What is a PBT?

A Physically Backed Token or PBT is a digital representation of a physical good as a non-fungible token. A PBT is similar to an NFT -- it represents a non-fungible entity onchain and may have associated metadata through a tokenUri, however, it differs in that ownership transfers are strictly gated by chip signatures.

Per EIP-5791 (opens in a new tab), the PBT was developed to solve the following problems:

• The ownership of the physical item and the ownership of the NFT are decoupled.
• Verifying the authenticity of the physical item requires action from a trusted 3rd party (e.g. StockX).

PBTs look to solve these problems and help usher in a new form of tokenized custody.

Minting PBTs

Ultimately how PBTs are minted or given to chip holders is up to the ProjectRegistrar implementation. For the purposes of ERS, tokens are minted upon the addition of chips to a project. End users holding a chips may subsequently transfer or claim a chip (see Chip Transfer).

Transferring PBTs

The main difference between PBTs and standard ERC-721s is how they are transferred. Most ERC-721s are easily transferred by a simple on-chain call directly to the token contract or via transferFrom using an intermediary contract. PBTs have a more restricted transfer mechanism due to their physical backing. For PBTs there are two forms of transfer:

• transferToken - transfer executed by the receiver submitting message signed by chip, message commits to the receiver and a block hash after which the transfer must be submitted within an expiration period. An additional extras field may be used in conjunction with an optional Transfer Policy in order to limit or modify how transfers occur.

Transfer Policies

If implemented for a given project, a transfer policy may use the extras field during transferToken to carry out additional validations or checks prior to transferringa token. The contents and validations of the payload will be unique to the transfer policy.