Token 4 Explained: Exploring Its Role in the Emerging Web3 Ecosystem

Web3 has evolved through distinct eras of token design. If Token 1 captured digital money, Token 2 scaled fungible utility, and Token 3 unlocked uniqueness with NFTs, “Token 4” is the next step: a composable, identity‑aware, yield‑bearing, and governance‑enabled token that can operate across chains and applications. It’s not a single standard, but a practical blueprint for how builders are merging the best of DeFi, NFTs, real‑world assets (RWA), and smart‑wallet UX into one programmable asset.

This article explains Token 4 as a pattern, drawing on the latest primitives, infrastructure, and regulatory‑friendly approaches emerging across the industry.

How We Got Here: From Token 1 to Token 3

• Token 1 – Digital money: Stateless value transfer, led by Bitcoin’s peer‑to‑peer design. See the original Bitcoin whitepaper.
• Token 2 – Fungible utility: ERC‑20 standardized fungible tokens for payments, governance, and liquidity markets. Reference the ERC‑20 specification.
• Token 3 – Uniqueness and access: NFTs via ERC‑721 and semi‑fungible assets via ERC‑1155 enabled digital ownership, access rights, and game economies.

Token 4 builds on these layers to make tokens multi‑role, programmable, and interoperable by design.

What Is Token 4?

Token 4 is a design pattern for next‑generation on‑chain assets that combine:

• Identity awareness and rights: Tokens can “own” accounts and assets using ERC‑6551 token‑bound accounts, support credentials or non‑transferable achievements (often called “soulbound” concepts; see the paper Decentralized Society: Finding Web3’s Soul), and enforce permissions on‑chain.
• Programmable yield and revenue: RWAs and on‑chain funds can stream yield or distribute revenues directly to token holders. Initiatives like MAS’s Project Guardian and BlackRock’s tokenized fund press release (launch announcement) illustrate institutional momentum behind tokenization.
• Native governance and reputation: Holders can vote via modern off‑chain signing frameworks like Snapshot, apply quadratic mechanisms in a Sybil‑resistant way (context from Vitalik’s overview of quadratic voting), and accumulate non‑financial reputation that informs protocol decisions.
• Cross‑chain mobility: Secure cross‑chain messaging and token movements via mature infrastructure such as Chainlink CCIP enable assets to operate where liquidity, users, or compliance requirements live.
• Smart‑wallet UX and account abstraction: With EIP‑4337 and the broader account abstraction roadmap, tokens interact with paymasters, session keys, and batched transactions, making complex operations safer and more user‑friendly.
• Intent‑centric automation and agents: Tokens can be acted upon by user “intents” and autonomous agents that route to the best execution across protocols. For a primer on intents in DeFi, see this overview from Anoma.

In short, Token 4 turns tokens into fully programmable and interoperable assets that carry utility, rights, and economic flows wherever they go.

Why Token 4 Matters Now

A few converging forces make Token 4 timely:

• Institutional tokenization is accelerating: RWAs like money market funds and Treasuries are moving on‑chain, demonstrating regulatory‑compatible flows and transparent settlement. Beyond BlackRock, Franklin Templeton’s on‑chain fund expansion shows mainstream adoption of tokenized cash equivalents (announcement).
• Better UX and safer interactions: Smart‑wallet tooling reduces friction in approvals and signing, while token‑bound accounts unify identity and inventory for complex apps (gaming, loyalty, enterprise).
• Composability across ecosystems: Cross‑chain standards and oracles make it viable to deploy assets on the most suitable chain, then settle or reconcile globally.
• Governance needs maturity: Protocols are moving beyond “one token, one vote,” seeking reputation‑aware models that can be enforced by the token itself.

These trends point to tokens as programmable containers for utility, compliance, and cash flows—precisely the Token 4 pattern.

The Token 4 Stack: Design Patterns You Can Use

• Core token standard: Use ERC‑20, ERC‑721, or ERC‑1155 depending on fungibility needs; extend with metadata and hooks.
• Identity module: Attach an ERC‑6551 token‑bound account for custody and composability; optionally add non‑transferable credentials for permissions.
• Yield and economics: Embed distribution logic (streaming, pro‑rata, oracles) for revenue, interest, or rewards. For RWAs, align with frameworks explored in Project Guardian.
• Governance and reputation: Integrate off‑chain signing for snapshots, reputation weighting, and timelocks. Snapshot’s governance model is a practical baseline (Snapshot).
• Cross‑chain mobility: Route liquidity and state with battle‑tested cross‑chain infrastructure (Chainlink CCIP).
• Smart‑wallet compatibility: Support EIP‑4337 features like paymasters and session keys to reduce friction (EIP‑4337).

Example: A Token 4 RWA Flow

1. Mint: The issuer creates an ERC‑20 representing claims on a cash‑equivalent portfolio. Identity gating uses non‑transferable credentials to ensure KYC‑eligible holders.
2. Holder account: Each token can be linked to a token‑bound account (ERC‑6551) that “owns” positions in DeFi or receives distributions.
3. Yield: Yield distributions stream periodically to token holders’ accounts via on‑chain schedules or oracle updates.
4. Governance: Holders vote on operational parameters through Snapshot; timelocks and multisigs enforce changes.
5. Cross‑chain: Liquidity migrates where needed via CCIP; accounting reconciles on the issuer’s primary chain.

This architecture matches the compliance, transparency, and efficiency requirements institutions increasingly seek in 2025.

Risks and Best Practices

Programmability increases the attack surface. Treat Token 4 designs as security‑critical systems:

• Approvals and allowances: Avoid unlimited approvals; educate users on common ERC‑20 pitfalls (see ERC‑20 common issues).
• Upgradeability: Use audited proxies, timelocks, and clear change management processes (OpenZeppelin upgrades).
• MEV and execution risks: Consider private order‑flow or intent routing to reduce extractable value (MEV overview).
• Governance capture: Introduce quorum requirements, reputation weighting, and circuit breakers for critical functions.
• Cross‑chain trust: Favor well‑audited, economically secure bridges and message networks; design for graceful failure modes.

Implementation Checklist

• Define asset semantics: Fungible vs. non‑fungible, transfer rules, metadata, and lifecycle.
• Choose identity strategy: Token‑bound accounts (ERC‑6551), non‑transferable credentials, and access control lists.
• Model economics: Yield, fees, redemption logic, and oracle dependencies.
• Plan governance: Voting mechanism, roles, timelocks, and emergency controls.
• Integrate UX: Account abstraction, batched transactions, paymasters, and human‑readable signing.
• Audit thoroughly: Contracts, wallets, cross‑chain flows, and operational playbooks.

Custody Matters: How OneKey Fits Token 4

Token 4 assets often require frequent, complex interactions—approving modules, claiming yield, signing governance votes, and executing cross‑chain operations. A hardware wallet that provides clear transaction previews, robust EVM support, and human‑readable signing reduces operational risk significantly.

OneKey focuses on:

• Transparent signing and message verification for complex contract interactions
• Broad chain coverage and compatibility with smart‑wallet flows
• Open‑source software and security‑first firmware
• Simple backups and recovery paths that fit multi‑signature or distributed setups

If your Token 4 strategy involves composable rights, programmable yields, or governance at scale, aligning it with trustworthy self‑custody is prudent. A secure device like OneKey can serve as the anchor for both day‑to‑day operations and long‑term key management.

Closing Thoughts

Token 4 isn’t a new standard—it’s a practical pattern now possible because identity‑aware tokens, account abstraction, cross‑chain messaging, and institutional‑grade tokenization have matured. By treating tokens as programmable containers for rights, reputation, and cash flows, teams can deliver applications that feel seamless to users and satisfy compliance and operational needs.

Whether you’re designing a game economy, a loyalty program, or a regulated RWA product, the Token 4 blueprint helps you compose the pieces that matter—and self‑custody with a reliable hardware wallet can keep those pieces safe as they interact across an increasingly complex Web3 world.