Encumber is an ERC proposal adding the ability to pledge tokens without giving up ownership of the tokens until the tokens are transferred. This enables use-cases such as non-custodial DeFi, where a protocol has a right to seize tokens (e.g. in liquidation), but otherwise doesn't have custody of the tokens in the interim. This repository includes code snippets on a potential implementation of the Encumber ERC, as well as a few examples of smart contracts which could lever encumbrances.
Feel free to explore and add feedback, comments or new use-cases to this document.
The encumberableERC20 is a proposed implementation of the encumbrance ERC specification. This is a simple ERC-20 token, but it allows a token holder to call encumber(address taker, uint256 amount). Separately, if you've given an allowance to a contract (e.g. a DeFi protocol), that protocol may call encumberFrom(address owner, address taker, uint256 amount) to create an encumbrance for itself.
A similar example ot the encumberableERC20, but exhibited as an ERC-721 token which also follows the Encumber specification as a potential implementation.
Contract: Optional Purchase
A toy options DeFi contract that offers the right to purchase a token for a given time-period. The key interesting fact is that the token is held (in an encumbered state) in the option seller's own wallet until such a time that the option is exercised. If the option expires, then the encumbrance is released and the token never left the owner's own custody.
Contract: Temporary Ownership
An inversion of the encumbrance-- a toy contract where an NFT is lent to another party but an encumbrance is kept by the lender. That is, the ERC-721 is transfered but there is an encumbrance created from the recipient to the original owner. If the recipient (borrower) doesn't pay "rent" in a timely manner, the ERC-721 reverts ownership back to the original owner. This allows a user to hold the ownership rights to a token by borrowing it, with no risk to the original owner.
Please feel free to add new examples, comment on the specification or implementation code or leave general thoughts as issues. Also, contribute to the Encumber ERC specification or its conversation page.
All code in the repo is released under a CC0 license.