ERC-1400 vs ERC-3525: Regulated Assets vs Financial Instruments

Built for securities: Explicitly designed for capital markets with mandatory transfer restrictions, investor whitelists, and certificate management. This matters for STOs, private equity, and real-world assets (RWA) where legal compliance is non-negotiable. Integrates with ERC-1066 status codes for standardized off-chain legal opinions.

Semi-fungible ledger: Each token has a unique ID (like an NFT) but also a numeric value (like an ERC-20). This enables complex financial positions like bonds with tranches, insurance policies with claims, or loyalty points with metadata. Perfect for structuring on-chain derivatives, vesting schedules, and programmable portfolios.

Enterprise-ready adoption: Backed by Polymath, Securitize, and TokenSoft with established issuance platforms, KYC/AML providers, and custody solutions. This matters for projects needing off-the-shelf compliance and integration with traditional finance rails. The standard is battle-tested for multi-jurisdictional offerings.

Slot/Value architecture: The slot represents the financial contract type, the value is the balance. This allows for atomic bundling/unbundling of positions and seamless integration with DeFi protocols like Aave or Compound for use as collateral. Ideal for building next-gen DeFi primitives beyond simple fungible tokens.

• Security Token Offerings (STOs) requiring regulatory approval.
• Tokenizing Real-World Assets (RWA) like real estate or fund shares.
• Enforcing transfer restrictions based on investor accreditation or jurisdiction.
• Projects that prioritize legal certainty over programmability.

• Structured financial products like bonds, insurance, or vesting contracts.
• GameFi or Metaverse assets requiring both identity and quantitative value.
• DeFi protocols needing complex, composable position management.
• Loyalty & membership systems where points have tiered attributes and values.

Built-in transfer restrictions: Enforces on-chain rules for KYC/AML, accredited investor status, and jurisdiction. This matters for security tokens (STOs) and real-world asset (RWA) tokenization where legal compliance is non-negotiable. Integrates with Polymath and Securitize platforms.

Mandatory document attachment: Links legal prospectuses, terms, and certificates (hashes) directly to the token contract. This provides an immutable audit trail, critical for regulated capital markets and private equity to prove disclosure and satisfy auditors.

High implementation overhead: Requires complex off-chain validators and legal wrappers. This leads to higher gas costs and slower time-to-market, making it a poor fit for decentralized protocols or high-frequency DeFi applications seeking composability.

Slot-ID architecture: Each token has a fungible value within a unique slot. This is ideal for bond tranches, insurance policies, and loyalty points where assets share a class but have individual states (e.g., maturity date, claim status). Used by Solv Protocol for financial NFTs.

Native arithmetic operations: Tokens can be split, merged, and transferred in batches on-chain. This enables complex financial engineering like portfolio bundling, coupon payments, and on-chain accounting without external ledgers, fitting structured products and DeFi yield vaults.

Limited ecosystem support: Fewer wallets (beyond MetaMask), explorers, and oracles natively parse the slot-ID model. This creates integration friction and higher development costs for mainstream dApps, slowing adoption for consumer-facing use cases.

Built-in transfer restrictions: Enforces KYC/AML checks via on-chain or off-chain attestations (e.g., using Polymath's ST-20). This is critical for security tokens representing real-world equity or debt, where investor accreditation and jurisdictional rules are non-negotiable.

Document management & partition logic: Each token issuance can be tied to legal prospectuses (via document functions) and segregated into tranches (partitions) for different investor classes. This mirrors traditional capital market structures, making it the standard for platforms like Securitize.

Slot-ID architecture: Combines the fungibility of ERC-20 (value in units) with the uniqueness of ERC-721 (identity in id). A single contract can represent millions of bonds, insurance policies, or loyalty points with shared logic but distinct states, drastically reducing gas costs versus deploying separate NFTs.

Native multi-dimensional value: Tokens can hold and transfer multiple values (units) within one id. This enables native representation of vesting schedules, coupon-paying bonds, or options contracts without complex wrapper contracts. Used by Solv Protocol for their financial NFTs.

Heavyweight implementation: Mandatory compliance hooks and document logic increase contract size and gas overhead for simple transfers. This is overkill for non-regulated financial instruments and creates friction for decentralized applications (dApps) expecting seamless composability.

Limited tooling & audit maturity: As a newer standard (2022), support in major wallets (MetaMask), explorers (Etherscan), and cross-chain bridges is still developing. This increases integration risk compared to the battle-tested ERC-20/ERC-721 standards it seeks to augment.