3. BRC-RWA Protocol Standard

The BRC-RWA Protocol defines a secure, compliant, and decentralized standard for issuing, managing, and trading real-world asset (RWA) tokens natively on the Bitcoin mainnet. It is more than just a token standard—it’s a comprehensive technical framework for on-chain asset representation and governance.

3.1 Design Principles

• Native Bitcoin Compatibility: Fully built on the Bitcoin mainnet, utilizing the UTXO model, Taproot, and Ordinals without relying on Layer 2 solutions.

• Minimized Trust Assumption: Reduces reliance on centralized intermediaries by transferring trust to on-chain logic and multi-signature structures.

• Compliance-Aware Architecture: Integrates asset auditing, KYC/AML interfaces, and regulatory support to accommodate diverse jurisdictions.

• Extensibility: Supports a wide range of asset types (real estate, bonds, commodities, etc.) and configurable attributes for future scalability.

• Transparency and Verifiability: Asset-related data is verifiable on-chain, enabling users to trace and audit the token’s underlying asset at any time.

3.2 Core Components

3.2.1 RWA Token Metadata Schema

Each asset token includes metadata inscribed on-chain via Ordinals, formatted in JSON. A typical schema might look like:

{
  "protocol": "brc-rwa-1.0",
  "type": "rwa-token",
  "asset_id": "rwa-btc-property-2025-001",
  "asset_type": "real_estate",
  "valuation": "1000000 USD",
  "ownership_right": "fractional",
  "supply": "10000",
  "issuer": "CompanyXYZ",
  "kyc_required": true,
  "audit_hash": "QmYdX...1Zp",
  "created_at": "2025-04-01T00:00:00Z"
}

3.2.2 Inscription Layer (Asset Registration)

• Asset metadata is inscribed onto specific Satoshis using Ordinals.

• Anchored to a UTXO via a P2TR (Pay-to-Taproot) address.

• Publicly queryable via Bitcoin full nodes or compatible explorers.

3.2.3 Transfer Layer (Token Transfer Logic)

• Each transfer involves a Bitcoin transaction, linking the inscribed UTXO to a new Taproot address.

• Output UTXOs represent ownership, enabling complete traceability.

• Enforces ownership logic via Taproot script paths.

3.2.4 Contract Layer (Taproot Smart Contracts)

• Custom Taproot scripts enable conditions like lock-up periods, vesting, and multi-sig ownership.

• Miniscript enables secure and composable script conditions, e.g., “2-of-3 signatures” or “unlock after date X”.

3.3 RWA Token Lifecycle Specification

• Registration Asset providers submit verified documents and metadata for on-chain inscription, initially marked as status: registered.

• Compliance Verification Third-party services complete KYC/AML checks and asset audits, with report hashes inscribed on-chain.

• Token Minting Tokens are issued on-chain based on asset valuation and supply parameters, mapped to P2TR addresses.

• Trading & Transfers RWA tokens are tradeable on compatible DEXs or P2P markets following the BRC-RWA standard.

• Yield Distribution Taproot scripts automatically distribute dividends or yields to token holders based on recorded ownership.

• Liquidation / Redemption In case of asset sale, default, or redemption, token holders are compensated according to protocol-defined mechanisms.

3.4 Open API & Indexer Layer

The protocol defines a set of APIs and indexer standards to support third-party integrations such as wallets, explorers, and DApps.

• Asset Status API /rwa/:id/status – Returns current asset state (e.g., active, frozen, redeemable)

• Metadata Query API /rwa/:id/metadata – Returns full inscribed metadata and off-chain references (e.g., IPFS hash)

• Transaction History API /rwa/:id/transactions – Lists all historical movements of the asset token on-chain

• Yield Distribution API /rwa/:id/yield?period=2025-Q2 – Returns distribution details for a specified period

• Validator Interface Validates metadata hash consistency, ownership proofs, and UTXO legitimacy

3.5 Asset Classification Framework

BRC-RWA supports asset-specific schemas based on category and regulatory requirements.

Asset Type	Description	Special Fields
Real Estate	Commercial or residential properties	location, tenants, deed_hash
Private Equity	Unlisted company shares	company_id, cap_table
Fixed Income	Debt instruments and receivables	maturity_date, coupon_rate
Commodity	Gold, energy, etc.	storage_location, insurance_hash

3.6 Compliance and Risk Control Framework

• KYC/AML Integration Standards: Interfaces for third-party verifiers (e.g., SumSub, Civic, Chainalysis).

• Risk Control Templates:

  • Ownership cap per wallet

  • Max daily transfer limits for high-risk assets

  • On-chain blacklisting and address filtering

• Audit Proofs: Periodic on-chain verification of document hashes to ensure data integrity.

Through this modular and secure protocol design, BRC-RWA enables the tokenization, registration, and exchange of real-world assets natively on Bitcoin. It provides a robust technical and compliance foundation for building a new on-chain financial ecosystem backed by tangible value.