By: Geeq  on May 9, 2024

April Highlights:

• Counterparty feature for NFTs is code complete and will go through QA testing in May.
• Entire validation framework was reviewed and updated.
• Work began to support multiple chains with different parameters.

Spotlight on Counterparty NFTs.

A counterparty NFT requires, by protocol, the validation of signatures from the sender and receiver. This is the last feature we are adding to Geeq’s NFTs.

Counterparty NFTs make sense when there must be a meeting of the minds, i.e. when both parties must agree to the same terms for the transfer of an asset.

Why do we need counterparty NFTs?

Let’s assume I have a package to deliver and I want you to accept it. If I bring the package to you and you won’t sign for it, it’s still my responsibility. If I leave the package on the street and the package gets stolen, the absence of your signature means the fault was mine.

Without blockchain, there is typically some business logic to prevent failures to pass on responsibility for an asset. For example, if we meet and the package or delivery aren’t satisfactory, you would report it to my boss and the situation would have to be resolved one way or another. A failed outcome may lead to filing an insurance claim.

The entire process can be costly, error-prone, and time-consuming. In addition, documents may be falsified or changed after the fact without clear evidence of who did so.

Real world assets tokenized with counterparty NFTs

Counterparty NFTs provide more certainty when physical goods or real world assets are exchanged.

When I create a counterparty NFT, I describe the package and terms of delivery. When I sign the transaction and send it to a chain, the description (ledger record) and its deed are created on-chain, much like a Geeq NFT. However, the transaction is signed by a private key for my coin account rather than a mint account.

When you see the package and the way it is delivered, you can check on-chain easily to see if I delivered the way I said I would. If everything is fine, you use your private key to sign acceptance the way you normally would (e.g. signing a receipt on an e-pad) and send it to me. I append your signature and receipt to my counterparty NFT by using the append-only function described last month.

I am only allowed to transfer the asset to your account if my counterparty NFT has appended your signature. These rules mean either of us can block the transfer if the terms are not agreeable.

There are three possible outcomes.

• We come to terms and the counterparty NFT is transferred. Everyone is happy.
• I have failed to make the transfer on-chain. It is clear I am liable.
• You accepted the transfer on-chain when you shouldn’t have. It is clear you are liable.

The counterparty NFT clearly distinguishes between all three cases. If the insurance company is able to view the blockchain, it has all the information at its fingertips, saving valuable time and paperwork.

It is a straightforward process to mint a counterparty NFT that points to a fully-digital NFT. These may be used if explicit, contemporaneous documentation is desired by both counterparties, such as an agreement to a contract with royalties.

The counterparty feature builds on the append-only NFTs described last month.

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