Introduction
Demand for on-chain tokenization resulted in the creation of a few competing ERC standards. These are ERC-1400, ERC-1155, ERC-3643 (T-REX) as well as CMTA and tZERO approaches.
Having extensive experience in developing private/L2 tokenization frameworks (TokenD, TokenE) and custom solutions on top of them we decided to take a one step further and build the next-generation framework that is lightweight, abstract, and fully on-chain.
We reimagined ERC-3643 (T-REX) techniques, expanded its architecture capabilities, solved a slew of tight-coupling problems T-REX has, added a set of KYC / compliance modules, and named the framework - TokenF.
TokenF is an open-source product released under an MIT license that can be used as a set of abstract tokenization smart contracts for those who are building their own RWA solutions.
Functionality covered by TokenF:
Extensive Diamond-pattern-based modularity that allows any KYC / regulatory compliance checks to be implemented, allowing integration with various 3rd-party KYC providers. For instance, integration with the zk-powered Rarimo proof-of-human (PoH) identity solution based on biometric passports.
Flexible role-based access-control management system which enables custom access rules for privileged parties to be set up. The RWA solution may require dedicated access to a certain functionality / asset, which is now easy to tackle.
Context-driven transaction execution flow that allows precise tracking of parties, actions, checks, and rules involved in the transaction to be exercised. Simply put, TokenF will push the entire transaction knowledge to the connected modules so they can check the KYC / compliance with ease.
ERC-20 compatibility which provides flexibility for implementing eligibility checks through the integration of compliance modules without affecting the standard ERC-20 behavior.
Conditional rules for standard ERC-20 functions with simple configurability. Configuration is supported on both pre-deployment (scripts) and post-deployment (runtime) stages.
State-of-the-art codebase that leverages advanced development techniques, seamlessly abstracting complexity behind the rich, though-out smart contracts. We used Solarity and Openzeppelin to tie everything together.
TokenF may be configured to include (but is not limited to) the following list of regulatory limitations that we think are essential for any regulated on-chain token:
Thorough KYC procedure before customer onboarding.
Constant AML and KYC customer activity analysis in respect of suspect transactions to be related to money laundering or terrorist financing.
Freeze and suspension of a customer's wallet.
Freeze of partial or total tokens on a customer's wallet.
Suspend the token.
Impose limits to reduce the size of the position or exposure in a token.
Limit the ability of any customer wallet to enter into a token, including the introduction of limits on the size of a position any wallet can hold at all times.
*Depending on the specific country regulation rules may differ, but the general regulatory approach and functionality usually stay the same.
While creating the TokenF framework we studied the following existing tokenization solutions:
ERC-3643 (T-REX):
Frictionless Protocol (Defyca) framework that enables the tokenization of securities in compliance with European law.
ERC-1155:
ERC-1400:
ERC-20 with additional modifications:
CMTA Token:
TAURUS framework that enables the tokenization of securities in compliance with Swiss law.
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