ERC-5528: Refundable Fungible Token

Abstract

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This standard is an extension of EIP-20. This specification defines a type of escrow service with the following flow:

• The seller issues tokens.
• The seller creates an escrow smart contract with detailed escrow information like contract addresses, lock period, exchange rate, additional escrow success conditions, etc.
• The seller funds seller tokens to the Escrow Contract.
• Buyers fund buyer tokens which are pre-defined in the Escrow Contract.
• When the escrow status meets success, the seller can withdraw buyer tokens, and buyers can withdraw seller tokens based on exchange rates.
• Buyers can withdraw (or refund) their funded token if the escrow process is failed or is in the middle of the escrow process.

Motivation

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Because of the pseudonymous nature of cryptocurrencies, there is no automatic recourse to recover funds that have already been paid.

In traditional finance, trusted escrow services solve this problem. In the world of decentralized cryptocurrency, however, it is possible to implement an escrow service without a third-party arbitrator. This standard defines an interface for smart contracts to act as an escrow service with a function where tokens are sent back to the original wallet if the escrow is not completed.

Specification

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There are two types of contract for the escrow process:

• Payable Contract: The sellers and buyers use this token to fund the Escrow Contract. This contract MUST override EIP-20 interfaces.
• Escrow Contract: Defines the escrow policies and holds Payable Contract's token for a certain period. This contract does not requires override EIP-20 interfaces.

Methods

constructor

The Escrow Contract demonstrates details of escrow policies as none-mutable matter in constructor implementation.

The Escrow Contract MUST define the following policies:

• Seller token contract address
• Buyer token contract address

The Escrow Contract MAY define the following policies:

• Escrow period
• Maximum (or minimum) number of investors
• Maximum (or minimum) number of tokens to fund
• Exchange rates of seller/buyer token
• KYC verification of users

escrowFund

Funds _value amount of tokens to address _to.

In the case of Escrow Contract:

• _to MUST be the user address.
• msg.sender MUST be the Payable Contract address.
• MUST check policy validations.

In the case of Payable Contract:

• The address _to MUST be the Escrow Contract address.
• MUST call the same function of the Escrow Contract interface. The parameter _to MUST be msg.sender to recognize the user address in the Escrow Contract.

escrowRefund

Refunds _value amount of tokens from address _from.

In the case of Escrow Contract:

• _from MUST be the user address.
• msg.sender MUST be the Payable Contract address.
• MUST check policy validations.

In the case of Payable Contract:

• The address _from MUST be the Escrow Contract address.
• MUST call the same function of the Escrow Contract interface. The parameter _from MUST be msg.sender to recognize the user address in the Escrow Contract.

escrowWithdraw

Withdraws funds from the escrow account.

In the case of Escrow Contract:

• MUST check the escrow process is completed.
• MUST send the remaining balance of seller and buyer tokens to msg.sender's seller and buyer contract wallets.

In the case of Payable Contract, it is optional.

Example of interface

This example demonstrates simple exchange of one seller and one buyer in one-to-one exchange rates.

Rationale

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The interfaces cover the escrow operation's refundable issue.

The suggested 3 functions (escrowFund, escrowRefund and escrowWithdraw) are based on transfer function in EIP-20.

escrowFund send tokens to the Escrow Contract. The Escrow Contract can hold the contract in the escrow process or reject tokens if the policy does not meet.

escrowRefund can be invoked in the middle of the escrow process or when the escrow process fails.

escrowWithdraw allows users (sellers and buyers) to transfer tokens from the escrow account. When the escrow process completes, the seller can get the buyer's token, and the buyers can get the seller's token.

Backwards Compatibility

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The Payable Contract which implements this EIP is fully backward compatible with the EIP-20 specification.

Test Cases

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Unit test example by truffle.

This test case demonstrates the following conditions for exchanging seller/buyer tokens.

• The exchange rate is one-to-one.
• If the number of buyers reaches 2, the escrow process will be terminated(success).
• Otherwise (not meeting success condition yet), buyers can refund (or withdraw) their funded tokens.

Security Considerations

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Since the Escrow Contract controls seller and buyer rights, flaws within the Escrow Contract will directly lead to unexpected behavior and potential loss of funds.

Copyright

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Copyright and related rights waived via CC0.