We tend to treat ownership on-chain as all or nothing. You either have the private key, or you don’t. Either your address is on the token contract, or it isn’t. But what if control over blockchain assets could be fractional, not just in economic value, but in time, privilege, and usage?
This is the idea behind a new approach being tested on Sapphire: transforming digital assets into liquid, lendable credentials with strict, programmable controls. It's called Liquefaction, and it opens the door to temporary ownership models without compromising on-chain security.
The Problem with “You Own It or You Don’t”
Consider something like a Bored Ape NFT. If you want to let someone else access the perks like private Discords, token-gated sites, event access, the only secure way today is to transfer the NFT outright. That’s risky, clunky, and often irreversible.
Sharing keys is a nonstarter. Wrapping tokens in new contracts is brittle and hard to generalize.
What’s needed is a way to separate the power to use an asset from the power to transfer or sell it.
Enter Trusted Execution Environments (TEEs)
Sapphire brings TEEs to smart contract execution. These are isolated, verifiable hardware environments that can run code securely, even shielding the private keys from their “owner.” Think of it like a black box where the wallet lives: it can sign messages, enforce rules, but never leak the key.
In the Liquefaction model, assets are held in TEE-controlled wallets. Users don’t get direct access to the keys they get scoped, time-bound signing privileges. Want to rent an NFT for 24 hours? The TEE can enforce that. Need to sign into a token-gated site? The TEE signs on your behalf. When the time’s up, access disappears.
Why This Matters
This isn’t just about NFT rentals. Once you can safely grant usage without ownership, the design space explodes:
- Ticketing: Sell event passes that expire after use
- Gaming: Lend in-game items or characters
- Identity: Share reputation or SBTs for limited periods
- DAOs: Delegate voting power with baked-in limits
- Cross-chain wallets: Securely abstract accounts across ecosystems
And all of this happens without needing to trust a middleman or build custom contracts. The TEE enforces the rules, privileges are granted and revoked without giving up control.
A Live Example: Renting a Bored Ape
A new prototype demonstrates this with a BAYC NFT. A user can temporarily “rent” the ape, gaining access to member spaces and token-gated experiences. Their address appears in the Yuga Labs contract during the rental, just like a standard transfer but behind the scenes, the asset remains secured inside the TEE.
When the rental ends, the next approved user takes over, determined via a secondary-price auction. This ensures fairness and economic alignment while keeping custody and rules hard-coded in the TEE.
What’s Next?
This could become a new primitive for Web3, turning static tokens into dynamic credentials. It forces us to rethink how we define "ownership" and what wallets can actually do when we decouple keys from identity and usage.
If you're a developer interested in programmable identity, wallet design, or building composable token experiences, this space is worth watching closely.
Would you trust a TEE to enforce your access rules? What if your wallet never showed you the key at all? Those are the kinds of questions this tech is now making real.
Let me know what you'd build if ownership became liquid.
Links
- Live example → https://takemyape.com/
- Liquefaction Paper → https://arxiv.org/abs/2412.02634
Top comments (2)
"control over blockchain assets could be fractional, not just in economic value, but in time, privilege, and usage" - this is just phenomenal. This can have great impact on libraries - books, video games, or movies. RWA is a craze, so any real world assets that is tokenized can benefit from liquefaction's fractional ownership, like in case of rent, lease, etc.
Dani from Cornell Tech’s IC3 Core Research Team engaged in a lively discussion on the subject of liquefaction during the recent ETHDam conference, and his demo perfectly demonstrated this new development in blockchain's evolving technology.
moving beyond the current all-or-nothing model to allow more flexible, gradated, or conditional ownership. This could enable fractional ownership, dynamic rights, and richer interactions with assets. Could be a game-changer for DeFi and NFTs!