EP:46 Depreciating Licensing Model in NFT Ownership with Anthony Lee Zhang from UChicago Booth

Economics Design

NFT is not just about digital art and tokenising assets. There are so many more things we can do with NFTs, like embedding property rights, more efficient mechanism design of property rights allocation and balancing between the various types of tradeoffs.

Today, we have with us Anthony Lee Zhang, assistant professor of Finance at UChicago Booth. He co-authored a paper with Glen Weyl on depreciating licenses (DL). Licenses are basically property rights, and NFT is about tokenising these property rights. (A chapter in the book)

In Depreciating Licenses, Anthony and Glen came up with a simple game theory model of asset ownership. Basically you own a fixed percentage of the property and the remaining percentage is auctioned off or being sold each time period. In this way, it mixes both a full ownership model and full rental model.

This is absolutely fascinating because in property rights allocation, we typically experience the trade off between investment incentive (owning the asset 100%) VS asset allocation (allocating to the best person who values the item the highest right now). With depreciating licenses model, this mixes both and balances the trade off.

Join our NFT discussion channel on discord to ask questions and to learn more: https://discord.gg/6zKyFEyJ

Also check out the Art is Always On Sale model with Simon de la Rouviere: [https://youtu.be/5WitN5bwfr8](https://youtu.be/5WitN5bwfr8)

DL paper by Anthony Lee Zhang and E Glen Weyl: [anthonyleezhang.github.io/pdfs/dl.pdf](http://anthonyleezhang.github.io/pdfs/dl.pdf)

Reach out to Anthony on Twitter: [https://twitter.com/AnthonyLeeZhang](https://twitter.com/AnthonyLeeZhang)