aelf’s Blockchain-based Digital Asset Identification Standard approved by IEEE
Interpretation of assets management consensus standard
Author: Ma Haobo
Recently, the Standard for Blockchain-based Digital Asset Identification, submitted by aelf, was approved by the IEEE SA Standards Board New Standards Committee (NesCom). The standard specifies methods and practices of crypto asset identification. The standard also addresses attributes of the blockchain system digit asset identification including but not limited to data structure, data format, and related asset management operation specifications.
The purpose of this standard is to improve digital asset management with an asset identification specification in blockchain systems. The standard aims to provide a data format and structure references for organizations designing digital asset identification solutions — providing digital asset services and setting up operational specifications for organizations.
Current Situation and Problems of Assets Management on the chain.
In the blockchain system, the unspecified participants usually work together under set contract rules to complete a social production and management activity on the blockchain. Some of these activities are closely related to assets, such as payments, loans, asset transactions, games and entertainment, etc. .
There are various ways to define assets within a blockchain as well as when compared to other blockchains. For example, in Ethereum, ETH is an asset that is directly constrained by the underlying code of the block chain, while a Fungible token is defined by the contract interface ERC20, and a Non-Fungible token is defined by ERC721. There are also emerging asset agreements such as ERC998 and ERC1155.
Most users utilize a blockchain through specific terminals, which usually includes a blockchain browser, wallet, decentralized applications (DAPP), etc. By defining standards through contract interfaces, these users’ terminals can handle various assets in a standardized way. These DApps usually need to adapt to different contract interfaces, but also deal with non-contract defined assets like ETH. When these terminals need to support different blockchains, they require extra work to adapt.
The number of interfaces that user terminals need to deal with is increasing with the emergence of more blockchain systems. But most functions are equivalent in the assets definition. At the same time, there is a growing need to move assets from one chain to another chain. For example, there are some BTC value anchored assets in Ethereum, USDT is issued on bitcoin network and Ethereum network at the same time, and the assets on the aelf main-chain and side-chain can be transferred directly. But there is not a unified standard to solve the cross-chain data communication problem in the whole blockchain industry.
What a common asset standard might do to an industry
The birth of wETH is a great place to talk about “industry change” . wETH, which is Wrapped Ether, is an ETH asset Wrapped under ERC20. As mentioned above, ETH is a non-contractual asset, but why redefine it under ERC20? Some decentralised exchanges in Ethereum, which typically deal with ERC20 assets. But ETH, as one of the key assets in Ethereum, also needed to be backed by these decentralised exchanges, so wETH was born. Users can get the same amount wETH after locking ETH in the contract. Accordingly, users will be able to get the same amount ETH by destroying the wETH in the contract, so users can exchange any ERC20 Token including the ETH in these decentralized exchanges. This seems to be a good solution. However the transformation operation on the chain may bring permanent system complexity.
Users’ needs will always be different. After solving the problems of Eth and wETH, people hope to adapt the transaction to BTC. Due to the isomeric chain, there is no good atomic transfer scheme so far. Most BTC assets anchored in Ethereum are anchored by mortgages. The risk of the centralized BTC mortgage scheme lies in the safe custody of the mortgaged BTC. Systematic risks associated with the Ethereum on-chain mortgaged asset revolves around price fluctuations. Moreover, each scheme is neither simple nor elegant. When simple requirements face complex solutions, we need a simple solution.
Challenges may also arise when conducting Defi activities on a single chain as Ethereum transaction volume increases. When the trading volume increased in March 2020, the Maker’s data source could not keep up with outside real prices, and some mortgage orders went awry. When a single chain is not big enough to handle a high number of data transactions, it may be better to process these assets on higher performance cross chains, such as EOS. But we can’t deal with the ERC20 assets on EOS. Of course, aelf can not currently deal with ERC20 assets.
Current blockchain systems, on-chain assets, and especially fungible tokens, have special commonalities. Some cryptocurrency wallets have achieved compatibility with multiple blockchain systems. A unified blockchain asset standard is not specific to a certain kind of blockchain system and can drastically reduce the systemic costs of the entire industry.
IEEE Digital Asset Standard Proposals Overview
The IEEE digital asset proposal, submitted by aelf, defines the digital asset standard in terms of data structure, data format specification and management operation specifications related to asset identification.
Combined with the digital assets demand of blockchain systems, such as public and alliance chains, a flexible asset standard with strong versatility and multiple options is necessary.
In this standard, some assets’ properties will be defined, such as name, supply, decimal places, etc. Some basic operations are also defined, such as distribution, destruction, migration, and so on.
At the same time, we will define the standard form of cross-chain transfers on the premise that cross-chain data can be synchronized normally. In this regard, the aelf team members are continuing to invest in research and development. The aelf team also launched the Cross-Chain Transfer Protocol (CCTP), and held cross-chain transfer testing and a hacker bounty between the Ethereum and aelf testnet.
Expectations and perspectives on digital asset standards
If such a standard can be implemented, users can use a client to process various digital assets without difference. For example, if a user got a rare item in the EOS blockchain game, he can also sell the item to get USDT in an NFT exchange on Ethereum, and then sell the USDT to buy the BTC on the unique side-chain of aelf’s decentralized exchange (BTC/USDT), where only transactions for the conversion of BTC to USDT are processed.
Based on existing mainstream blockchain systems, it is difficult to achieve pre-compatibility. The first decade of blockchain is a decade of high-speed development in which new ideas and methods are constantly emerging. Therefore, it may be difficult to implement all the functions defined in the digital assets standard when the existing blockchain is not compatible with the standard protocols.
It is hoped that the digital assets standard can be easily implemented by each blockchain system. If a function is unique to a specific blockchain system, it should not be included in the standard.
After establishing this standard, it is expected to receive increasing support from multiple chains. When blockchain technology is a common feature utilized in mainstream applications, it can speed up assets’ liquidity.
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