ERC-7943 introduced to address fragmentation in real-world asset tokenization

A coalition of Web3 companies has introduced a new Ethereum token standard, ERC-7943, designed to streamline compliance and reduce fragmentation within the growing real-world asset (RWA) sector. The new standard provides a minimal, modular interface that works seamlessly across Ethereum layer-2s and Ethereum Virtual Machine (EVM) chains, while remaining agnostic to implementation and vendor-specific infrastructure. This flexibility means that ERC-7943 can operate within any ecosystem without being tied to any particular company’s tools or infrastructure.

Dario Lo Buglio, co-founder of Brickken and author of Ethereum Improvement Proposal (EIP)-7943, explained to cointelegraph that the new standard functions as a “universal layer” that sits atop any token type. This simplifies the process for developers and institutions by eliminating the need for custom wrappers and bridges when integrating tokenized assets into their applications.

Backed by Web3 and fintech leaders

The introduction of ERC-7943 is backed by a coalition of Web3 and fintech firms, including Bit2Me, Brickken, Compellio, Dekalabs, DigiShares, Hacken, Forte Protocol, FullyTokenized, RealEstate.Exchange, Stobox, and Zoth. This diverse coalition is pushing for a standardized approach to integrating tokenized assets into a rapidly expanding market.

A response to institutional demand and developer frustration

EIP-7943 is a direct response to both developer frustration and the “perfect storm of institutional interest” in the RWA sector. The RWA.xyz tracker shows that the total value of tokenized RWAs on-chain has reached $28.44 billion, with a 6% increase in the last 30 days. The growth of tokenized assets highlights the institutional adoption of RWAs, with issuers now fiercely competing for market share.

Financial institutions seek programmable controls that align with their compliance frameworks, while developers are burdened with rewriting custom logic for each new RWA token. This challenge underscores the need for a standardized token that can serve as a common foundation for both developers and financial institutions.

ERC-7943’s role in tackling fragmentation

Previous efforts to standardize RWA tokenization on Ethereum, such as ERC-1400 and ERC-3643, have paved the way for compliance-driven solutions. ERC-1400 introduced a hybrid model combining fungible and non-fungible tokens (NFTs) with built-in compliance features. Meanwhile, ERC-3643 focused on regulated assets like securities, integrating on-chain identity and permission layers for KYC and AML compliance.

Lo Buglio acknowledged that while ERC-1400 and ERC-3643 have their merits, particularly in securities and identity management, they are tightly coupled to specific permissioning systems. In contrast, ERC-7943 differentiates itself by being a minimal, implementation-agnostic interface that allows any project or protocol to easily integrate it into their ecosystem without friction. The goal of ERC-7943 is to eliminate fragmentation in the industry by offering a single, standardized set of functions for compliance, enabling smoother composability between various platforms and protocols.

The future of ERC-7943 and its impact

As the adoption of RWAs continues to grow, the need for a standardized, interoperable token that can support compliance across platforms is critical. ERC-7943 aims to fill this gap, providing a flexible and scalable solution that will benefit developers, institutions, and the broader DeFi ecosystem.

The standard is currently in the review stage of the EIP process, and feedback from compliance professionals and other token standard authors has already been incorporated. The goal is to create a foundation for cross-platform compliance that will drive the next phase of growth in tokenized asset markets.