Eggs are ERC-721 NFTs that hold information about the home and represent the real value of the home, more simply known as the lien.
When a homeowner chooses to have the lien removed from their property, they just return a free and clear Egg to the Originator. This is accomplished by repaying the entire amount borrowed. The issuing contract instructs the Originator to remove the lien from the public record.
To increase trust, Oracles will be put in place to monitor county lien records and submit them to the blockchain. The essential information regarding the lien and the home is included in the Egg token.
To balance the Egg owner's privacy with the stability that the data offers, Bacon Protocol only provides data that is already on the public record. It should be noted that the Egg does not include the owner's name, credit, or other financial information.
The data that’s represented in the Eggs allows the protocols to determine the value of the Egg and nothing more. Here’s the data that’s included in Eggs:
- House address
- Amount of the lien
- Value of any liens that are “senior” to the Egg at the time it was created
- An image of the house
Before minting an Egg, an Originator must verify several things:
- Show that the home’s value is enough to cover the value of the Egg.
- Verify that the person they are minting the Egg for is the owner of the house.
- Sign a Deed of Trust agreement with the owner to create the lien.
- Record the lien on the public record with the county where the house resides.
Once the lien has been recorded, the Originator gives the Egg NFT to the owner, who is then free to use the Egg in any protocol that accepts Eggs.
Most borrowers will utilize the Egg to borrow USDC from a Pan right away. However, the cool thing is that Eggs will not only be used in the Bacon Protocol; other protocols may be interested in taking Eggs as collateral as well.
The Originator is also responsible for ensuring that the home is kept in good condition during the life of the Egg. The Deed of Trust requires the owner to keep the house in such a condition that if it were to be sold to pay off the debt, it would be worth enough to do so.
Furthermore, the owner pledges to keep the house in good shape, to properly insure it, and to pay all taxes. The only connection to the real world is the trust that the protocol places in the Originator to create, maintain, and, if necessary, enforce the lien.
The goal of the Bacon Protocol is to keep real-world integration to a minimum and limited to the Eggs NFT.