ERC-3643: Revolutionizing or Adding Complexity? - Nextrope - Your Trusted Partner for Blockchain Development and Advisory Services

ERC-3643: Revolutionizing or Adding Complexity?

Miłosz

16 Jan 2024
ERC-3643: Revolutionizing or Adding Complexity?

The community's involvement in the research and development of blockchain technology is once again challenging traditional paradigms. As we have previously observed, the tokenization of Real World Assets (RWAs) has faced a multitude of challenges. ERC-3643 approaches the legal sphere with flexibility and the utmost care, facilitating the proficient integration and use of blockchain infrastructure for assets of various kinds. In this article, we will explore the essence and advantages of this standard, along with potential complexities that may be lurking.

ERC-3643 and Overall Considerations

Trust

Transfers of ERC-20 tokens typically follow a specific process on Ethereum Virtual Machine (EVM) blockchains, adhering to the standard ERC-20 implementation. This process includes the initiation, approval, and eventual transfer of the tokens. Normally, KYC (Know Your Customer) and AML (Anti-Money Laundering) checks require integration with external APIs.

ERC-3643 uses a model that necessitates predefined criteria before transfer execution. The standard integrates ONCHAINID, which acts as a smart contract for a digital identity management system. It enables third-party-issued identification certificates and KYC or AML service providers to interact and enforce legislative requirements on the tokens. Linking an investor's wallet to an ONCHAINID represents a significant shift in the security tokens market. Issuers can recover the token balance using the 'recovery' function when necessary. This process involves comparing and validating information with associated off-chain databases.

Usability

ERC-3643's design acknowledges the global scope of blockchain applications and caters to cross-jurisdictional landscapes through modular design. Its architecture features transaction limits, investor qualifications, and geographical restrictions checks. It communicates with existing EVM-compatible systems or ERC-20-based tokens. The strong emphasis on regulations has some implications for investor confidence. Institutional bodies prioritize legal safety and risk management and most likely ERC-3643 fits both rigorous financial policies and a string of assets tokenization demands. It allows for the implementation of multi-level permissions and roles within its token ecosystem. This hierarchical structure adds an extra layer of security, as it controls who can execute specific actions within the token’s life cycle.

ERC-3643 and Artificial Intelligence

The convergence of blockchain technology and Artificial Intelligence (AI) tools heralds a groundbreaking synergy, poised to unlock new capabilities. This triad of technologies intertwines to create a more intelligent, efficient, and secure ecosystem. By integrating AI algorithms with ERC-3643's smart contracts, there is a significant leap in automated decision-making capabilities. AI can analyze vast amounts of data to make informed decisions about token transactions, ensuring compliance, and optimizing operational efficiency. AI's ability to process and analyze complex datasets simplifies intricate processes involved in token management. It enables more nuanced and sophisticated handling of ERC-3643 tokens, catering to a variety of use cases without adding operational complexity. The integration of AI tools can optimize transactional processes within the ERC-3643 framework, enhancing speed and reducing costs.

Closer Outlook

Table 1: Advantages of ERC-3643

Table 2: Potential Challenges in Front of ERC-3643

Wondering how this standard performs against other protocols? We have previously compared the ERC-1400 and ERC-3643 capabilities.

Conclusion

By facilitating a secure and compliant environment for tokenization, ERC-3643 encourages innovation in the digital asset space. It seeks to evolve alongside changing global regulatory jurisdictions. Further enhancements may include more sophisticated mechanisms. Undoubtedly, the TREX protocol remains at the forefront of blockchain technology adaptability, not only limited to intangible assets like intellectual property and patents. From agriculture to entertainment, becoming more deeply integrated into DeFi ecosystems, offering novel investment opportunities. The standard establishes a foundation for growth, although it appears innovative, flexible, and compliance-oriented, it might not be without drawbacks.

If you are interested in utilizing ERC-3643 or other blockchain-based solutions for your project, please reach out to contact@nextrope.com

FAQ

What is ERC-3643 and how does it improve tokenization?

  • ERC-3643 is a standard for tokenizing Real World Assets (RWAs) on blockchain. It integrates with legal frameworks, ensuring secure asset transfers and compliance with regulations like KYC/AML.

How does ERC-3643 address regulatory compliance?

  • ERC-3643 utilizes ONCHAINID for identity verification and regulatory enforcement. It includes features like transaction limits and investor qualifications to meet global regulatory requirements.

What are the main advantages of ERC-3643?

  • ERC-3643 offers enhanced security through multi-level permissions, global applicability, and integration with existing systems. It also enables the integration of blockchain with AI tools for optimized operations.

What challenges might ERC-3643 face?

  • Challenges include regulatory complexity, interoperability with existing systems, and scalability for handling various asset types and transaction volumes.

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!