Cardano Founder Reviews CIP-113 Proposal for Real-World Asset Tokenization

Cardano founder Charles Hoskinson has turned his attention to CIP-113, a proposal to standardize programmable blockchain assets. In a tweet, Hoskinson acknowledged the progress made on the initiative, expressing plans to review and provide feedback on the proposal.

Hoskinson also revealed intentions to collaborate with the proposal’s development team via Cardano developer J.J. Siler to assess how CIP-113 could align with Cardano’s broader strategy for tokenizing real-world assets (RWAs).

Additionally, Hoskinson highlighted the proposal’s potential integration with Midnight, Cardano’s privacy-focused sidechain.

CIP-113: A Year in the Making

Notably, the whole discussion around CIP-113 after senior blockchain engineer Matteo took to X to share updates on Cardano Stablecoins, Securities, and Real World Assets. Matteo noted that CIP-113, central to these updates, has been in development for over a year, prompting Hoskinson’s engagement.

The proposal seeks to set a new standard for interoperable securities, stablecoins, and tokenized real-world assets within the Cardano ecosystem. At its core, CIP-113 introduces smart accounts derived from users’ stake credentials, allowing tokens to be securely transferred and managed. These accounts enhance security by ensuring tokens cannot leave the account without explicit transactions.

The proposal also includes an on-chain registry to track programmable assets and user states, such as blacklists and whitelists. This feature strengthens compliance and asset management. Unlike Ethereum’s ERC-20 standard, CIP-113 eliminates the need for token delegation, reducing security risks.

According to Matteo, early adopters like FluidTokens and MinswapDEX are already preparing for implementation. Finest Tokenize plans to use CIP-113 to tokenize stocks and securities.

Matteo confirmed that the team will release updated documentation by mid-January 2025, with full operational readiness of CIP-113 expected by the first quarter of the year.

Midnight Integration and Potential Use Cases

Hoskinson sees significant potential for CIP-113 within Midnight, a privacy-centric sidechain emphasizing secure and compliant transactions.

As Cardano expands its cross-chain partnerships involving RWAs, integrating CIP-113 could position Cardano as a leader in tokenizing real-world assets. With its approach to programmable assets, CIP-113 is set to unlock new opportunities in DeFi and asset tokenization.

Hoskinson Sees New Opportunities in DeFi Asset Management

A month ago, Hoskinson, on his YouTube channel, elaborated on the broader implications of CIP-113. He discussed how Cardano’s hybrid issuance system, combining native assets with enhanced ledger features, could unlock new opportunities in DeFi and asset management.

“The goal,” he stated, “is to make Cardano the premier platform for tokenizing and managing real-world assets securely, efficiently, and compliantly.”

Hoskinson also addressed concerns around features like freeze-and-seize, clarifying that these tools could serve non-adversarial purposes, such as asset recalls, identity updates, or dividend payments.