Real world tokenisation fireside chat with Anndy Lian: Unpacking the landscape

Real world tokenisation fireside chat with Anndy Lian: Unpacking the landscape

In a recent fireside chat, Anndy Lian, an intergovernmental blockchain expert and author of the book Blockchain Revolution 2030, engaged in a profound discussion on real-world tokenisation. This engaging conversation, moderated by Faraj Abutalibov, Chief Commercial Officer of the Venom Foundation, provided a deep dive into the evolving landscape of tokenisation, offering insights that resonate with both seasoned professionals and those new to the blockchain space.

Lian’s journey into the world of blockchain began in 2013 with his first Bitcoin purchase. Beyond personal involvement, his extensive experience advising governments underscores the practical application of blockchain at the highest levels of governance.

His role as a blockchain advisor to an intergovernmental group further solidifies his expertise. As an investor and fund manager holding a CMS license in Singapore, Lian brings a multifaceted perspective, enriching the fireside chat with a wealth of practical insights.

Tokenisation overview

The discussion commences with Lian providing an overview of the evolving perception of tokenisation. He notes a substantial shift from initial scepticism, especially from governments, to the current scenario where significant players, including prominent banks and governments, actively advocate for the tokenisation of Real World Assets (RWA). Lian emphasises the technological readiness for tokenisation, underlining the momentum behind the RWA wave.

His assertion on the shift in perception echoes a broader transformation in the financial and regulatory landscape. The acknowledgement from major players, traditionally cautious about emerging technologies, signifies a turning point. The active endorsement of tokenisation by influential entities not only validates its legitimacy but also sets the stage for widespread adoption. The emphasis on technological readiness is crucial, highlighting that the infrastructure and tools required for efficient tokenisation are now more accessible and robust than ever before.

However, he introduces a critical concern that often goes unnoticed – the lack of a clear revenue model for companies engaged in tokenisation. Drawing from personal experience with a Registered Market Operator (RMO) investment, he highlights the complexities surrounding assets like properties, where achieving liquidity and establishing revenue models pose intricate challenges.

Lian’s insight into the revenue models of tokenisation ventures sheds light on a fundamental challenge in the industry. While the momentum for tokenising assets is palpable, the path to sustained profitability remains nebulous for many.

This observation prompts a critical examination of the business models associated with tokenisation, urging stakeholders to address this gap for long-term viability. His example involving a Registered Market Operator investment offers a tangible illustration, emphasising the need for innovative solutions to navigate complexities, particularly in traditionally illiquid markets like real estate.

Monetisation models

Lian delves into the monetisation models prevalent in the tokenisation space, distinguishing between established companies and startups. Larger companies with diverse income streams might find a more stable footing, but startups face hurdles in raising substantial funds due to uncertainties surrounding their revenue-generating capabilities. Here, he underscores the necessity for innovation among startups, citing examples such as the introduction of new ERC standards and novel approaches to tokenising assets.

The exploration of monetisation models unravels the varied landscape within the tokenisation space. Lian’s differentiation between established players and startups highlights the nuanced challenges each category faces. Larger companies equipped with diverse income streams possess a more resilient financial foundation.

In contrast, startups grapple with the intricacies of fundraising, compounded by uncertainties in proving their revenue-generating potential. Lian’s call for innovation becomes a rallying cry, emphasising the dynamic nature of the blockchain industry, where adaptability and novel approaches are prerequisites for success.

An interesting highlight is the success story of tokenising art, particularly through Non-Fungible Tokens (NFTs). Lian points to the added value brought to physical artworks through NFTs, presenting a compelling case for the broader integration of tokenisation in the art world.

The success story of art tokenisation, especially through the lens of NFTs, accentuates the transformative power of blockchain in traditionally non-digital domains. Lian’s emphasis on the added value of physical artworks highlights a paradigm shift in how we perceive and interact with art.

The integration of NFTs not only unlocks new revenue streams for artists but also democratises art ownership, allowing a broader audience to participate in the art market. This success story becomes a beacon for exploring similar opportunities in other industries where tokenisation can bring about significant value addition.

Challenges of tokenisation

Transitioning to the challenges hindering the widespread adoption of tokenisation, Lian and Abutalibov identify two significant hurdles: regulatory complexities and the prevailing reality. The lack of standardisation across different asset classes and varying regulations in different jurisdictions present formidable obstacles.

The identification of regulatory complexities and the prevailing reality as significant hurdles offer a sobering reflection on the impediments to the widespread adoption of tokenisation. Lian and Abutalibov’s emphasis on the lack of standardisation across asset classes signals the need for a unified regulatory framework that accommodates the diverse nature of tokenised assets.

The jurisdictional variations compound the challenges, requiring a concerted effort from global stakeholders to streamline regulations and foster a conducive environment for tokenisation to flourish.

Lian expands on the scepticism that still exists around the necessity of tokenisation. He observes that despite technological advancements, a sizable portion of the population questions the practical utility of tokenisation, slowing down its accelerated adoption.

Lian’s exploration of scepticism unveils a crucial aspect of the adoption curve for tokenisation. Despite the undeniable technological advancements, a segment of the population remains unconvinced about the practical utility of tokenisation.

This scepticism, rooted in a lack of understanding or clarity, becomes a barrier that extends beyond regulatory challenges. Lian’s observation underscores the importance of comprehensive education and awareness campaigns to demystify tokenisation, fostering a more inclusive and informed approach to its adoption.

Potential tokenisation use cases

The conversation explores potential use cases beyond traditional assets. Lian expresses optimism about the tokenisation of carbon credits, emphasising the traceability benefits it can bring to this sector. Additionally, he notes the increasing recognition of stablecoins by government bodies, especially in the context of Central Bank Digital Currencies (CBDCs).

The exploration of potential use cases propels the conversation beyond the realms of traditional assets, opening up new vistas for tokenisation. His optimism about tokenising carbon credits underscores the broader environmental and sustainability applications of blockchain. The emphasis on traceability aligns with the growing demand for transparent and accountable solutions in sectors crucial for global well-being.

Furthermore, stablecoins and their recognition by government bodies signal a shift in the perception of digital currencies, with central banks exploring their own digital versions. This recognition not only validates the concept of stablecoins but also marks a step toward mainstream acceptance of blockchain-based financial instruments.

Future impacts on the financial industry

Looking ahead, Lian speculates on the transformative impact of tokenisation on the financial industry. Envisioning increased efficiency in transactions, he anticipates faster and cheaper money transfers if tokenisation is embraced on a large scale. Lian underscores the importance of translating technological potential into practical applications to realise these transformative benefits.

Lian’s foresight into the future impact on the financial industry offers a glimpse into the transformative potential of tokenisation. The anticipation of increased efficiency in transactions aligns with the fundamental promise of blockchain technology.

Faster and cheaper money transfers emerge as tangible benefits, resonating with the ongoing quest for streamlined financial processes. His emphasis on translating technological potential into practical applications becomes a rallying cry for stakeholders to bridge the gap between innovation and real-world implementation, unlocking the full spectrum of transformative benefits.

Drivers of mass adoption

Considering the drivers of mass adoption, Lian emphasises the crucial role of everyday people using crypto. He envisions a “wow” moment when the retail investor base grows substantially, contributing to the next surge in crypto adoption. Drawing parallels to China’s widespread adoption of digital payments, he hopes for a similar scenario where people seamlessly use crypto for everyday transactions more effectively and economically.

His reflection on the drivers of mass adoption shifts the focus to the end-users – everyday people using crypto. The anticipation of a “wow” moment parallels the disruptive shifts witnessed in other technological revolutions. The envisaged growth in the retail investor base becomes a pivotal catalyst for the next surge in crypto adoption.

His comparison to China’s embrace of digital payments underscores the transformative power of widespread user acceptance. The aspiration for seamless crypto integration into everyday transactions highlights the need for user-friendly interfaces and widespread accessibility, laying the groundwork for a more inclusive crypto landscape.

The role of NFTs in tokenisation

Lian concludes the conversation by referencing his book, “NFT from Zero to Hero,” born out of a desire to guide friends away from potential scams in the NFT space. He aims to simplify the tokenisation of loyalty programs for companies. Contrary to the notion that NFTs are losing relevance, Lian points to successful projects like Oracle Red Bull Racing’s NFTs as evidence of the continued vitality of the NFT space.

His conclusion encapsulates the multifaceted role of NFTs in tokenisation. His book not only reflects a personal commitment to guiding others but also underscores the need for education in navigating the dynamic NFT space. The simplification of tokenising loyalty programs emerges as a practical application of NFTs in the corporate realm, showcasing their versatility beyond the art and gaming sectors.

Lian’s debunking of the notion that NFTs are losing relevance becomes a testament to their enduring impact, with successful projects like Oracle Red Bull Racing’s NFTs serving as proof of concept. Far from losing vitality, the NFT space continues to evolve and find new applications, contributing to the ever-expanding narrative of tokenisation.

In conclusion 

In this fireside chat, Lian provides a nuanced perspective on the current state and future possibilities of real-world tokenisation. The challenges and opportunities discussed paint a comprehensive picture of an industry on the cusp of significant developments.

As the conversation delves into potential applications, regulatory hurdles, and the transformative impact on the financial sector, it becomes clear that real-world tokenisation is a dynamic space with immense potential yet to be fully realised.

His perspective emerges as a guiding light for industry stakeholders navigating the intricate landscape of real-world tokenisation. The challenges outlined serve as waypoints for strategic considerations, urging a proactive approach to address impediments. Simultaneously, the opportunities highlighted become beacons for innovation, signalling the untapped potential awaiting exploration.

The fireside chat, rich with insights and foresight, positions Lian as a key influencer in shaping the trajectory of real-world tokenisation, inspiring a collective journey towards unlocking its transformative power.

World Tokenisation Summit was held on the 21st of November, 2023, in Dubai. More information on the fireside chat can be found here.

 

 

 

 

Source: https://e27.co/unpacking-the-landscape-real-world-tokenisation-fireside-chat-with-anndy-lian-20240131/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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Fireside chat with Anndy Lian at World Tokenization Summit, Dubai

Fireside chat with Anndy Lian at World Tokenization Summit, Dubai

Insights

What is the background of Anndy Lian, the guest speaker in the fireside chat on real-world tokenization?

Anndy Lian, based in Singapore, entered the crypto world in 2013 and became fully immersed in blockchain by 2017. He serves as an intergovernmental blockchain expert, book author, and has advised various governments.

How does Anndy Lian view the state of real-world tokenization, and what changes has he observed since discussing the concept in 2017-2018?

Anndy Lian acknowledges the significant traction real-world tokenization has gained. Initially met with skepticism, governments and companies now embrace the idea, recognizing its straightforwardness. The technology for asset tokenization is deemed ready, with big banks and governments leading the wave.

What are the key challenges highlighted by Anndy Lian regarding the revenue model behind some real-world asset (RWA) projects?

Anndy Lian questions the sustainability and revenue generation of RWA projects, especially those tokenizing assets like mid-level properties. He emphasizes the liquidity problem associated with certain asset tokenization.

According to Anndy Lian, what is the future outlook for stablecoins and carbon credit tokenization, and how do governments perceive stablecoins?

Lian sees stablecoins as here to stay, with more governments likely to embrace them within a certain framework. He views carbon credit tokenization as a valid use case, citing the intriguing traceability of the credit itself.

In Anndy Lian's perspective, what impact could tokenization have on the financial industry if adopted on a large scale, and what does he envision for the future of transactions?

Lian believes tokenization, if widely adopted, could revolutionize the financial industry, making transactions more efficient, faster, and cheaper. He envisions the potential for 24/7 clearance and money transfers, leading to a more effective financial system.

 

In the ever-evolving world of blockchain and cryptocurrencies, the concept of real-world tokenization has been gaining significant traction. To delve deeper into this topic, we recently had the pleasure of hosting a fireside chat with Anndy Lian, an intergovernmental blockchain expert and book author.

The discussion was led by Faraj, the Chief Commercial Officer of Venom Foundation, a layer one chain out of Abu Dhabi focusing on stable coins and real-world asset organization globally. Faraj is also the founder of a large community of crypto executives, boasting around 2,000 members.

The guest speaker, Anndy Lian, is based in Singapore but often travels around the globe. He embarked on his journey in the crypto world in 2013 when he bought his first Bitcoin. By 2017, he had fully immersed himself in the blockchain space and has never left since. Lian advises different governments. At one point, he served as a blockchain advisor to an intergovernmental group.

The State of Real-World Tokenization
When asked about his views on real-world tokenization, Lian acknowledged the obvious traction the concept has gained over the years. He recalled how governments were skeptical when he first started discussing the idea around 2017-2018. However, the narrative has since changed. Today, governments and companies are more open to the idea, recognizing the straightforwardness of real-world asset (RWA) tokenization.

Lian believes that the technology for tokenizing assets is 100% ready. He sees big banks and governments pushing the RWA wave, indicating a promising future for the concept. However, he also highlighted a key issue: the revenue model behind some of these RWA projects. He questioned how these companies would sustain themselves and make money, especially given the liquidity problem associated with tokenizing certain assets like mid-level properties.

The Future of Stable Coins and Carbon Credit Tokenization
Discussing the future of stablecoins and carbon credit tokenization, Lian expressed that most government bodies he interacts with recognize that stablecoins are here to stay. He sees a future where more governments will embrace stable coins within a certain framework, which could lead to the acceleration of Central Bank Digital Currencies (CBDCs).

As for carbon credit tokenization, Lian sees it as a valid use case. He has interacted with several carbon credit exchanges and believes that the traceability of the credit itself would be very interesting.

The Impact of Tokenization on the Financial Industry
If tokenization is taken seriously and adopted on a large scale, Lian believes it could have a long-lasting impact on the financial industry. He envisions a future where transactions become more effective, with money moving from point A to B in a much faster and cheaper manner. He also sees the potential for 24/7 clearance and money transfers, leading to a more effective financial system.

The Next Driver of Mass Adoption
When asked about the next driver of mass adoption, Lian expressed his hope for more people to start talking about how they can spend their crypto. He believes that the next “wow” moment would be seeing more adoption, leading to a larger community and driving crypto to the next level.

Conclusion
The fireside chat with Anndy Lian provided valuable insights into the world of real-world tokenization, stablecoins, and carbon credit tokenization. As the blockchain and crypto space continues to evolve, these discussions play a crucial role in shaping the future of the industry. As Lian aptly put it, the key is to read, learn, and explore for oneself, rather than relying solely on influencers or hype.

World Tokenization Summit was held on 21st of November 2023 at Melia Desert Palm, Al Awir Road, Warsan 2, Dubai, United Arab Emirates.

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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ERC3643 Unveiled: Enhancing Compliance and Control in Tokenizing Real-World Assets

ERC3643 Unveiled: Enhancing Compliance and Control in Tokenizing Real-World Assets

ERC3643 is an Ethereum standard for permissioned tokens, also known as security tokens. It is an open-source suite of smart contracts that enables the issuance, management, and transfer of tokens that represent real-world assets, such as equity, debt, real estate, or art. It is designed to work with an on-chain identity system that allows for the validation of the identities and credentials of investors and issuers through signed attestations issued by trusted claim issuers. It aims to provide a comprehensive framework for managing the lifecycle of security tokens, from issuance to transfers between eligible investors, while enforcing compliance rules at every stage. Also, supports additional features such as token pausing and freezing, which can be used to manage the token in response to regulatory requirements or changes in the status of the token or its holders. In this article, I will provide a personal perspective on the current state of ERC3643, provide statistics and data to support an opinion on its benefits and challenges, and offer research to support an argument for or against its adoption.

ERC3643 was first proposed in July 2021 by a group of developers from Tokeny Solutions, a platform for tokenizing securities. The proposal was based on the previous T-REX protocol, which had been used by Tokeny and its partners to tokenize over €28 billion worth of assets across 180 jurisdictions. The proposal was reviewed and accepted by the Ethereum community as an official standard in 2021, becoming the first standard for permissioned tokens on Ethereum. Since then, ERC3643 has been adopted by several projects and platforms in the security token space, such as SecuritizePolymath, and Tokensoft.

One of the main benefits is that it enables the tokenization of real-world assets in a compliant and efficient way. Tokenization is the process of converting the ownership rights of an asset into a digital token that can be stored and transferred on a blockchain. This process can bring several advantages, such as:

  • Increased liquidity: Tokenization can lower the barriers to entry and exit for investors, allowing them to trade fractional ownership of assets in a global and 24/7 market. This can increase the demand and supply of assets, resulting in higher liquidity and lower costs.
  • Reduced intermediaries: Tokenization can eliminate or reduce the need for intermediaries, such as brokers, custodians, and lawyers, who often charge high fees and introduce delays and risks in the transaction process. By using smart contracts and blockchain technology, tokenization can automate and streamline the issuance and transfer of tokens, reducing costs and increasing efficiency.
  • Enhanced transparency: Tokenization can provide a higher level of transparency and trust for investors and issuers, as the tokens and their underlying assets are recorded and verified on a public and immutable ledger. This can improve the quality and availability of information, as well as the accountability and governance of the token issuers.
  • Improved accessibility: Tokenization can democratize access to assets that are traditionally illiquid, expensive, or exclusive, such as real estate, art, or private equity. By creating fractional and digital ownership of assets, tokenization can enable more investors to participate in the market, diversify their portfolio, and benefit from the returns of the assets.

However, tokenization also faces several challenges, especially when it comes to security tokens, which are subject to complex and varying regulations across different jurisdictions. Security tokens must comply with the laws and rules that govern the issuance and transfer of securities, such as KYC (Know Your Customer), AML (Anti-Money Laundering), and CFT (Combating the Financing of Terrorism). These regulations are meant to protect investors and issuers from fraud, manipulation, and other risks, but they also impose restrictions and requirements that can limit the potential of tokenization. For instance, security tokens may have to comply with:

  • Eligibility criteria: Security tokens may only be issued and transferred to investors who meet certain criteria, such as accreditation, residency, or income. These criteria may vary depending on the type and jurisdiction of the token and the investor, and they may require the verification of the identity and credentials of the investors.
  • Transfer restrictions: Security tokens may have to follow certain rules and limitations when they are transferred between investors, such as lock-up periods, holding periods, volume limits, or whitelists. These rules may depend on the status and jurisdiction of the token and the investor, and they may require the approval of the issuer or a third party.
  • Disclosure obligations: Security tokens may have to provide certain information and reports to the investors and regulators, such as prospectuses, financial statements, or audits. These information and reports may vary depending on the nature and jurisdiction of the token and the issuer, and they may require the involvement of professionals and authorities.

These challenges pose significant technical and legal difficulties for the tokenization of real-world assets, as they require the integration and coordination of multiple systems and parties, such as blockchain platforms, identity providers, claim issuers, regulators, and intermediaries. Moreover, these challenges may also affect the attractiveness and feasibility of tokenization, as they may reduce the liquidity, efficiency, transparency, and accessibility of the tokens.

This is where ERC3643 comes in. It is designed to address these challenges by providing a standard and flexible framework for the creation and management of permissioned tokens on Ethereum. Leverages the power and versatility of smart contracts and blockchain technology to encode and enforce the compliance and control rules of the tokens, while also integrating with an on-chain identity system to validate and verify the identities and credentials of the investors and issuers. It defines several interfaces that are described below:

  • Token interface: This interface defines the basic functions and events of the token, such as minting, burning, transferring, pausing, and freezing. It also defines the functions and events related to the token lifecycle, such as issuing, redeeming, and updating. It also inherits from the ERC-20 interface, which is the standard for fungible tokens on Ethereum.
  • Identity Registry interface: Defines the functions and events related to the identity registry, which is a smart contract that stores and manages the on-chain identities of the investors and issuers. The identity registry allows the registration and removal of identities, as well as the addition and revocation of attestations. An attestation is a signed statement issued by a trusted claim issuer that attests to a certain attribute or credential of an identity, such as accreditation, residency, or income. The identity registry also allows the verification of the eligibility of an identity to hold or receive a token, based on the attestations and the token rules.
  • Identity Registry Storage interface: Defines the functions and events related to the identity registry storage, which is a smart contract that stores the data of the identity registry, such as the identities, the attestations, and the token rules. The identity registry storage is separated from the identity registry to allow for the upgradeability and modularity of the identity registry.
  • Compliance interface: Defines the functions and events related to the compliance, which is a smart contract that implements the logic and rules for the compliant transfer of tokens. The compliance contract checks the eligibility of the sender and the receiver of a token transfer, as well as the validity and availability of the token. The compliance contract also allows the issuer or an agent to update the token rules, such as the eligibility criteria or the transfer restrictions, as well as to force or block a token transfer in case of emergency or dispute.
  • Trusted Issuers Registry interface: Defines the functions and events related to the trusted issuers registry, which is a smart contract that stores and manages the list of trusted claim issuers that can issue attestations for the identities. The trusted issuers registry allows the issuer or an agent to add or remove claim issuers, as well as to specify the claim topics that each claim issuer can attest to. A claim topic is a numerical identifier that represents a certain attribute or credential of an identity, such as accreditation, residency, or income.
  • Claim Topics Registry interface: Defines the functions and events related to the claim topics registry, which is a smart contract that stores and manages the list of claim topics that can be used for the attestations. The claim topics registry allows the issuer or an agent to add or remove claim topics, as well as to specify the description and the verification method of each claim topic.

By using these interfaces, ERC3643 provides a standard and flexible framework for the tokenization of real-world assets on Ethereum, while ensuring the compliance and control of the tokens. It allows the issuer or an agent to customize and update the token rules and the identity system according to the specific needs and requirements of the token and its jurisdiction. Also allows the investor to register and verify their identity and credentials on-chain, as well as to transfer and receive tokens in a compliant and efficient way.

In my opinion, ERC3643 is a valuable and innovative standard that can facilitate and accelerate the adoption of security tokens on Ethereum. It can enable the tokenization of a wide range of asset classes and industries, such as real estate, private equity, funds, and debt, which can unlock new opportunities and benefits for investors and issuers. It can also enhance the liquidity, efficiency, transparency, and accessibility of security tokens, while ensuring the compliance and control of the tokens. It can also foster the interoperability and compatibility of security tokens with other Ethereum protocols and applications, such as decentralized exchanges, lending platforms, and wallets.

However, ERC3643 is not without its challenges and limitations. It still faces the complexity and diversity of the regulatory landscape, which may differ from country to country, or even from state to state. This means that they may have to adapt and comply with different and changing regulations, which may pose technical and legal challenges for the issuer and the investor. For instance, ERC3643 may have to deal with the issue of cross-border transfers, which may involve different jurisdictions and regulations, as well as the issue of regulatory updates, which may require the modification or migration of the token and the identity system.

Another challenge is the scalability and security of the Ethereum network, which is the underlying platform that supports ERC3643. Ethereum is a public and decentralized blockchain that allows anyone to create and execute smart contracts and applications. However, Ethereum also suffers from some limitations, such as:

  • Low throughput: Ethereum can only process a limited number of transactions per second, which is currently around 15-20. This means that ERC3643 may face congestion and delays when there is a high demand for token transfers or identity operations, which may affect the user experience and the performance of the token.
  • High fees: Ethereum charges a fee for every transaction that is executed on the network, which is called gas. The gas fee depends on the complexity and the demand of the transaction, and it can fluctuate significantly depending on the network conditions. This means that ERC3643 may incur high and variable costs for the issuer and the investor, which may reduce the profitability and the feasibility of the token.
  • Security risks: Ethereum is a public and open network that is secured by a consensus mechanism called proof-of-work, which relies on the computational power of the network participants, also known as miners. However, proof-of-work also exposes Ethereum to some security risks, such as 51% attacks, which occur when a malicious actor gains control of more than half of the network’s computing power and can manipulate or disrupt the network. This means that ERC3643 may face the risk of losing or compromising the tokens or the identities, which may result in financial or reputational losses for the issuer and the investor.

These limitations are not inherent to ERC3643, but rather to the Ethereum network, which is still evolving and improving. Ethereum is currently undergoing upragdes, which relies on the stake of the network participants, also known as validators. Proof-of-stake is expected to increase the throughput, reduce the fees, and enhance the security of the network, which may benefit ERC3643 and other Ethereum protocols and applications.

In conclusion, ERC3643 is a promising and innovative standard that can enable the tokenization of real-world assets on Ethereum, while ensuring the compliance and control of the tokens. It can bring several benefits, such as increased liquidity, reduced intermediaries, enhanced transparency, and improved accessibility, for both investors and issuers. It can also foster the interoperability and compatibility of security tokens with other Ethereum protocols and applications. However, it also faces some challenges and limitations, such as the complexity and diversity of the regulatory landscape, and the scalability and security of the Ethereum network. ERC3643 is still a relatively new and evolving standard, which may require further development and testing before it can achieve its full potential and adoption. Therefore, I believe that ERC3643 is a valuable and innovative standard that deserves our attention and support, but also our caution and scrutiny.

 

 

 

Source: https://www.securities.io/erc3643-unveiled-enhancing-compliance-and-control-in-tokenizing-real-world-assets/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

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