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Distributed Ownership Model for Non‐Fungible Tokens

This research investigates the transition from singular ownership to distributed or fractional ownership models for non-fungible tokens. The authors argue that

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Abstract

This research investigates the transition from singular ownership to distributed or fractional ownership models for non-fungible tokens. The authors argue that as the value of high-end NFTs grows, the barrier to entry becomes prohibitive for many participants. This paper outlines a technical framework for fractionalizing NFTs, allowing for the shared ownership of unique digital assets through tokenization. By distributing governance or profit-sharing rights across a larger group of stakeholders, this model increases liquidity and democratization in the NFT market. The study evaluates the technical requirements, including smart contract vault mechanisms, that ensure the security of the underlying asset while allowing the fractional tokens to be traded freely. This approach is positioned as a critical development for enabling institutional-grade investment strategies and community-managed collections in the Web3 era. Authors: S. B. Far, A. I. Rad Publication: Academic Paper Publication date: 2022-01-01

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Key findings

  • Fractionalization significantly enhances the liquidity of high-value non-fungible assets.
  • Vault-based smart contracts are essential for maintaining the security of the underlying collateralized asset.
  • Distributed ownership models introduce complex governance challenges regarding decision-making over the base asset.
  • Tokenization allows for the creation of secondary markets based on fractional interest in single digital assets.

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Citation

S. B. Far, A. I. Rad (2022). Distributed Ownership Model for Non‐Fungible Tokens. Academic Paper. https://onlinelibrary.wiley.com/doi/abs/10.1002/9781119752134.ch22
Canonical knowledge ID: research:distributed-ownership-model-for-non-fungible-tokens