Ethereum RWA Standards
Smart contract specifications
Motivation
Real estate is the largest asset class in the world. By tokenizing real estate, barriers to entry are lowered, transaction costs are minimized, information asymmetry is reduced, ownership structures become more malleable, and a new building block for innovation is formed. However, in order to tokenize this asset class, a common standard is needed that accounts for its real world particularities while remaining flexible enough to adapt to various jurisdictions and regulatory environments.
Ethereum tokens involving real world assets (RWAs) are notoriously tricky. This is because Ethereum tokens exist on-chain, while real estate exists off-chain. As such, the two are subject to entirely different consensus environments. For Ethereum tokens, consensus is reached through a formalized process of distributed validators. When a purely-digital NFT is transferred, the new owner has a cryptographic guarantee of ownership. For real estate, consensus is supported by legal contracts, property law, and enforced by the court system. With existing asset-backed ERC-721 tokens, a transfer of the token to another individual does not necessarily have any impact on the legal ownership of the physical asset.
The advent of blockchain technology has brought about a new era of efficiency, accessibility, and liquidity in the world of asset transfer. This is particularly evident in the realm of cryptocurrencies, where users can transfer token ownership peer-to-peer without intermediaries. However, when it comes to tokenized securities or security tokens, the situation is more complex due to the need for compliance with securities laws. These tokens cannot be permissionless like utility tokens; they must be permissioned to track ownership and ensure that only eligible investors can hold tokens.
The existing Ethereum protocol, while powerful and versatile, does not fully address the unique challenges posed by security tokens. There is a need for a standard that supports compliant issuance and management of permissioned tokens, suitable for representing a wide range of asset classes, including small businesses and real estate.
ERC-3643 T-REX Token for regulated exchanges
The T-REX token is an institutional-grade security token standard. This standard provides a library of interfaces for the management and compliant transfer of security tokens, using an automated onchain validator system leveraging onchain identities for eligibility checks.
The standard defines several interfaces that are described hereunder:
Token
Identity Registry
Identity Registry Storage
Compliance
Trusted Issuers Registry
Claim Topics Registry
ERC-1400 (Universal Token, consensus & Matrixport)
ERC1400 is a hybrid token standard precisely designed for the use case of tokenized financial assets:
By being ERC20 retrocompatible, it remains compatible with the majority of existing tools and platforms.
By being partially-fungible (hybrid token), it allows to represent different classes of assets, perform more evolved token actions (lock tokens, collateralize tokens, etc.), which is essential in the context of corporate actions.
By offering the possibility to attach data to transfers, strong control over token transfers, based on granular certificate checks can be setup by issuers.
ERC-6065 (for Real Estate)
Inherits ERC-721 - Allows for backwards compatibility with the most widely accepted NFT token standard.
operatingAgreementHashOf - immutable hash of the legal agreement detailing the right to ownership and conditions of use with regard to the property
Property Unique Identifiers - legal description (from physical deed), street address, GIS coordinates, parcel/tax ID, legal owning entity (on deed)
debtOf - readable debt value, currency, and foreclosure status of the NFT
managerOf - readable Ethereum address with managing control of property
ERC-4626 Tokenized vault position
ERC-404/DN404 - (Ownership Fractions)
- Fractions management of NFts with ERC20s