‍Liquefaction: How Bored Ape 8180 Became the Most Traded NFT in History‍

• Liquefaction lets multiple users share a single address via programmable access controls.
• Private keys reside inside TEEs and only sign transactions that meet specific policy conditions.
• Liquefaction demo enables Bored Ape NFT rentals while smart contracts prevent theft.

Blockchain ownership has always operated on a binary principle: possess the private key, and you control everything, share it, and you risk losing everything. Liquefaction breaks this paradigm with a new wallet system secured by specialized hardware, enabling temporary access to digital assets. 

As recently showcased with the demo EthDam, this system grants users temporary ownership of a Bored Ape NFT, along with its full associated benefits, while smart contracts ensure its eventual return. Through the demo, this novel application has already created the most traded NFT in history. 

What is Liquefaction?

The origin of liquefaction can be traced back to a blog post that explored how to use private keys to sell DAO votes. Researchers at IC3 and Cornell took this concept and expanded it into liquefaction—a wallet system built on Sapphire that uses trusted execution environments (TEEs) to hide private keys while allowing controlled access to their signing capabilities. 

By adding logic on top of addresses through TEE-based policies, liquefaction effectively enables any blockchain address to behave like a smart contract. Through a process of encumbering keys, programmable rules or policies allow multiple users to share a single blockchain address, which, in turn, enables assets to be shared, rented, or pooled.

The first proof of concept (PoC) of liquefaction involves sharing access to a Bored Ape (more information below), but this only scratches the surface of the potential. 

How Does Liquefaction Work?

Liquefaction relies on Sapphire's privacy and liveness properties, both of which are critical elements for it to function correctly. The system encumbers private keys directly inside TEEs, creating an isolated environment where keys never leave the secure enclave. 

• When a user initiates an action with a liquefaction wallet, they request the TEE to sign their transaction.
• This request then passes through a multi-layered, confidential policy evaluation process. 
• These policies (smart contracts) implement stateful logic that can track rental periods, enforce spending limits, or restrict specific operation types. 

The TEE will sign a transaction only if it satisfies all policy conditions, with Sapphire verifying that policies are unaltered. This creates a verification chain where each transaction must pass through multiple validation checkpoints before receiving authorization. The result is a cryptographic guarantee that prevents anyone from extracting keys or manipulating policies.

The system requires a blockchain-based TEE rather than simple off-chain computation for two critical reasons: first, liveness guarantees ensure no one can simply "unplug the computer" and disappear with assets, and second, attestation capabilities allow anyone to verify what's happening and ensure continued operation.

Liquefaction In Practice: Take My Ape

The Take My Ape demo makes the value of liquefaction tangible. It delivers a hands-on experience by letting users' own' a Bored Ape at a fraction of the usual cost. Through a simple auction, users can bid in ROSE tokens to gain possession of a BAYC for a minimum of 15 minutes. Winners enjoy:

• Control of the ape's image 
• Ability to play with the ape in BAYC Studio
• Proof of ownership via a signature
• Access the BAYC member-only area

Users can sign into exclusive platforms that require BAYC credentials, display their ape on websites, sign messages to prove ownership, and even enforce copyright claims by restricting unauthorized image use. The only real limitation is the inability to transfer the NFT to another address, a necessary step to prevent theft.

Since launch, BAYC #8180 has already been transferred 34 times. For minimal cost, you can participate in Web3 at a level previously reserved for those with hundreds of thousands of dollars. Try it yourself  here!

Looking Ahead

Liquefaction is a paradigm shift for blockchain, similar to breakthroughs like oracles and rollups that came before it. By securing keys inside TEEs while offering conditional access through confidential policies, liquefaction breaks the assumption that addresses must belong to single entities. 

For developers, simplified implementations are coming. Whether it's temporarily owning a Bored Ape or unlocking liquidity in billions of locked tokens, liquefaction points to future where ownership, privacy, and flexibility come together in ways that were previously impossible.