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Tracking the Growth of Tokenized Assets:
How QualitaX Delivered ERC-3643 Analytics
Overview
In the rapidly expanding market of tokenized real-world assets, the importance of transparency, oversight, and adherence to standards is paramount. The ERC-3643 standard, designed for EVM-based smart contracts, addresses this need by offering a framework for compliant, regulated, and permissioned tokenized assets.
Despite the significant tokenization of over $30 billion USD in real-world assets via ERC-3643 and the engagement of major entities like Citi, the industry lacked a mechanism to monitor ERC-3643's implementation and usage across blockchain networks.
To bridge this gap, QualitaX, in collaboration with the ERC3643 Association and members such as Tokeny, introduced ERC-3643 Analytics. A Dune dashboard provides valuable, data-driven insights into the standard’s adoption, showcasing a commitment to enhancing transparency and efficiency in the realm of tokenized assets.
Link to ERC-3643 Analytics: https://dune.com/qualitax/erc-3643-analytics
Why tracking ERC-3643 on-chain activities?
Tracking ERC-3643 on-chain activities is essential for maintaining transparency, ensuring regulatory compliance, providing market insights, enhancing security, managing assets effectively, facilitating interoperability, and simplifying auditing and reporting processes.
The purpose of the solution was to focus on tracking the adoption of ERC-3643 for the key reasons below:
Growth of Tokenized Asset Market: The adoption of ERC-3643 can be a strong indicator of the growth and maturation of the market for tokenized assets. As more assets are tokenized using this standard, it reflects an increasing acceptance and utilization of blockchain technology for asset representation, potentially transforming traditional asset markets.
Standardization and Interoperability: The adoption level of ERC-3643 is a measure of how standardized the process of tokenization is becoming. A widely adopted standard promotes interoperability among different platforms and applications, facilitating a more seamless and integrated blockchain ecosystem.
Innovation and Development Insight: Monitoring the adoption of ERC-3643 can provide insights into the areas of innovation and development within the blockchain and fintech sectors. It helps in understanding which types of assets are being tokenized and the emerging use cases, guiding future developments and investments in the space.
Regulatory Landscape Understanding: The extent to which ERC-3643 is adopted may influence or be influenced by the regulatory landscape. Understanding its adoption can provide insights into how regulations are shaping the market and vice versa. It can also signal the need for new or adapted regulatory frameworks to accommodate the growing market of tokenized assets.
Investor Interest and Market Dynamics: Tracking adoption can shed light on investor interest and confidence in tokenized assets. A rising adoption rate might indicate a bullish market sentiment, while stagnation or decline could signal issues or a lack of confidence in the market.
Our Approach
Data Exploration & Analysis
Step 1: Understand the IERC3643 interface and its events.
The IERC3643 interface is a critical component of the ERC-3643 standard, providing a structured and standardized approach for creating, managing, and transferring security tokens. A primary focus of the IERC3643 interface is to ensure compliance with legal and regulatory requirements. If a token implements the IERC3643 interface, then the token is compliant with the ERC3643 standard.
The IERC3643 interface includes the definition of various events such as ComplianceAdded, TokensFrozen, TokensUnfrozen, Paused, Unpaused, RecoverySuccess, and others. These events are used to log significant actions on the blockchain, providing an immutable record that enhances transparency and audibility.
Event signatures are unique to a contract's code and can be a reliable way to identify contracts that implement a certain standard, especially if that standard defines unique events.
List of events:
Event Name | Event Description | Event Usage |
UpdatedTokenInformation | Emitted when the core information of a token within the smart contract is updated. This event is triggered in the smart contract when an authorized party updates the token's key information. This event logs the new details of the token, such as its name, symbol, decimals, version, and associated on-chain ID.The UpdatedTokenInformation event acts as a record on the blockchain, ensuring that changes to the token's identity are transparent and verifiable. | This event logs the new details of the token, such as its name, symbol, decimals, version, and associated on-chain ID.The UpdatedTokenInformation event acts as a record on the blockchain, ensuring that changes to the token's identity are transparent and verifiable. |
IdentityRegistryAdded | Emitted whenever a new identity registry is added to the smart contract.This event is crucial in contexts where identity management and verification are integral to the contract's operations, such as in regulated token environments or identity-based access control systems. The event logs the addition of a new identity registry address, signifying a significant update to the contract's identity management infrastructure. | This event is triggered in the smart contract when an identity registry is added. |
ComplianceAdded | Emitted when a new compliance contract is added. | This event is triggered when the smart contract to refer to the Compliance smart contract. |
RecoverySuccess | Emitted when a successful recovery action for a lost or compromised wallet is completed in the smart contract. This event is crucial to provide mechanism for investors to regain control of their assets in the event of lost access, such as forgotten private keys or wallet security breaches. | Event serves to log the successful completion of such recovery processes, providing transparency and a record of the action on the blockchain. This is important for trust and security in the platform, as it allows all participants to verify that asset recovery actions are conducted legitimately and successfully. |
AddressFrozen | Emitted when the status of an investor's address is changed in terms of its operational capabilities, specifically regarding whether the address is frozen or unfrozen. This event is critical in contracts where user accounts may need to be restricted or released, often for regulatory or security reasons. | This event is triggered in scenarios where an account needs to be frozen or unfrozen, possibly due to suspicious activities, compliance requirements, or administrative controls. This event serves as an immutable log entry on the blockchain, ensuring that all changes to account statuses are transparent and auditable. It allows users and auditors to monitor and verify the actions taken by administrators thus maintaining the integrity and trustworthiness of the system. |
TokensFrozen | Emitted when a certain amount of tokens belonging to a user's address is frozen within the smart contract. This event is typically used in contracts where the movement of tokens can be restricted under specific conditions, such as for regulatory compliance, dispute resolution, or security purposes. | By logging the freezing of tokens, the event helps in auditing and regulatory oversight, ensuring that all significant actions regarding token circulation and control are properly recorded and publicly verifiable. Tokens might be frozen as a precautionary measure against suspected fraudulent activities, or due to a legal hold in the case of ongoing litigation, or as part of compliance with financial regulations. |
TokensUnfrozen | Event is emitted when a previously frozen amount of tokens belonging to a user's address is unfrozen or released within the smart contract. This event typically occurs in contracts where there are mechanisms for restricting and later releasing token movements, for compliance, dispute resolution, or security reasons. | This event is triggered within the smart contract when specific conditions or actions lead to the unfreezing of a user's tokens. For instance, tokens might be unfrozen after the resolution of a legal dispute, the lifting of a regulatory hold, or once an investigation into suspicious activities concludes with no adverse findings. The TokensUnfrozen event ensures transparency and traceability, creating a record on the blockchain that tokens have been released from restrictions. By logging the unfreezing of tokens, the event facilitates auditing and regulatory oversight, ensuring that all significant actions regarding token circulation and control are properly recorded and publicly accessible. |
Paused | Emitted when the operations of the smart contract are temporarily halted for a specific user address. This event is typically used in contracts that incorporate pause functionality, allowing for the temporary suspension of certain activities or transactions. This functionality can be crucial for emergency situations, maintenance, or compliance purposes. | This event is triggered when the smart contract's functionality is temporarily suspended in relation to a specific user address. This could be due to a variety of reasons such as suspicious activity detection, compliance requirements, or administrative controls. By logging the pause action, the event helps maintain trust among users and provides a clear audit trail for future review and accountability. It's especially relevant in contracts where operational integrity and user security are paramount. |
Unpaused | Emitted when previously paused operations of the smart contract are resumed for a specific user address | This event is triggered when the smart contract's functionality is unpaused or reactivated in relation to a specific user address. The reasons for unpausing can vary, such as the resolution of a security concern, completion of maintenance, or fulfillment of compliance criteria. Logging the unpausing action is important for trust and accountability in the contract's operations. |
The full specification can be found on Github here: https://github.com/TokenySolutions/EIP3643/blob/main/eip-3643.md
Step 2: Identify ERC3643-compliant tokens based on specific events and their signatures.
In EVM-based smart contracts, events can emit logs which are recorded on the blockchain. These logs often include "topics" used for indexing purposes. The first topic (topic0) usually represents the hash of the event signature, while subsequent topics (like topic1) store indexed event parameters. These indexed topics help in efficiently querying and filtering log data for specific events or conditions, making it easier to track and analyze on-chain activities.
It is important to note to account for false positives: Just because a contract emits a certain event, it doesn't guarantee full compliance with ERC-3643. Further verification is necessary.
The ERC-3643 standard requires that all compliant tokens emit an UpdatedTokenInformation event at initial deployment, capturing critical metadata about the token at inception. If any of this information is later modified, the ERC-3643 token contract should emit an additional UpdatedTokenInformation event with the updated details. However, follow-on update events should not be counted as new, unique ERC-3643 tokens, as they represent changes to an existing contract.
In addition, to promote adoption and ensure conformance, the ERC-3643 Association will soon deploy an on-chain factory contract. This factory contract, available open-source here, will deploy tokens using the Tokeny T-REX standardized suite of contracts and emit a TREXSuiteDeployed event for each new token creation. Stakeholders will soon be able to easily spin up compliant ERC-3643 tokens by interacting with this factory contract, while our analytics will monitor the resulting deployment events to track growth.
Event Name | Event Signature Hash (Topic0) |
ComplianceAdded | 0x7f3a888862559648ec01d97deb7b5012bff86dc91e654a1de397170db40e35b6 |
IdentityRegistryAdded | 0xd2be862d755bca7e0d39772b2cab3a5578da9c285f69199f4c063c2294a7f36c |
UpdatedTokenInformation(string,string,uint8,string,address) | 0x6a1105ac8148a3c319adbc369f9072573e8a11d3a3d195e067e7c40767ec54d1 |
Step 3: Establish what to track
Metric | Description |
N# of permissionned token contracts deployed from the Tokeny T-Rex Factory. | Total Count of token contracts on the Ethereum Mainnet, Polygon Mainnet and Avalanche. |
N# of permissionned token contracts deployed from the Tokeny T-Rex Factory by network. | Count and percentage of total token contracts on the Ethereum Mainnet, Polygon Mainnet and Avalanche. |
N# of permissionned token contracts deployed from the Tokeny T-Rex Factory per month by network. | Monthly trend of token contracts deployed on the Ethereum Mainnet, Polygon Mainnet and Avalanche. |
N# of permissionned token contracts deployed from the Tokeny T-Rex Factory per month by industry. | Monthly trends of token contracts deployed on the Ethereum Mainnet, Polygon Mainnet and Avalanche by industry. |
List of permissionned token contracts deployed from Tokeny TREX Factory by network. | List of permissionned tokens deployed on the Ethereum Mainnet, Polygon Mainnet and Avalanche. |
N# Whitelisted Investors | N# Total Whitelisted Investors |
N# Whitelisted Investors by Network | N# Total Whitelisted Investors by Network |
N# Whitelisted Investors by Token | N# Whitelisted Investors by Token |
Volume of transactions | The total number and value of transactions interacting with ERC3643-compliant contracts. |
N# Investors by Country (to be added) | N# Investors by Country |
Total Gas by network (to be added) | Total Gas spent by network |
Growth Rate of ERC3643 Contract Deployments (to be added) | Rate at which new ERC3643-compliant contracts are being deployed over time. |
Building the ERC-3643 Dashboard
3.1 Dataset
The ERC-3643 adoption dashboard utilizes an internally developed enriched dataset to allow for more performant and cost-effective analytics. Rather than relying solely on expensive third-party datasets, we have supplemented the base data with additional qualitative attributes such as industry categorization. By enhancing the data in-house to align closely with the ERC-3643 Association analytic needs, we have optimized the dashboard to reduce reliance on external data sources, improve query speeds and responsiveness, and contain costs.
The dataset is available publicly: dune.qualitax.dataset_dataset_qx_erc3643_trexfactory_data_160224
3.2 Data Enrichment Process
Valuable information such as Industry is not available on-chain yet as part of the standard. As a result, this requires qualitative research, and engaging with the relevant stakeholders to identify the vertical relevant for the ERC-3643 tokens.
3.3 Dune Analytics Dashboard PoC
To enable rapid prototyping and iteration, we initially built a proof-of-concept (PoC) version of the ERC-3643 adoption dashboard using Dune Analytics. Leveraging Dune's no-code environment allowed us to deploy an operational dashboard at zero additional cost. The ease of use and flexibility provided by Dune facilitated quick validation of the dashboard concept, dimensions, and initial analytic use cases. Once proven through the PoC, we deployed the custom dashboard on our infrastructure.
Dune Analytics Dashboard: ERC-3643 Adoption tracker.
Conclusion
The deployment of the ERC-3643 Analytics Dashboard by QualitaX has marked a significant milestone for the ERC-3643 stakeholders. This dashboard not only enhanced visibility into the adoption and growth of ERC-3643 but also plays a pivotal role in promoting standardization and interoperability across blockchain platforms.
By providing actionable insights into market dynamics, regulatory compliance, and investor sentiment, the dashboard can inform decision-makers, investors, and regulatory bodies with the knowledge needed to navigate the complexities of the tokenization landscape.
Furthermore, its contribution towards fostering an environment of transparency, ethical practices, and professionalism within the blockchain community underscores QualitaX's commitment to driving meaningful industry-level impact. The success of this initiative highlights the critical importance of data-driven analytics in shaping the future of blockchain technology and its applications, positioning QualitaX as a supporter of open, compliant, and efficient tokenized asset markets.
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