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ABSNFT: Securitization and Repurchase Scheme for Non-Fungible Tokens Based on Game Theoretical Analysis

Author

Listed:
  • Hongyin Chen
  • Yukun Cheng
  • Xiaotie Deng
  • Wenhan Huang
  • Linxuan Rong

Abstract

The Non-Fungible Token (NFT) is viewed as one of the important applications of blockchain technology. Although NFT has a large market scale and multiple practical standards, several limitations of the existing mechanism in NFT markets exist. This work proposes a novel securitization and repurchase scheme for NFT to overcome these limitations. We first provide an Asset-Backed Securities (ABS) solution to settle the limitations of non-fungibility of NFT. Our securitization design aims to enhance the liquidity of NFTs and enable Oracles and Automatic Market Makers (AMMs) for NFTs. Then we propose a novel repurchase protocol for a participant owing a portion of NFT to repurchase other shares to obtain the complete ownership. As participants may strategically bid during the acquisition process, our repurchase process is formulated as a Stackelberg game to explore the equilibrium prices. We also provide solutions to handle difficulties at market such as budget constraints and lazy bidders.

Suggested Citation

  • Hongyin Chen & Yukun Cheng & Xiaotie Deng & Wenhan Huang & Linxuan Rong, 2022. "ABSNFT: Securitization and Repurchase Scheme for Non-Fungible Tokens Based on Game Theoretical Analysis," Papers 2202.02199, arXiv.org, revised Jul 2022.
    • Handle: RePEc:arx:papers:2202.02199
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    References listed on IDEAS

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    1. Guillermo Angeris & Tarun Chitra, 2020. "Improved Price Oracles: Constant Function Market Makers," Papers 2003.10001, arXiv.org, revised Jun 2020.
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    Cited by:

    1. Jason Milionis & Dean Hirsch & Andy Arditi & Pranav Garimidi, 2022. "A Framework for Single-Item NFT Auction Mechanism Design," Papers 2209.11293, arXiv.org.

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