I understand there's an OOTB workflow step in AEM Assets where a workflow can be configured to add a watermark to the asset in subject. However, I'm trying to investigate if there's a way to customize and remove the same watermark at a later step. Use case could be - A watermark is added to an asset while ingestion & the same is removed once it is approved by the reviewer at a later step of workflow. This is to quickly identify and eliminate the use of unapproved assets. I understand there are better ways to handle this, but that's just an example.
The out of the box "Add Watermark" step appears to write directly on the original asset. Provided the asset is not edited during the approval process, you could create a version that gets watermarked then restore the clean version after it's approved.