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

TL;DR

This paper introduces a game-theoretic approach to improve NFT markets through securitization and repurchase schemes, enhancing liquidity and ownership transfer mechanisms.

Contribution

It proposes a novel Asset-Backed Securities model and a Stackelberg game-based repurchase protocol for NFTs, addressing liquidity and strategic bidding issues.

Findings

Enhanced NFT liquidity via securitization

Equilibrium prices derived from game-theoretic analysis

Solutions for market challenges like budget constraints

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.