ERC-5725: Transferable Vesting NFT
Transferable Vesting NFTs brought to you by ApeBond & Paladin
Last updated
Transferable Vesting NFTs brought to you by ApeBond & Paladin
Last updated
ApeBond and , a blockchain security provider, collaborated to develop an extension to the ERC-721 standard that allows for exciting new functionality for NFTs. The standard is the result of careful consideration of what NFTs can and should be, as well as many rounds of real-world testing and iteration.
ERC-5725 (Ethereum Request for Comments 5725) provides an interface for transferable vesting NFTs which release underlying tokens over time.
While time locks and vesting are both important mechanisms for controlling the distribution of ERC-20 tokens and have been around since the age of ICOs, the lack of standardization across the industry can be problematic. Without a standardized approach, it can be difficult for investors to understand how a particular token is being distributed and what the implications of that distribution might be.
ERC-5725 allows for the implementation of a standard API for NFT based contracts to allow two primary functionalities: transferability, and vesting.
Projects that implement ERC-5725 are able to use their NFTs to represent unvested tokens that belong to the holder of the NFT. In other words, this standard allows projects to either integrate with an existing NFT marketplace, or create their own, to be used as a secondary market for vesting tokens.
Also, using ERC-5725, projects can hold and represent the vested and locked properties of any underlying token (ERC-20 or otherwise) that is emitted to the NFT holder. This standard is an extension of the ERC-721 token that provides basic functionality for creating vesting NFTs, claiming the tokens and reading vesting curve properties.
ApeGuru and Apetastic, core contributors to ApeBond, created the ERC-5725 after realizing that no such standard existed when developing vesting contracts for ApeBond’s business development partners. They enlisted the help of Paladin to review the contracts and ensure the highest level of security and usability for future projects. ApeBond used the standard in creating the Bonds to raise protocol-owned liquidity through the sale of discounted vesting tokens in exchange for user LP tokens.
ERC-5725 allows projects to implement several new capabilities to create value for users and projects:
Transferability of vesting tokens When using ERC-5725, vesting tokens are emitted to the holder of a transferable NFT, meaning that users can buy or sell the NFTs that represent unvested tokens. This secondary market offers users more flexibility around the underlying asset, as they can liquidate or trade it at any time.
Custom NFT art capabilities ERC-5725 also allows projects to create custom NFT art based on a variety of underlying inputs. For example, projects can choose to include a limited edition seal or color scheme on NFTs of particular significance or value, which can then become one of the considerations when valuing the NFT on a secondary market.
Novel vesting curves The vesting curves within ERC-5725 NFTs do not have to be linear — they are entirely customizable, and can have accelerating or decelerating vesting depending on the use case required by the project.
Aggregated, holistic views of vesting tokens and properties The standard ERC-5725 API enables projects to create holistic dashboards and reporting tools that aggregate the status of their vesting NFTs across entire chains, which can help the project make more informed strategic decisions about future releases and marketing efforts.
ApeBond has used the ERC-5725 standard to create a category of products called Bonds. Bonds allow crypto projects to create transferable NFTs that users purchase with liquidity provider tokens. Holders of the NFTs then receive the project’s native token at a discount, which is set by a variety of factors including Bond supply and token prices, linearly over the course of a vesting period set by the project.
This serves two purposes — first, users get access to discounted tokens that vest over time instead of having to buy them directly at current market prices, and second, projects receive LP tokens that represent liquidity they now own and control. This approach is superior to the traditional yield farming model in that the capital that a project puts forth in the form of discounted tokens generates a return in the form of project-owned liquidity, as opposed to rented liquidity where reward tokens spent generate no return for the project.
To date, ApeBond has created over $5M worth of protocol-owned liquidity through the sale of Bonds based on the ERC-5725 standard.
ApeBond and Paladin are excited to promote the ERC-5725 standard to the crypto community at large to enable users to take advantage of the many opportunities that it creates.
ApeGuru invites anyone with questions about ERC-5725 to reach out to them on Telegram at @Apegurus .
If you have a favorite crypto project that might be a good fit for Bonds, have them reach out to us using our .
Interesting in learning more about how to deploy an ERC-5725 contract? Please consult our implementation guide