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pattern-erc3643-rwa.md

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title Pattern: ERC-3643 Tokenized RWAs
status ready
maturity prod
works-best-when
Regulatory compliance is mandatory
Need permissioned transfers with identity verification
Tokenizing real-world assets (bonds, equity, funds)
avoid-when
Full ERC-20 interoperability is needed (unrestricted transfers)
High-frequency trading with minimal compliance checks
dependencies
ERC-3643
ONCHAINID
ERC-734
ERC-735

Intent

Enable compliant tokenization of real-world assets with built-in identity management, transfer restrictions, and regulatory compliance enforced at the smart contract level.

Ingredients

  • ERC-3643: Core permissioned token standard with compliance framework
    • ONCHAINID: Decentralized identity management system for KYC/AML verification
    • T-REX Protocol: Complete suite of smart contracts for tokenized securities
    • ERC-734/735: Key and claim management for identity verification
    • Compliance Modules: Pluggable rules engine for transfer restrictions
    • Identity Registry: On-chain registry of verified participants

Protocol (concise)

  1. Identity Setup: Participants create ONCHAINID with verified claims (KYC, accreditation, jurisdiction)
  2. Token Deployment: Issue ERC-3643 token with specific compliance rules and transfer restrictions
  3. Registry Population: Add eligible participants to identity registry with required credentials
  4. Transfer Initiation: Token holder initiates transfer to eligible recipient
  5. Compliance Check: Smart contract validates both sender and receiver against transfer rules
  6. Execution: Transfer executes only if all compliance conditions are met; reverts if failed
  7. Audit Trail: All transfers and compliance checks logged on-chain for regulatory reporting

Guarantees

  • Identity Verification: All token holders verified through ONCHAINID system
  • Regulatory Compliance: Transfer rules enforce KYC/AML, investor accreditation, jurisdiction restrictions
  • Selective Permissions: Granular control over who can hold, transfer, and receive tokens
  • Audit Transparency: Complete on-chain history of ownership and compliance status
  • Interface Compatibility: Uses ERC-20 interface but with additional transfer restrictions

Trade-offs

  • Complexity: More complex than simple ERC-20 tokens, requires identity infrastructure
  • Gas Costs: Additional compliance checks increase transaction costs
  • Permissioned Nature: Not suitable for permissionless DeFi applications
  • Regulatory Dependency: Compliance rules must be maintained and updated
  • Privacy Limitation: Identity verification may conflict with transaction privacy needs

Example

"Corporation issues €100M tokenized bond series with ERC-3643 compliance": • Corporation deploys ERC-3643 bond token with investor accreditation requirements • Qualified institutional investors complete KYC process and receive ONCHAINID credentials • Bond tokens distributed to verified investors' addresses in identity registry • Secondary trading restricted to other qualified investors meeting compliance rules • All transfers automatically enforce regulatory requirements without manual oversight

See also