📖 This EIP is in the review stage. It is subject to changes and feedback is appreciated.

# EIP-4519: Non-Fungible Tokens Tied to Physical Assets Source

### Interface for non-fungible tokens representing physical assets that can generate or recover their own accounts and obey users.

Author Javier Arcenegui, Rosario Arjona, Roberto Román, Iluminada Baturone https://ethereum-magicians.org/t/new-proposal-of-smart-non-fungible-token/7677 Review Standards Track ERC 2021-12-03 165, 721

## Abstract

This EIP proposes a standard interface for non-fungible tokens that represent physical assets, such as Internet of Things (IoT) devices. A SmartNFT is tied to a physical asset that can check if the tie is authentic or not. The SmartNFT can include an Ethereum address of the physical asset and, consequently, the physical asset can sign messages or transactions. The physical asset can operate with an operating mode that is defined by its SmartNFT with an attribute named state. The token state can define if the token owner or the token user can use the asset or not. A cryptographically secure mutual authentication process can be carried out between the physical asset and its owner or its user. SmartNFTs extend ERC-721 non-fungible tokens, which only allow representing assets by a unique identifier, but not by an Ethereum address. Moreover, SmartNFTs extend ERC-721 NFTs to include users in addition to owners.

## Motivation

This SmartNFT was developed because the ERC-721 NFT does not include the users of an asset (only include the owners) and does not include the Ethereum address of the asset. Smart assets (for example, IoT devices) are increasing nowadays. If smart assets are tied to SmartNFTs then they can be managed in a secure and traceable way. The reason is that SmartNFTs, unlike ERC-721 NFTs, allow establishing secure communication channels between the physical asset and its owner and its user. In this way, assets, owners and users can be assured of exchanging information with trusted parties.

Secure Physical Asset Tied to a SmartNFT Current non-fungible tokens are associated with passive assets, either virtual or physical things, but they do not include any standardized mechanism to tie the non-fungible token to the asset. Tying physical assets to NFTs is interesting because the asset can know anytime its owner, user, operating mode, and how to establish secure communication channels with its owner and user. The assets, owners and users are identified by their Ethereum addresses and the Ethereum address of the asset can be obtained from a unique physical property of the physical asset (for example, using a physical unclonable function). The asset can be an active part in any transfer of ownership and use. In addition, the asset is smart, for example to not obey orders from a non-authorized user, or to be inoperative if a successful authentication with the user or the owner has not been fulfilled.

User Management Mechanism SmartNFTs allow implementing a new and useful user management mechanism. In the last few years, many projects concerning assets sharing (for example, vehicles) have been created and developed. SmartNFTs incorporate the Ethereum address of the user as another attribute of the token in order to distinguish between the user, who employs the asset for a specific application, and the owner, who assigns the token to users. Hence, both users and owners of an asset can be traced.

Secure Key Exchange Mechanism The engagement of the asset with an owner or a user is carried out after a mutual authentication protocol (for example, based on elliptic curve Diffie-Hellman key exchange protocol). This protocol can be employed for a key agreement between the asset and its owner, in the one side, and between the asset and its user, in the other side.

## Specification

The SmartNFT attributes addressAsset and addressUser are, respectively, the Ethereum addresses of the physical asset and the user. They are optional attributes but at least one of them should be used in a SmartNFT. In the case of using only the attribute addressUser, two states define if the token is assigned or not to a user. Figure 1 shows these states in a flow chart. When a token is created, transferred or unassigned, the token state is set to notAssigned. If the token is assigned to a valid user, the state is set to userAssigned.

In the case of defining the attribute addressAsset but not the attribute addressUser, two states define if the token is waiting for authentication with the owner or if the authentication has finished successfully. Figure 2 shows these states in a flow chart. When a token is created or transferred to a new owner, then the token changes its state to waitingForOwner. In this state, the token is waiting for the mutual authentication between the asset and the owner. Once authentication is finished successfully, the token changes its state to engagedWithOwner.

Finally, if both the attributes addressAsset and addressUser are defined, the states of the SmartNFT define if the asset has been engaged or not with the owner or the user (waitingForOwner, engagedWithOwner, waitingForUser and engagedWithUser). The flow chart in Figure 3 shows all the possible state changes. The states related to the owner are the same as in Figure 2. The difference is that, at the state engagedWithOwner, the token can be assigned to a user. If a user is assigned (the token being at states engagedWithOwner, waitingForUser or engagedWithUser), then the token changes its state to waitingForUser. Once the asset and the user authenticate each other, the state of the token is set to engagedWithUser, and the user is able to use the asset.

In order to complete the ownership transfer of a token, the new owner must carry out a mutual authentication process with the asset, which is off-chain with the asset and on-chain with the token, by using their Ethereum addresses. Similarly, a new user must carry out a mutual authentication process with the asset to complete a use transfer. SmartNFTs define how the authentication processes start and finish. These authentication processes allow deriving fresh session cryptographic keys for secure communication between assets and owners, and between assets and users. Therefore, the trustworthiness of the assets can be traced even if new owners and users manage them.

When the SmartNFT is created or when the ownership is transferred, the token state is waitingForOwner. Assuming that the asset is an electronic physical asset, it saves in its memory the owner address and sets its operating mode to waitingForOwner. The owner generates a pair of keys using the elliptic curve secp256k1 and the primitive element P used on this curve: a secret key SKO_A and a Public Key PKO_A, so that PKO_A = SKO_A*P. To generate the shared key between the owner and the asset, KO, the public key of the asset, PKA, is employed as follows:

KO=PKA*SKO_A

Using the function startOwnerEngagement, the owner saves PKO_A as the attribute dataEngagement and the hash of KO as the attribute hashK_OA in the SmartNFT. The owner sends PKO_A signed to the asset. The asset checks the signature of the owner and, if signature is correct, the asset uses PKO_A to calculate:

KA = SKA*PKO_A

If everything is correctly done, KO and KA are the same since:

KO=PKA*SKO_A=(SKA*P)*SKO_A= SKA*(SKO_A*P)=SKA*PKO_A

Using the function ownerEngagement, the asset sends the hash of KA obtained and if it is the same as the data in hashK_OA, then the state of the token changes to engagedWithOwner and the event OwnerEngaged is sent. Once the asset receives the event, it changes its operation mode to engagedWithOwner. This process is shown in Figure 4. From this moment, the asset can be managed by the owner and they can communicate in a secure way using the shared key.

If the asset consults Ethereum and the state of its SmartNFT is waitingForUser, the asset (assuming it is an electronic physical asset) saves in its memory the user address and sets its operating mode to waitingForUser. Then, a mutual authentication process is carried out with the user, as already done with the owner. The user sends the transaction associated with the function startUserEngagement. As in startOwnerEngagement, this function saves the public key generated by the user, PKU_A, as the attribute dataEngagement and the hash of KU=PKA*SKU_A as the attribute hashK_UA in the SmartNFT.

The user sends PKU_A signed to the asset. The latter checks the signature of the user and, if signature is correct, the asset uses PKU_A to calculate:

KA = SKA*PKU_A

If everything is correctly done, KU and KA are the same since:

KU=PKA*SKU_A=(SKA*P)*SKU_A= SKA*(SKU_A*P)=SKA*PKU_A

Using the function userEngagement, the asset sends the hash of KA obtained and if it is the same as the data in hashK_UA, then the state of the token changes to engagedWithUser and the event UserEngaged is sent. Once the asset receives the event, it changes its operation mode to engagedWithUser. This process is shown in Figure 5. From this moment, the asset can be managed by the user and they can communicate in a secure way using the shared key.

Since the establishment of a shared secret key is very important for a secure communication, SmartNFTs include the attributes hashK_OA, hashK_UA and dataEngagement. The first two attributes define, respectively, the hash of the secret key shared between the asset and its owner and between the asset and its user. Assets, owners and users should check they are using the correct shared secret keys. The attribute dataEngagement defines the public data needed for the agreement.

pragma solidity ^0.8.0;
/// @title SmartNFT: Extension of ERC-721 Non-Fungible Token Standard.
///  Note: the ERC-165 identifier for this interface is 0x8a68abe3
interface SmartNFT is ERC721/*,ERC165*/{
/// @dev This emits when the NFT is assigned as utility of a new user.
///  This event emits when the user of the token changes.
///  (_addressUser == 0) when no user is assigned.

/// @dev This emits when user and asset finish mutual authentication process successfully.
///  This event emits when both the user and the asset prove they share a secure communication channel.
event UserEngaged(uint256 indexed tokenId);

/// @dev This emits when owner and asset finish mutual authentication process successfully.
///  This event emits when both the owner and the asset prove they share a secure communication channel.
event OwnerEngaged(uint256 indexed tokenId);

/// @dev This emits when it is checked that the timeout has expired.
///  This event emits when the timestamp of the SmartNFT is not updated in timeout.
event TimeoutAlarm(uint256 indexed tokenId);
/// @notice This function defines how the NFT is assigned as utility of a new user (if "addressUser" is defined).
/// @dev Only the owner of the SmartNFT can assign a user. If "addressAsset" is defined, then the state of the token must be
/// "engagedWithOwner","waitingForUser" or "engagedWithUser" and this function changes the state of the token defined by "_tokenId" to
/// "waitingForUser". If "addressAsset" is not defined, the state is set to "userAssigned". In both cases, this function sets the parameter
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @notice This function defines the initialization of the mutual authentication process between the owner and the asset.
/// @dev Only the owner of the token can start this authentication process if "addressAsset" is defined and the state of the token is "waitingForOwner".
/// The function does not change the state of the token and saves "_dataEngagement"
/// and "_hashK_OA" in the parameters of the token.
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @param _dataEngagement is the public data proposed by the owner for the agreement of the shared key.
/// @param _hashK_OA is the hash of the secret proposed by the owner to share with the asset.
function startOwnerEngagement(uint256 _tokenId, uint256 _dataEngagement, uint256 _hashK_OA) external payable;

/// @notice This function completes the mutual authentication process between the owner and the asset.
/// @dev Only the asset tied to the token can finish this authentication process provided that the state of the token is
/// "waitingForOwner" and dataEngagement is different from 0. This function compares hashK_OA saved in
/// the token with hashK_A. If they are equal then the state of the token changes to "engagedWithOwner", dataEngagement is set to 0,
/// and the event "OwnerEngaged" is emitted.
/// @param _hashK_A is the hash of the secret generated by the asset to share with the owner.
function ownerEngagement(uint256 _hashK_A) external payable;

/// @notice This function defines the initialization of the mutual authentication process between the user and the asset.
/// @dev Only the user of the token can start this authentication process if "addressAsset" and "addressUser" are defined and
/// the state of the token is "waitingForUser". The function does not change the state of the token and saves "_dataEngagement"
/// and "_hashK_UA" in the parameters of the token.
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @param _dataEngagement is the public data proposed by the user for the agreement of the shared key.
/// @param _hashK_UA is the hash of the secret proposed by the user to share with the asset.
function startUserEngagement(uint256 _tokenId, uint256 _dataEngagement, uint256 _hashK_UA) external payable;

/// @notice This function completes the mutual authentication process between the user and the asset.
/// @dev Only the asset tied to the token can finish this authentication process provided that the state of the token is
/// "waitingForUser" and dataEngagement if different from 0. This function compares hashK_UA saved in
/// the token with hashK_A. If they are equal then the state of the token changes to "engagedWithUser", dataEngagement is set to 0,
/// and the event "UserEngaged" is emitted.
/// @param _hashK_A is the hash of the secret generated by the asset to share with the user.
function userEngagement(uint256 _hashK_A) external payable;

/// @notice This function checks if the timeout has expired.
/// @dev Everybody can call this function to check if the timeout has expired. The event "TimeoutAlarm" is emitted
/// if the timeout has expired.
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @return true if timeout has expired and false in other case.
function checkTimeout(uint256 _tokenId) external returns (bool);

/// @notice This function sets the value of timeout.
/// @dev Only the owner of the token can set this value provided that the state of the token is "engagedWithOwner",
/// "waitingForUser" or "engagedWithUser".
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @param _timeout is the value to assign to timeout.
function setTimeout(uint256 _tokenId, uint256 _timeout) external;

/// @notice This function updates the timestamp, thus avoiding the timeout alarm.
/// @dev Only the asset tied to the token can update its own timestamp.
function updateTimestamp() external;

/// @notice This function lets obtain the tokenId from an address.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @param _addressAsset is the address to obtain the tokenId from it.

/// @notice This function lets know the owner of the token from the address of the asset tied to the token.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @param _addressAsset is the address to obtain the owner from it.
/// @return owner of the token bound to the asset that generates _addressAsset.

/// @notice This function lets know the user of the token from its tokenId.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @param _tokenId is the tokenId of the SmartNFT tied to the asset.
/// @return user of the token from its _tokenId.
function userOf(uint256 _tokenId) external view returns (address);

/// @notice This function lets know the user of the token from the address of the asset tied to the token.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @param _addressAsset is the address to obtain the user from it.
/// @return user of the token tied to the asset that generates _addressAsset.

/// @notice This function lets know how many tokens are assigned to a user.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @return number of tokens assigned to a user.

/// @notice This function lets know how many tokens of a particular owner are assigned to a user.
/// @dev Everybody can call this function. The code executed only reads from Ethereum.
/// @return number of tokens assigned to a user from an owner.
}


## Rationale

The demand for SmartNFTs, which allow user management and a tie to a physical asset are growing (for example, in the context of the Internet of Things). Therefore, it is essential to establish a standard capable of including all these options working together or separately. The incorporation of an Ethereum address of the user or an Ethereum address of a physical asset to the SmartNFT is optional. However, it does not make sense that the SmartNFT does not include any of them because, in that case, the SmartNFT would be an ERC-721 token. Since some functions such as startUserEngagement are available only if both addresses are implemented, a single interface with all the options is proposed.

SmartNFT This EIP proposes a non-fungible token tied to a physical asset. The asset is able to generate an Ethereum address and authenticate its user and its owner. Hence, the asset can be considered as a smart asset associated with an NFT. If the asset and the token are regarded as one thing, we can talk about a SmartNFT.

Authentication This EIP proposes using the smart contract to verify the mutual authentication process between the physical asset and the owner or the user by verifying the hash of a shared key.

Tie Time This EIP proposes including the attribute timestamp (to register in Ethereum the last time that the physical asset checked the tie with its token) and the attribute timeout (to register the maximum delay time established for the physical asset to prove again the tie). These attributes avoid that a malicious owner or user could use the asset endlessly. When the asset calls updateTimestamp, the smart contract must call block.timestamp, which provides current block timestamp as seconds since Unix epoch. For this reason, timeout must be provided in seconds.

ERC-721-based EIP-721 is the most commonly-used standard for generic NFTs. This EIP extends ERC-721 for backwards compatibility.

## Backwards Compatibility

This standard is an extension of ERC-721. It is fully compatible with both of the commonly used optional extensions (IERC721Metadata and IERC721Enumerable) mentioned in the EIP-721 standard.

## Test Cases

The test cases presented in the paper shown below are available [here] (../assets/eip-4519/PoC_SmartNFT/README.md).

## Reference Implementation

A first version was presented in a paper of the Special Issue Security, Trust and Privacy in New Computing Environments of Sensors journal of MDPI editorial. The paper, entitled Secure Combination of IoT and Blockchain by Physically Binding IoT Devices to Smart Non-Fungible Tokens Using PUFs, was written by the same authors of this EIP.

## Security Considerations

In this EIP, a generic system has been proposed for the creation of non-fungible tokens tied to physical assets. A generic point of view based on the improvements of the current ERC-721 NFT is provided, such as the implementation of the user management mechanism, which does not affect the token’s ownership. The physical asset should have the ability to generate an Ethereum address from itself in a totally random way so that only the asset is able to know the secret from which the Ethereum address is generated. In this way, identity theft is avoided and the asset can be proven to be completely genuine. In order to ensure this, it is recommended that only the manufacturer of the asset has the ability to create its associated token. In the case of an IoT device, the device firmware will be unable to share and modify the secret. Instead of storing the secrets, it is recommended that assets reconstruct their secrets from non-sensitive information such as the helper data associated with Physical Unclonable Functions (PUFs). Although a secure key exchange protocol based on elliptic curves has been proposed, the token is open to coexist with other types of key exchange.

Copyright and related rights waived via CC0.