If all conditions are met, it is judged as the same Slot. Value is an intrinsic property of the container SFT, and values under the same Slot can be transferred to each other, while those under different Slots cannot. This also distinguishes ERC3525 from 1155, where the former transfers value through Slot to different IDs, while the latter transfers different values through IDs. For development, ERC3525 is much easier to use than 1155, as it only requires adding Slots within a single contract to accommodate 10,000 types of items in a GameFi scenario.
Smart contracts can be upgraded and act as accounts capable of transferring tokens, processing logic, storing state and assets. SFT tokens in ERC3525 can be seen as visualized and tokenized smart contracts that react to external events, execute logic, store and transfer assets, and demonstrate the advantages of distributed ledgers (recording transaction history) and smart contracts (internal execution logic). This provides convenience and flexibility for developers and users, catering to the needs of complex business scenarios.
With an SFT token in ERC3525, it is possible to describe multiple categories of assets within a single contract, avoiding the possibility of contract explosion due to combinations. NFTs can be split and merged through value transfers. Additionally, an SFT token can be dynamically displayed and respond to external events. Taking the decentralized gaming platform X WINNER as an example, if X WINNER were to add platform tokens, platform points, proof-of-work, and other elements to the SFT, players holding such SFT tokens would be granted corresponding rights on the platform. The metadata inside the SFT token can be changed through on-chain transactions or other off-chain data sources. The value transfers within different scenarios can introduce different titles, levels, or expressions, serving as a tool for generating revenue and also symbolizing a form of identity within the platform.
Lastly, it is worth noting that ERC3525 achieves an average gas consumption level comparable to ERC721. This is the result of meticulous design and long-term optimization. Moreover, ERC3525 is designed to be backward-compatible with ERC721, allowing almost all wallets, DeFi protocols, NFT tools, and markets in the current market to directly support ERC3525 without the need for modifications. For game players, low-entry and convenient operations are of great importance, reducing interaction pathways and learning costs. This is one of the significant reasons why we consider using ERC3525.
Although our focus lies in the gaming platform sector, we have a positive outlook on the future development prospects of ERC3525. It not only provides a new direction for current blockchain applications but also has the potential to link more real-world assets and empower them.
The above is our understanding of ERC3525 and the initial intentions behind our choice of ERC3525.