ERC-6960: Next-Gen Tokenization Standard with Enhanced Security and Efficiency

Tokenization is the foundation of a token-based economy, enabling the transfer of value from real-world assets (RWAs) to the digital realm. This process enhances the tradability of assets, unlocking new markets for assets that would otherwise remain illiquid.

Fractional ownership emerges as a popular investment approach, granting individuals the opportunity to own a portion or share of high-value assets that would typically be beyond their financial reach. By enabling fractional ownership, a wider range of individuals can participate in investment opportunities and reap the benefits of asset ownership.

April 30 marks a very important day for us and for RWAs. We authored an EIP which is now an ERC.

ERC-6960: A token standard designed by team Polytrade to represent Real-World Assets (RWAs) and support fractional ownership. On this day, the standard details were officially published on the Ethereum website.


  • The token standard addresses the limitations present in ERC-1155 when managing tokens with multiple classifications.
  • It has been specifically designed to cater to Real World Assets (RWAs) and facilitate the fractionalization of assets.
  • The standard implements a two-level classification system that enhances organization and simplifies asset management.

So, what exactly is this standard? Known as ERC-6960, the purpose of this dual-layer token (DLT) standard is to address the limitations of the ERC-1155 token standard and enhance ERC token classification and management.

But why create another token standard when there are already numerous Ethereum token standards in the market? To understand the rationale behind the development of ERC-6960, we need to delve into the workings of the three popular ERC tokens and identify their unique features.

Let’s meet the trio. The ERC token family comprises ERC-20, ERC-721, and ERC-1155, with ERC-20 designed for fungible assets and ERC-721 tailored for non-fungible assets.


ERC-1155, the most recent addition, introduced a semi-fungible token standard on the Ethereum blockchain, allowing the creation of tokens that can represent both fungible and non-fungible assets within a single smart contract. Feature-wise, here’s how they compare:

Fungible tokensYesNoYesYes
Non-fungible tokensYesYesNoYes
Batch transfersYesNoNoYes
Unlimited token typesYesNoNoYes
Smart contract sizeSmallerLargerLargerSmaller
Gas costsLowerHigherHigherLower
Use casesGames, digital collectibles, metaverseDigital collectibles, art, gamingDeFi, payments, gamingRWAs, invoices, company stocks, collectibles, real estate

Now, let’s focus on the issue with the existing standards: ERC-20 and ERC-721 together. Imagine you’re involved in GameFi and have been playing a game for a while. Naturally, you’d want to possess the assets you’ve earned in the game and collect them as valuable items. In most games out there, these assets can only be represented through tokens. Some of these tokens are fungible (ERC-20), while others are non-fungible (ERC-721).

If you own both fungible and non-fungible in-game assets, you would need multiple smart contracts to support those assets, which can be quite cumbersome. Fractional NFTs and co-ownership of properties are not supported in this scenario.

Enter ERC-1155—the solution…almost. ERC-1155 efficiently manages both fungible and non-fungible tokens within a single smart contract, addressing the inefficiencies, lack of management, and interoperability seen in the previous token standards.

What Does 6960 Do?

What does ERC-6960 bring to the table? ERC-6960 aims to enhance the scalability and flexibility of ERC-1155 by serving as an extension to ERC-1155 and other implementations. One of its key features is the dual-layer classification, enabling the hierarchical representation of fungible and non-fungible tokens. Simply put, ERC-6960, as a dual-layer token standard, allows a single asset to be divided into multiple sub-assets.

For example, imagine you have a fungible asset with a total supply of 60 units. With ERC-6960, you can divide the asset into three sub-assets with varying supplies of 10, 20, and 30 units, respectively. It’s akin to breaking down a $500 bill into five $100 bills. You can explore the Gitbook of the token standard for further details.

Let’s break it down even further.

Different ERC standards were designed for specific purposes, such as ERC-20 for fungible tokens and ERC-721 for NFTs. This lack of universality meant that often there has been a need to choose between standards based on their token’s characteristics, which lead to fragmentation and interoperability issues.

Some ERC standards have a limited set of functionalities, making them inadequate for more complex use cases. For example, ERC-20 tokens lack native support for features like time-locked transfers.

While ERC-20 tokens can represent real-world assets through tokenization, they may not be inherently compatible with certain assets, such as unique pieces of art or rare collectibles, where the concept of divisibility is not applicable.

To tokenize and fractionalize assets, if we were to use the previous ERC standards there are some major drawbacks.

How are Assets Fractionalized with Previous Standards?

With ERC-20 the first step is to tokenize the underlying asset. This involves creating a smart contract that represents ownership of the asset. The smart contract will hold the asset or be backed by its value in some way.

Once the asset is tokenized, the next step is to create tokens that represent fractional ownership of the asset. The total supply of these tokens will correspond to the total number of fractional shares of the asset available for sale.

The tokens are then distributed to individual investors, each representing their ownership fraction of the asset. For example, if the asset is divided into 1000 shares, an investor purchasing 10 tokens will own 1% of the asset.

Fractionalization with ERC-721 is similar to ERC-20 fractionalization. The smart contract divides the asset into a predetermined number of ERC-721 tokens. These tokens are then distributed to investors, and each token holder will have a unique, non-fungible share of the asset.

Fractionalization with ERC-1155 is more versatile and allows multiple token types within the same contract. Therefore, the asset can be tokenized as a single ERC-1155 contract, representing all the fractional shares of the asset.

In an ERC-1155 contract, different token IDs can represent different fractions of the asset. For example, token ID 1 might represent a 1% share, token ID 2 a 0.1% share, and so on. These fractional shares are minted and distributed to investors based on their investment amount.

When talking about doing it with all the previous standards, unique ownership fractions must be managed individually.

There is a “vault” which is the secure storage of the underlying asset or its value. A vault is typically a smart contract or an external custodian responsible for holding and managing the asset. For ERC-20 fractionalization, the vault could be a smart contract that holds the asset’s value and mints or burns ERC-20 tokens based on the fractional shares being traded. For ERC-721 and ERC-1155, the vault would be responsible for holding the physical asset or its value and issuing the corresponding tokens to the token holders.

With ERC-721 tokens, each token represents a unique share of the asset, so creating more fractions involves minting new ERC-721 tokens for each additional fraction. This process requires putting the asset or its value in the vault to validate and verify the new unique share before minting.

This is what ERC-6960 changes. It eliminates the process of creating more fractions by minting new tokens for each additional fraction. ERC-6960 makes auto-settlement easy. If the mother NFT is settled, all its fractions are automatically settled.

The use case for this is Polytrade’s RWA marketplace. Our NFTs are settled automatically by the Asset Originator. The marketplace gives you access to an automated settlement of investments, secure transactions, and easy payouts of your insured assets without the need to wait, claim, or go through any hassles.

Need for an Extension Token to ERC-1155

Fractionalized assets often struggle to represent ownership in a clear and flexible manner.

Common approaches involve creating ERC-20 tokens where each token represents a share in the asset or locking ERC-721 and minting multiple ERC-1155 tokens to represent ownership. However, these methods lack true fractionalization. ERC-6960 introduces a solution by utilizing a main ID linked to the parent NFT, while the SubID can hold different variables. One of the standout features is the ability to settle all fractions with a single click, even if there are 100 owners of the same asset.


Let’s consider the scenario of tokenizing an invoice within a token-based economy, enabling fractional ownership for investors. By incorporating the dual-layer token standard, a mint function is employed to assign ownership of a fraction representing a specific value. This function takes into account the following parameters:

  1. The wallet address of the buyer or investor.
  2. The main ID of the invoice.
  3. Sub ID of the invoice fraction.
  4. Amount of the invoice fraction.

This dual-layer token standard is not limited to invoices alone. Its flexibility and robust design make it applicable to a wide range of real-world assets. It can be implemented in various cases, allowing for tokenization and fractionalization of different kinds of assets, thereby expanding its versatility and usability.



While ERC20, ERC721, and ERC1155 token standards possess their own merits, they face limitations when it comes to efficiently managing diverse asset types and their attributes within a single contract. DLT overcomes these limitations by offering a more flexible, efficient, and scalable solution that caters to a broad range of applications and industries. The distinctive features of DLT make it indispensable in situations where efficient management of diverse assets is crucial, and neglecting its utilization would lead to suboptimal outcomes.

Simplified Asset Management

The incorporation of the mainId and subId structure within the dual-layer token (DLT) standard offers a streamlined approach to asset management. This framework provides developers with enhanced efficiency and organization when handling complex scenarios involving diverse asset types and their multiple attributes.

Optimized Gas Costs

DLT’s ability to efficiently manage various asset types within a single contract contributes to reduced gas costs associated with smart contract interactions. This optimization is particularly valuable in a dynamic landscape where gas prices can fluctuate significantly.

Inherent Scalability

The dual-layer structure of DLT is designed to handle diverse asset types and their associated attributes without compromising efficiency. This inherent scalability proves essential when dealing with real-world assets that possess multiple components and require flexible management approaches.

Enhanced Interoperability

DLT serves as a standard that fosters a more interconnected ecosystem by facilitating seamless interaction and integration with other blockchain projects, wallets, and marketplaces. This enhanced interoperability is vital for promoting the widespread growth and adoption of blockchain technology across various industries.

Fostering Innovation

DLT’s versatility empowers developers to explore novel applications and drive innovation across industries and use cases. The unique combination of the mainId and subId structures simplifies adaptation to diverse scenarios and requirements, enabling the creation of innovative solutions that may not be feasible with other token standards.

BTS: ERC-6960

Polytrade’s motivation behind creating an ERC token standard was simple. We identified a gap and saw a path to address it. With ERC-6960, we aim to revolutionize asset representation and foster further development within the ecosystem.

To establish a comprehensive multi-token standard interface based on a dual-layer classification, it was imperative to develop a standalone interface rather than simply extending the ERC1155 interface. Extending ERC1155 would have required substantial modifications, making a separate interface a more suitable approach. Nonetheless, the design of this new interface draws inspiration from the ERC1155 standard.

In this dual-layer token standard, each token is assigned a mainId if it represents a main asset. Sub-assets associated with the main asset are then assigned subIds, which can possess their own metadata, supply, and other attributes. The relationship between a mainId and its subIds follows a one-to-many structure, although it can be expanded to support other types of relationships. When interacting with the contract, sub-assets are nested within their respective main asset and are identified by providing the parent token ID (mainId) and the corresponding subId as parameters for each method.

It is important to note that the classification layer in this standard is limited to two levels, meaning that sub-assets cannot have further sub-assets of their own. Introducing additional methods to track each sub-asset and its derivatives would be impractical and overly complex for the contract.

The DLT interface serves as the core requirement for a DLT-compliant contract, while the DLTReceiver interface handles the safe transfer of dual-layer token types. The standard is designed to be flexible, allowing developers to access the internal functions within the DLT interface and expose them as external functions in a manner that suits their preferences. Additionally, the standard offers a DLTEnumerable extension, defined in EIP 6960, which enables the enumeration of all mainIds and subIds within the contract, as well as providing the total supply for each mainId and subId.


Github –

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