3.1 Decision Tree for Standard Selection
Do not choose a token standard based on the “name of the asset”. Choose based on required behaviour, holder rights, transfer restrictions, number of asset types, redemption mechanics and compliance needs.
| Standard | Type | Best suited for | Key limitation |
|---|---|---|---|
| ERC-20 | Fungible | Interchangeable units | No inherent legal restrictions |
| ERC-721 | Non-fungible | Unique assets | Not optimal for high volumes of similar units |
| ERC-1155 | Multi-token | Multiple asset types in one contract | Higher data-model complexity |
| ERC-4626 | Vault | Share of underlying pool | Designed specifically for vaults |
| ERC-3643 | Permissioned security | Regulated assets with KYC | Requires identity/compliance infrastructure |
Golden rule: First define the required behaviour (transfer restriction, redemption, income distribution, voting); then select the standard. Choosing the standard before defining rights is one of the most common causes of RWA project failure.
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