From ERC-20 to ERC-3525: RWAs Paving the Path to Web3 Mass Adoption

Since Bitcoin’s inception in 2008, blockchain has evolved rapidly, yet the crypto market’s $3.2 trillion valuation in June 2025 remains dwarfed by Apple’s $3.5 trillion market cap. Web3’s promise of decentralized, real-world applications has been slow to materialize, but Real World Asset (RWA) tokenization is emerging as a game-changer. Citi’s 2023 report, Money, Tokens, and Games, projects RWAs could drive a $5–16 trillion market by 2030, onboarding the next billion Web3 users. Central to this vision is the ERC-3525 standard, a semi-fungible token (SFT) that blends the strengths of ERC-20, ERC-721, and ERC-1155, enabling complex asset representation for bonds, invoices, and derivatives.

This analysis compares these Ethereum token standards, explores ERC-3525’s digital modeling paradigm, and evaluates its potential to catalyze RWA adoption in Web3, while addressing challenges and key application areas.

Background: EIP, ERC, and the Rise of ERC-3525

• EIP (Ethereum Improvement Proposal): A framework for proposing Ethereum network enhancements, covering protocol changes, APIs, or standards.
• ERC (Ethereum Request for Comment): A subset of EIPs defining application-layer standards, like smart contract interfaces, ensuring interoperability. All ERCs are EIPs, but not vice versa.

ERC-3525, proposed by Solv Protocol on December 1, 2020, and finalized in September 2022 after 20 months of community refinement, introduces a semi-fungible token standard. Designed by a team with Chinese core members, it has gained traction for its ability to model complex financial assets, positioning it as a cornerstone for RWA tokenization.

Comparing Ethereum Token Standards

To understand ERC-3525’s role, let’s compare it with ERC-20, ERC-721, and ERC-1155, focusing on key components, strengths, and limitations.

ERC-20: Fungible Tokens

• Definition: Homogeneous tokens where each unit is interchangeable (e.g., USDT, DAI).
• Key Components:
  • Address: Owner’s wallet address.
  • Value: Token balance (e.g., 100 USDT).
• Strengths:
  • Ideal for fungible assets like currencies or shares.
  • Supports fractional ownership (e.g., 0.5 tokens).
  • Powers DeFi (lending, DEX trading, yield farming).
• Limitations:
  • Cannot represent unique or non-fungible assets (e.g., art, real estate).
• RWA Relevance: Stablecoins like USDT are RWAs, mapping fiat to blockchain, but ERC-20 lacks flexibility for complex assets.

ERC-721: Non-Fungible Tokens (NFTs)

• Definition: Unique, non-interchangeable tokens (e.g., Bored Apes, CryptoPunks).
• Key Components:
  • TokenId: Unique identifier for each token.
  • Owner: Address holding the token.
• Strengths:
  • Perfect for unique assets (art, collectibles, property deeds).
  • Drives NFT marketplaces and digital ownership.
• Limitations:
  • Non-fungible nature limits liquidity and composability.
  • No fractional ownership (e.g., can’t own 0.5 of an NFT).
• RWA Relevance: Suitable for tokenizing singular assets (e.g., a specific property), but inefficient for scalable, liquid markets.

ERC-1155: Multi-Token Standard

• Definition: A hybrid standard managing both fungible and non-fungible tokens in one contract.
• Key Components:
  • Id: Unique token type identifier.
  • Value: Quantity of that token type.
  • Owner: Address holding the tokens.
• Strengths:
  • Supports both fungible (e.g., in-game currency) and non-fungible (e.g., unique weapons) tokens.
  • Reduces gas costs by consolidating contracts.
  • Used in gaming (e.g., weapon classes with multiple identical units).
• Limitations:
  • Complexity increases implementation difficulty.
  • No fractional ownership or partial transferability.
  • Limited for structured financial assets (e.g., bonds, derivatives).
• RWA Relevance: Flexible for tokenized asset classes but lacks the granularity needed for dynamic financial instruments.

ERC-3525: Semi-Fungible Tokens (SFTs)

• Definition: Combines ERC-20’s fungibility, ERC-721’s uniqueness, and ERC-1155’s multi-token flexibility, with added composability for complex assets.
• Key Components:
  • Id: Unique token identifier (like ERC-721).
  • Value: Quantifiable balance (like ERC-20).
  • Slot: Category/class defining interchangeability rules.
  • Address: Owner’s wallet address.
• How Slots Work: Tokens with the same Slot are interchangeable within that category (e.g., KFC membership points), but different Slots (e.g., KFC vs. McDonald’s) are not. Each Slot can have multiple Ids, each with its own Value.
• Example:
  • Slot: KFC membership.
  • Ids: Satoshi’s card (Id: 1), Vitalik’s card (Id: 2).
  • Value: Points (e.g., Satoshi has 100 points, Vitalik 50).
  • Mechanics: Satoshi can transfer 20 points to Vitalik (Id-to-Id transfer), split his card into sub-Ids (e.g., 60 + 40 points), or merge them. KFC points can’t transfer to McDonald’s (different Slot).
• Strengths:
  • Represents complex assets (bonds, futures, ABS, memberships).
  • Supports fractional ownership and composability (e.g., splitting/merging tokens).
  • Backward-compatible with ERC-721, easing integration.
  • Enables Id-to-Id transfers and structured financial modeling.
• Limitations:
  • High complexity increases learning and development barriers.
  • Slot-based structure introduces semi-centralized governance risks.
  • Adoption lags due to niche use cases and technical demands.
• RWA Relevance: Ideal for tokenizing structured financial assets, enabling transparent, liquid markets for RWAs.

Visual Comparison (inspired by Solv Protocol):

ERC-3525’s Digital Modeling Paradigm

ERC-3525 isn’t just a token standard—it’s a digital world modeling framework, enabling complex asset structures akin to Lego bricks. Its potential is best understood through three lenses:

1. Fractionable, Composable Super NFT

• Concept: ERC-3525 can emulate ERC-20 (same Slot, single Id), ERC-721 (unique Slot/Id), or ERC-1155 (multiple Ids per Slot), but goes further by enabling true fractionalization.
• Example: A Bored Ape NFT could be split into 100 shares (same Slot, different Ids), tradable independently, without external contracts.
• Impact: Enhances liquidity for high-value RWAs (e.g., real estate, art), making them accessible to retail investors.

2. Universal Digital Container

• Concept: Each Id is an abstract account with send/store/receive functions, acting as a “basket” for diverse assets. Slots define asset categories, and Values represent shares.
• Example: Id A (Slot: Crypto Fund) holds 100 BTC + 10 ETH. Split into 10 equal shares (Value: 10 BTC + 1 ETH each). Merge with Id B (100 DOGE) to create a new basket (10 BTC + 1 ETH + 100 DOGE).
• Impact: Enables nested, composable structures for structured finance (e.g., ABS, MBS), with delegated permissions for modular governance.

3. Visualized Smart Contract

• Concept: ERC-3525’s transparency displays real-time asset composition (e.g., underlying assets, proportions), like a dashboard on a container.
• Historical Context: The 2008 financial crisis was fueled by opaque derivatives (MBS, CDOs) hiding subprime risks. ERC-3525’s visibility could have exposed these, enabling real-time risk assessment.
• Impact: For RWAs, it ensures auditable, transparent asset-backed tokens, reducing systemic risk and boosting trust.

ERC-3525’s Role in RWA and Web3 Adoption

ERC-3525’s flexibility, composability, and transparency make it a linchpin for scaling RWAs, addressing Web3’s real-world application gap. Key areas of impact include:

1. Real World Assets (RWAs)

• Scope: RWAs encompass securities (stocks, bonds), commodities, real estate, art, carbon credits, and intellectual property. Citi predicts $5T in tokenized assets by 2030, driven by CBDCs and stablecoins.
• ERC-3525 Advantage:
  • Models complex securities (e.g., bonds, ABS) with nested structures.
  • Enhances transparency via real-time asset composition.
  • Supports fractional ownership, democratizing access.
• Case Study: Supply Chain Finance:
  • Problem: SMEs struggle with factoring (selling invoices for liquidity) due to trust and verification issues.
  • Solution: ERC-3525 creates paired accounts (Payable/Receivable). Payments to the Payable account auto-distribute to Receivable accounts via smart contracts, ensuring trustless factoring. Tokenized invoices are verifiable, liquid, and divisible.
  • Example: A $1M invoice is tokenized (Slot: Invoice, Id: 1, Value: $1M). Sold at 90% ($900K) to a factor, providing instant liquidity. Blockchain’s traceability eliminates fraud.
  • 2025 Update: Solv Protocol’s v3 platform tokenized $500M in SME invoices, integrating with Chainlink oracles for off-chain data.
• Outlook: Regulatory support (e.g., EU’s MiCA, Hong Kong’s tokenization guidelines) and oracle advancements (e.g., Chainlink CCIP) will accelerate RWA adoption, with ERC-3525 as a core standard.

2. Virtual Assets and Commodities

• Applications: Virtual land, upgradable game items, membership cards, gift cards, lottery tickets.
• ERC-3525 Advantage:
  • Backward-compatible with ERC-721, easing integration with NFT platforms.
  • Enables dynamic item upgrades/merging (e.g., combining game weapons).
  • Supports loyalty programs (e.g., Starbucks Odyssey’s Web3 rewards).
• Case Study: Loyalty Programs:
  • Example: Starbucks’ 10M+ U.S. loyalty members could use ERC-3525 for tokenized points (Slot: Starbucks, Id: User, Value: Points). Users transfer, split, or merge points seamlessly.
  • 2025 Update: Mantra’s LEEP protocol launched ERC-3525-based loyalty tokens for retail chains, with $200M TVL.
• Outlook: Gaming and loyalty programs could drive retail Web3 adoption, leveraging ERC-3525’s composability.

3. Social, Identity, and Tokenized Accounts

• Applications: Social graphs (e.g., Lens Protocol), soulbound tokens (SBTs), tokenized wallets.
• ERC-3525 Advantage:
  • Models complex social relationships via composable data structures.
  • Quantifies SBT attributes (e.g., event contributions).
  • Acts as a wallet-like container, enabling innovative account models.
• Example: Lens could use ERC-3525 to tokenize follower relationships (Slot: Network, Id: User, Value: Influence Score), tradable or divisible.
• Outlook: SBTs and tokenized identities could redefine Web3 social platforms, with ERC-3525 enhancing flexibility.

Challenges to ERC-3525 Adoption

Despite its potential, ERC-3525 faces hurdles:

1. Complexity: Its sophisticated structure (Slots, Ids, Values) raises the learning curve for developers and users, slowing adoption.
2. Development Barriers: Building ERC-3525 applications requires advanced expertise, limiting startup participation.
3. Semi-Centralization: Slot-based governance introduces centralized elements, clashing with DeFi’s ethos. Regulatory compliance (e.g., KYC for RWAs) amplifies this.
4. Market Awareness: As of June 2025, ERC-3525’s $1.2B TVL (per DeFiLlama) lags behind ERC-20 ($300B) and ERC-721 ($50B), reflecting niche status.

The Road to Web3 Mass Adoption

ERC-3525 isn’t about creating value—it’s about packaging value dynamically, transparently, and composably. Its ability to model complex RWAs positions it as a catalyst for Web3’s real-world impact:

• Liquidity: Fractionalized RWAs (e.g., $100 shares of a $1M property) democratize investment.
• Transparency: Visualized contracts prevent 2008-style opacity, fostering trust.
• Interoperability: Backward compatibility with ERC-721 ensures ecosystem integration.

2025 Trends:

• Institutional Push: BlackRock’s $2.9B tokenized fund and JPMorgan’s DvP trials signal RWA maturity.
• Retail Traction: X posts highlight growing interest in tokenized real estate and loyalty programs.
• Tech Advancements: Chainlink’s CCIP and Mantra’s LEEP enhance cross-chain RWA liquidity.

Future Vision: By 2030, RWAs could unlock $5T in tokenized assets, with ERC-3525 powering structured finance, supply chain solutions, and consumer applications. Success hinges on:

• Simplifying developer tools (e.g., Solv’s SDKs).
• Regulatory clarity (e.g., global KYC/AML standards).
• Retail onboarding via intuitive UX (e.g., loyalty apps).

Conclusion

From ERC-20’s fungible tokens to ERC-721’s NFTs and ERC-1155’s hybrid model, Ethereum’s standards have laid the groundwork for Web3. ERC-3525 builds on these, offering a super NFT, digital container, and visualized contract framework to scale RWA tokenization. Its ability to model complex assets—while ensuring transparency and liquidity—makes it a linchpin for Web3’s mass adoption.

Yet, complexity, development barriers, and semi-centralization pose challenges. As projects like Solv Protocol ($500M TVL) and Mantra ($200M TVL) demonstrate, ERC-3525 is gaining traction in supply chain finance, loyalty programs, and structured finance. With institutional backing, regulatory tailwinds, and technical refinements, ERC-3525 could bridge TradFi and DeFi, unlocking a multi-trillion-dollar market and bringing Web3 to billions.

For investors and developers, focus on ERC-3525’s niche applications (e.g., invoice factoring, tokenized bonds) and monitor regulatory shifts. The standard’s quiet rise in 2025 makes it a hidden gem worth watching.