diff --git a/src/assets/AssetManager.sol b/src/assets/AssetManager.sol
new file mode 100644
index 0000000..121340a
--- /dev/null
+++ b/src/assets/AssetManager.sol
@@ -0,0 +1,155 @@
+// SPDX-License-Identifier: MIT
+pragma solidity ^0.8.20;
+
+import "../precompiles/IAssets.sol";
+import "@openzeppelin/contracts/token/ERC20/IERC20.sol";
+import "@openzeppelin/contracts/access/Ownable.sol";
+
+/// @title Asset Manager Contract
+/// @dev This contract manages the bridging (not cross-chain bridging) between ERC20 tokens and native assets in the Tangle Network.
+/// It allows users to deposit ERC20 tokens and receive corresponding native assets, maintaining a 1:1 relationship
+/// between ERC20 tokens and native assets.
+///
+/// Key features:
+/// - Creates and tracks native assets corresponding to ERC20 tokens
+/// - Handles deposits of ERC20 tokens and mints equivalent native assets
+/// - Maintains a mapping between ERC20 tokens and their corresponding asset IDs
+/// - Uses the Assets precompile for native asset operations
+///
+/// Security considerations:
+/// - Only the contract owner can manually set asset IDs
+/// - Includes emergency recovery function for stuck ERC20 tokens
+/// - Asset IDs are obtained from the precompile to ensure system-wide consistency
+contract AssetManager is Ownable {
+    // Interface to the Assets precompile that handles native asset operations
+    IAssets public immutable assetsPrecompile;
+    
+    // Maps ERC20 token addresses to their corresponding native asset IDs
+    mapping(address => uint256) public erc20ToAssetId;
+    
+    // Events for tracking asset creation and deposits
+    event AssetCreated(address indexed erc20Token, uint256 indexed assetId);
+    event Deposited(address indexed erc20Token, uint256 indexed assetId, address indexed user, uint256 amount);
+
+    /// @dev Initializes the contract with the Assets precompile address
+    /// @param _assetsPrecompile The address of the Assets precompile contract
+    constructor(address _assetsPrecompile) {
+        assetsPrecompile = IAssets(_assetsPrecompile);
+    }
+
+    /// @notice Deposits ERC20 tokens and mints corresponding native assets
+    /// @dev The function performs the following steps:
+    /// 1. Transfers ERC20 tokens from the user to this contract
+    /// 2. Gets or creates a native asset ID for the ERC20 token
+    /// 3. Mints an equivalent amount of native assets to the user
+    ///
+    /// @param erc20Token The address of the ERC20 token to deposit
+    /// @param amount The amount of tokens to deposit
+    /// @return assetId The ID of the native asset that was minted
+    ///
+    /// Requirements:
+    /// - Amount must be greater than 0
+    /// - ERC20 token address must not be zero address
+    /// - User must have approved this contract to spend their tokens
+    function deposit(address erc20Token, uint256 amount) external returns (uint256) {
+        require(amount > 0, "Amount must be greater than 0");
+        require(erc20Token != address(0), "Invalid token address");
+        
+        // Transfer ERC20 tokens from user to this contract
+        require(
+            IERC20(erc20Token).transferFrom(msg.sender, address(this), amount),
+            "Token transfer failed"
+        );
+        
+        // Get or create asset ID
+        uint256 assetId = getOrCreateAssetId(erc20Token);
+        
+        // Mint native assets to the user
+        require(
+            assetsPrecompile.mint(assetId, address(this), amount),
+            "Asset minting failed"
+        );
+        
+        emit Deposited(erc20Token, assetId, msg.sender, amount);
+        return assetId;
+    }
+
+    /// @dev Internal function to get existing or create new asset ID for an ERC20 token
+    /// @param erc20Token The ERC20 token address
+    /// @return assetId The asset ID (either existing or newly created)
+    ///
+    /// The function follows these steps:
+    /// 1. Checks if an asset ID already exists for the token
+    /// 2. If not, gets the next available asset ID from the precompile
+    /// 3. Creates a new native asset with this contract as admin
+    /// 4. Stores the ERC20 token to asset ID mapping
+    ///
+    /// Note: The minimum balance for new assets is set to 1 to prevent dust attacks
+    function getOrCreateAssetId(address erc20Token) internal returns (uint256) {
+        uint256 assetId = erc20ToAssetId[erc20Token];
+        
+        // If asset doesn't exist, create it
+        if (assetId == 0) {
+            // Get the next available asset ID from the precompile
+            assetId = assetsPrecompile.next_asset_id();
+            
+            // Create the asset with this contract as admin
+            require(
+                assetsPrecompile.create(assetId, address(this), 1),
+                "Asset creation failed"
+            );
+            
+            // Store the mapping
+            erc20ToAssetId[erc20Token] = assetId;
+            
+            emit AssetCreated(erc20Token, assetId);
+        }
+        
+        return assetId;
+    }
+
+    /// @notice Retrieves the native asset ID for a given ERC20 token
+    /// @dev Returns 0 if no asset ID exists for the token
+    /// @param erc20Token The ERC20 token address to query
+    /// @return The corresponding native asset ID, or 0 if none exists
+    function getAssetId(address erc20Token) external view returns (uint256) {
+        return erc20ToAssetId[erc20Token];
+    }
+
+    /// @notice Allows the owner to manually set an asset ID for an ERC20 token
+    /// @dev This function is restricted to the contract owner and can only be used
+    /// for tokens that don't already have an asset ID assigned
+    ///
+    /// @param erc20Token The ERC20 token address
+    /// @param assetId The corresponding asset ID to assign
+    ///
+    /// Requirements:
+    /// - Caller must be the contract owner
+    /// - Token must not already have an asset ID
+    /// - Asset ID must be greater than 0
+    function setAssetId(address erc20Token, uint256 assetId) external onlyOwner {
+        require(erc20ToAssetId[erc20Token] == 0, "Asset ID already exists");
+        require(assetId > 0, "Invalid asset ID");
+        erc20ToAssetId[erc20Token] = assetId;
+        emit AssetCreated(erc20Token, assetId);
+    }
+
+    /// @notice Emergency function to recover accidentally sent ERC20 tokens
+    /// @dev This function allows the owner to recover any ERC20 tokens that were
+    /// accidentally sent to this contract. This is a safety measure and should
+    /// only be used in emergency situations.
+    ///
+    /// @param token The ERC20 token address to recover
+    ///
+    /// Requirements:
+    /// - Caller must be the contract owner
+    /// - Contract must have a non-zero balance of the specified token
+    function recoverERC20(address token) external onlyOwner {
+        uint256 balance = IERC20(token).balanceOf(address(this));
+        require(balance > 0, "No tokens to recover");
+        require(
+            IERC20(token).transfer(owner(), balance),
+            "Token recovery failed"
+        );
+    }
+}
\ No newline at end of file
diff --git a/src/precompiles/IAssets.sol b/src/precompiles/IAssets.sol
new file mode 100644
index 0000000..fc89c5c
--- /dev/null
+++ b/src/precompiles/IAssets.sol
@@ -0,0 +1,50 @@
+// SPDX-License-Identifier: MIT
+pragma solidity ^0.8.20;
+
+interface IAssets {
+    /// @notice Create a new asset with the given parameters
+    /// @param id The identifier for the new asset
+    /// @param admin The account that will administer the asset
+    /// @param minBalance The minimum balance required for an account to exist for this asset
+    /// @return success True if the operation was successful
+    function create(
+        uint256 id,
+        address admin,
+        uint256 minBalance
+    ) external returns (bool success);
+
+    /// @notice Start the process of destroying an asset
+    /// @param id The identifier of the asset to destroy
+    /// @return success True if the operation was successful
+    function startDestroy(
+        uint256 id
+    ) external returns (bool success);
+
+    /// @notice Mint new tokens for an asset
+    /// @param id The identifier of the asset
+    /// @param beneficiary The account that will receive the minted tokens
+    /// @param amount The amount of tokens to mint
+    /// @return success True if the operation was successful
+    function mint(
+        uint256 id,
+        address beneficiary,
+        uint256 amount
+    ) external returns (bool success);
+
+    /// @notice Transfer tokens from the caller to another account
+    /// @param id The identifier of the asset
+    /// @param target The account that will receive the tokens
+    /// @param amount The amount of tokens to transfer
+    /// @return success True if the operation was successful
+    function transfer(
+        uint256 id,
+        address target,
+        uint256 amount
+    ) external returns (bool success);
+
+    // Events that should be emitted by the implementation
+    event Created(uint256 indexed id, address indexed admin, uint256 minBalance);
+    event DestroyStarted(uint256 indexed id);
+    event Minted(uint256 indexed id, address indexed beneficiary, uint256 amount);
+    event Transferred(uint256 indexed id, address indexed from, address indexed to, uint256 amount);
+}