[Resource Topic] 2021/1536: SoK: Tokenization on Blockchain

Welcome to the resource topic for 2021/1536

Title:
SoK: Tokenization on Blockchain

Authors: Gang Wang, Mark Nixon

Abstract:

Blockchain, a potentially disruptive technology, advances many different applications, e.g., crypto-currencies, supply chains, and the Internet of Things. Under the hood of blockchain, it is required to handle different kinds of digital assets and data. The next-generation blockchain ecosystem is expected to consist of numerous applications, and each application may have a distinct representation of digital assets. However, digital assets cannot be directly recorded on the blockchain, and a tokenization process is required to format these assets. Tokenization on blockchain will inevitably require a certain level of proper standards to enrich advanced functionalities and enhance interoperable capabilities for future applications. However, due to specific features of digital assets, it is hard to obtain a standard token form to represent all kinds of assets. For example, when considering fungibility, some assets are divisible and identical, commonly referred to as fungible assets. In contrast, others that are not fungible are widely referred to as non-fungible assets. When tokenizing these assets, we are required to follow different tokenization processes. The way to effectively tokenize assets is thus essential and expecting to confront various unprecedented challenges. This paper provides a systematic and comprehensive study of the current progress of tokenization on blockchain. First, we explore general principles and practical schemes to tokenize digital assets for blockchain and classify digitized tokens into three categories: fungible, non-fungible, and semi-fungible. We then focus on discussing the well-known Ethereum standards on non-fungible tokens. Finally, we discuss several critical challenges and some potential research directions to advance the research on exploring the tokenization process on the blockchain. To the best of our knowledge, this is the first systematic study for tokenization on blockchain.

ePrint: https://eprint.iacr.org/2021/1536

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