ERC-3643 vs. ERC-1400: The Battle for Real Estate Tokenization

A complex, modular standard built for securities. It's the incumbent but shows its age.

• Granular Control: Separates issuance, transfer, and redemption logic.
• Document Attestation: Forces on-chain proof for every compliance rule.
• High Gas Cost: Modular design leads to ~40% higher transaction fees versus simpler models.

Wins by embedding identity (via ONCHAINID) directly into the token standard, making compliance a native property.

• Self-Sovereign Identity: Tokens are intrinsically linked to verified holder credentials.
• Automated Enforcement: Transfers fail by default unless identity/regulatory rules are met.
• Developer Adoption: ~3x more new RWA projects choose it over ERC-1400 for its integrated approach.

Sophisticated issuers aren't picking one; they're using both. ERC-3643 for identity and base compliance, ERC-1400 modules for complex corporate actions.

• Best of Both: ERC-3643's on-chain KYC with ERC-1400's dividend distribution modules.
• Institutional Demand: This hybrid model underpins $5B+ in tokenized funds and private equity.
• Future-Proof: Creates a bridge to broader DeFi while maintaining ironclad regulatory gates.

For RWA tokenization, compliance cost dwarfs gas fees. A failed, non-compliant transfer is infinitely more expensive.

• Primary Cost: Legal structuring and investor accreditation, not contract execution.
• Throughput Irrelevant: Settlement is batch-based, not high-frequency. ~10 TPS is sufficient.
• Real Bottleneck: Off-chain data oracles for NAV/price feeds, not the token standard itself.

A modular framework for complex securities, treating compliance as a series of on-chain checks. It's the incumbent, but its flexibility is its weakness.

• Granular Control: Defines transfer restrictions via canTransfer and certificate partitions.
• Interoperable: Designed to work with ERC-20 and ERC-777 for broader DeFi integration.
• Developer Overhead: Requires custom logic for each jurisdiction, leading to fragmented implementations.

Rejects the 'compliance as an afterthought' model. It bakes a decentralized identity (DID) and on-chain KYC/AML verification directly into the token's core logic.

• Self-Sovereign: Uses ONCHAINID for investor verification, separating identity from wallet address.
• Atomic Compliance: Transfers fail atomically if rules aren't met, eliminating settlement risk.
• Gas Efficiency: Pre-verified status reduces redundant checks, cutting gas costs by ~30-40% per compliant tx.

The battle is fought by infrastructure giants. Tokeny (ERC-3643) powers Euronext and major banks, focusing on turnkey enterprise solutions. Polymath (ERC-1400) champions a developer-centric, modular stack for custom security tokens.

• Tokeny's Edge: Full-stack SaaS with ~$50B+ in tokenized assets under management.
• Polymath's Play: A public blockchain (Polymesh) built specifically for regulated assets, enforcing rules at the protocol layer.
• Market Signal: Enterprise adoption favors the integrated, opinionated approach of ERC-3643.

ERC-1400 makes compliance a feature you add. ERC-3643 makes it the foundational layer. For real estate—where ownership rights, investor caps, and jurisdictional rules are non-negotiable—the identity-first, atomic model wins.

• First Principles: Real-world law cares about who, not which wallet. ERC-3643 encodes this.
• Settlement Finality: In a $1M property trade, a reversible or non-compliant transfer is catastrophic.
• Trajectory: The market is converging on the stricter, more opinionated standard for high-value RWAs.

Real estate is governed by a patchwork of local jurisdictions. A token compliant in New York may be illegal in Dubai. ERC-1400's modular approach can adapt, but ERC-3643's baked-in T-Rex suite risks creating walled gardens that don't interoperate globally.\n- Key Risk: Creates siloed liquidity pools per jurisdiction.\n- Key Risk: Increases legal overhead for cross-border deals by ~40%.

Tokenized deeds are meaningless without a legally binding off-chain title. Both standards rely on oracles or trusted actors to bridge this gap, creating a single point of failure. A malicious or faulty oracle can freeze or incorrectly transfer billions in tokenized assets.\n- Key Risk: Re-introduces centralized trust for a decentralized asset.\n- Key Risk: Oracle manipulation is a >$1B attack vector in DeFi.

Pension funds and REITs move at glacial speed. They will wait for a de facto standard to emerge, stalling the entire market. A prolonged battle between ERC-3643 (backed by Tokeny) and ERC-1400 (Polymath) could cause 5+ years of delay, ceding market share to traditional fintech.\n- Key Risk: Market stagnation during "standard wars".\n- Key Risk: Legacy systems like DTCC innovate faster in the vacuum.

Tokenized real estate needs deep secondary markets to justify the complexity. Without it, assets trade at a significant discount. Fragmented standards and compliance checks create illiquid, high-friction pools. Why tokenize a $10M building if you can only sell to 3 KYC'd wallets?\n- Key Risk: Negative network effect: low liquidity discourages new issuers.\n- Key Risk: Assets trade at 15-30% discount to NAV.

A modular framework for any regulated asset, but leaves compliance logic to the developer. It's the Swiss Army knife of security tokens.

• Core Mechanism: Uses certificate-based partitions and a canTransfer function for rule enforcement.
• Adoption Reality: Powers major platforms like Polymath and Securitize, but implementation complexity is high.
• Key Limitation: No native on-chain identity layer; KYC/AML must be bolted on via external oracles.

Built from the ground up for institutional onboarding, baking identity and rules directly into the token contract.

• Core Mechanism: Integrates an on-chain Identity Registry and a Compliance Oracle as mandatory components.
• Transaction Flow: Every transfer is gated by a multi-step check: Identity → Compliance → Execution.
• Institutional Edge: Enables programmatic compliance (e.g., investor caps, country restrictions) without custom code.

Your choice dictates your go-to-market strategy and regulatory burden.

• Pick ERC-1400 if: You need maximum flexibility for a novel asset class or are integrating with an existing ecosystem like Polymath.
• Pick ERC-3643 if: Your primary clients are TradFi institutions requiring turnkey, auditable compliance and you value reduced legal overhead.
• Bottom Line: ERC-1400 is a toolkit; ERC-3643 is a finished, opinionated product.