ERC-5505: EIP-1155 asset backed NFT extension

Extends EIP-1155 to support crucial operations for asset-backed NFTs

Metadata

Status: StagnantStandards Track: ERCCreated: 2022-08-18

Authors

liszechung (@liszechung)

Requires

EIP-1155

Links

GitHub page Discussion on Ethereum Magicians

Abstract

To propose an extension of smart contract interfaces for asset-backed, fractionalized projects using the EIP-1155 standard such that total acquisition will become possible. This proposal focuses on physical asset, where total acquisition should be able to happen.

Motivation

Fractionalized, asset backed NFTs face difficulty when someone wants to acquire the whole asset. For example, if someone wants to bring home a fractionalized asset, he needs to buy all NFT pieces so he will become the 100% owner. However he could not do so as it is publicly visible that someone is trying to perform a total acquisition in an open environment like Ethereum. Sellers will take advantage to set unreasonable high prices which hinders the acquisition. Or in other cases, NFTs are owned by wallets with lost keys, such that the ownership will never be a complete one. We need a way to enable potential total acquisition.

Specification

The key words “MUST”, “MUST NOT”, “REQUIRED”, “SHALL”, “SHALL NOT”, “SHOULD”, “SHOULD NOT”, “RECOMMENDED”, “MAY”, and “OPTIONAL” in this document are to be interpreted as described in RFC 2119.

EIP-1155 compliant contracts MAY implement this EIP for adding functionalities to support total acquisition.

Rationale

Native ETH is supported by via Wrapped Ether EIP-20. After forcedSale is set, the remaining NFTs metadata should be updated to reflect the NFTs are at most valued at the previously set TWAP price.

Security Considerations

The major security risks considered include

The execution of the forcedSale is only executed by the contract owner, after a governance proposal. If there is any governance attack, the forcedSale TWAP price might be manipulated on a specific timing. The governance structure for using this extension should consider adding a council to safeguard the fairness of the forcedSale.
Payment tokens are deposited into the contract account when forcedSale is executed. These tokens will then await the minority holders to withdraw on burning the NFT. There might be a potential security risk.