Application-oriented: A Polycentric Framework for Non-Fungible Tokens

Abstract

NFT is a new technology buttressed by blockchain and smart contracts. Changes brought by this new technology have spread to more aspects of life and imposed challenges to traditional legal and regulatory frameworks. Existing NFT rules and regulations are scattered, disjointed, and ambiguous, with the fundamental legal nature of NFTs unresolved and their heterogeneity unrecognized. The Article describes current NFT use cases, analyzes the current NFT regulatory and legal landscape, and parses out the advantages and disadvantages of each regulatory approach. As more NFT projects emerge and contribute to the global economy, it’s crucial to devise a robust conceptual framework for NFT regulation. This Article is the first to view the whole NFT ecosystem from a commons perspective and propose a polycentric framework for NFTs. In its early stages of NFT regulation, a polycentric framework will acknowledge NFTs’ versatility, encourage the involvement of multiple stakeholders, and identify best practices, so as to foster a long-enduring NFT ecosystem. The Article also introduces Ostrom’s law for successful NFT polycentric regulation and anticipates the challenges it may face, alongside possible responses and solutions. The regulatory journey of NFTs holds significance because the lessons learned can shed light on future emerging technologies. Similar to the experience of cyberspace, the journey will reshape how law and regulation adapt to novel challenges and constantly refine their contents and connotations to overcome unforeseen difficulties, strengthening our perception of governance as a “frequently adaptive process.”