TL;DR

Enforceability represents the most philosophically complex domain among NEW-EIP’s five pillars. How do we justify centralized regulatory authority within a decentralized system? Our answer to this fundamental dilemma is a new paradigm called “Selective Decentralization.”

• Philosophical Foundation: Decentralization and regulation are not zero-sum games but complementary relationships
• Technical Innovation: Six granular regulatory actions ensure legal clarity in enforcement
• Governance Model: System operations remain decentralized while regulatory intervention occurs transparently and traceably
• Practical Implementation: Gasless regulatory enforcement and cross-chain atomic enforcement enable real-time regulatory response

The future of decentralized finance lies not in excluding regulation, but in making regulation more efficient and transparent.

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The Philosophical Dilemma: Centralized Authority in Decentralized Systems

“How do we justify centralized regulatory authority within a decentralized system?”

This question reveals the inherent contradiction within blockchain technology. Satoshi Nakamoto’s message embedded in Bitcoin’s genesis block was clear: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” It was a declaration against the failures of centralized financial systems.

However, in tokenized capital markets, we face a different reality. According to recent research from Washington University Law Review, even cryptocurrency markets claiming decentralization actually depend on highly centralized exchanges.

“Despite its originating claims to decentralization, crypto-markets are anchored by exchanges that operate in a profoundly centralizing manner.”Washington University Law Review, 2023

This “Centralization Paradox” is not merely a technical limitation. It raises fundamental questions about the nature of governance.

The Dialectical Relationship Between Decentralization and Regulation

Recent research from Vanderbilt Journal provides fascinating insights. There exists fundamental tension between blockchain’s ideal of a “trustless” economy and the reality of power concentration and information asymmetry.

We must redefine this tension as a dialectical relationship rather than a zero-sum game.

Limitations of Traditional Binary Thinking

The blockchain community has traditionally been trapped in a binary framework:

Decentralization = Freedom vs Centralization = Control

However, this binary thinking doesn’t work in tokenized capital markets where regulatory compliance is essential. We need a new paradigm.

Selective Decentralization: A New Governance Paradigm

Conceptual Definition

Selective Decentralization is a governance model that applies different levels of decentralization to different domains within a system.

• Operational Layer: Complete decentralization (transaction processing, consensus, state management)
• Regulatory Layer: Transparent and limited centralization (legitimate regulatory intervention)

This is not merely a technical compromise. It’s a philosophical approach borrowed from democratic theory.

“Decentralized network governance does not presuppose a certain delineation between actors as pre-given, but assumes that actors’ rights, obligations, and regulatory authorities change depending on the function and role they assume.”Frontiers in Blockchain, 2020

Foundation of Philosophical Justification

Our selective decentralization model is based on three philosophical principles:

1. Functional Separation Principle: Each function of the system should have a governance model optimized for its purpose.

2. Transparency Principle: All regulatory interventions must be recorded on-chain and traceable.

3. Limited Authority Principle: Regulatory agencies’ powers are exercised only within clearly defined boundaries.

💡 Key Insight: Decentralization is not an end goal but a means. The true purpose is building efficient, transparent, and fair systems.

Six Regulatory Actions: Technical Implementation of Enforceability

Philosophical Resolution Through Legal Clarity

The biggest problem with existing security token standards was the legal ambiguity of regulatory actions. ERC-1644’s controllerTransfer function attempted to handle all regulatory measures through a single function, but failed to distinguish legally different actions.

Our six granular regulatory actions fundamentally solve this problem:

Regulatory Action	Legal Basis	Reversibility	Ownership Impact	Philosophical Meaning
FREEZE	Administrative Order	Reversible	Maintained	Preventive Protection
SEIZE	Court Order	Conditional	Maintained	Judicial Intervention
CONFISCATE	Criminal Conviction	Permanent	Forfeited	Retributive Justice
LIQUIDATE	Debt Settlement	Irreversible	Transferred	Economic Resolution
RESTRICT	Compliance	Conditional	Maintained	Conditional Freedom
RECOVER	Fraud Recovery	Restorative	Restored	Restorative Justice

Implementing Philosophy Through Code

enum RegulatoryAction {
    FREEZE,      // Temporary asset freeze, reversible
    SEIZE,       // Court order-based forced custody, ownership retained
    CONFISCATE,  // Permanent ownership forfeiture, final action for illegal assets
    LIQUIDATE,   // Asset liquidation for debt settlement
    RESTRICT,    // Trading allowed under specific conditions
    RECOVER      // Return of stolen/fraudulent assets to original owner
}

function executeRegulatoryAction(
    bytes32 assetId,
    RegulatoryAction action,
    bytes calldata evidence,
    bytes32 legalBasis
) external onlyAuthorizedRegulator {
    // Execute regulatory action
    // All actions permanently recorded on-chain
    emit RegulatoryActionExecuted(
        assetId, 
        action, 
        msg.sender, 
        evidence, 
        legalBasis,
        block.timestamp
    );
}

This code is not merely functional implementation. It is legal philosophy translated into code.

Real-time State-based Regulatory Control: A New Governance Model

Preventive vs Reactive Regulation

Traditional financial regulation is mostly ex-post (reactive). Actions are taken after problems occur. But blockchain technology enables ex-ante (preventive) regulation.

Oraclizer’s real-time state-based regulatory control implements this paradigm shift:

interface IRealTimeRegulatoryControl {
    function monitorAssetState(bytes32 assetId) 
        external view returns (AssetState);

    function triggerConditionalAction(
        bytes32 assetId, 
        RegulatoryAction action
    ) external;

    function scheduleTimeBasedAction(
        bytes32 assetId, 
        uint256 timestamp, 
        RegulatoryAction action
    ) external;
}

This represents the “intelligentization of regulation”. Regulation is no longer passive reaction but active prevention.

🔥 Revolutionary Feature: Regulatory agencies can intervene immediately even during ongoing transactions, enabling proactive risk management through conditional automatic enforcement.

Cross-chain Atomic Enforcement: Technical Implementation of Global Regulation

The Digital Boundary Problem of Jurisdiction

Modern tokenized assets are not confined to single chains. A single asset can exist simultaneously on Ethereum, Polygon, and Arbitrum. How should regulatory measures be implemented in this case?

Traditional approaches involved taking individual actions on each chain. However, this creates timing attacks and partial execution risks.

Philosophical Implications of Atomic Enforcement

Our cross-chain atomic enforcement is not merely a technical solution. It represents a new approach to “legal consistency”:

interface ICrossChainRegulatory {
    function atomicMultiChainAction(
        ChainAsset[] calldata assets,
        RegulatoryAction action,
        bytes calldata proof
    ) external returns (bool success);

    function validateCrossChainCompliance(
        bytes32 assetId,
        uint256[] calldata chainIds
    ) external view returns (bool compliant);
}

Philosophical Question: If a FREEZE action fails on Arbitrum but succeeds only on Ethereum, is this truly a “freeze”?

Our answer is clear: Regulatory measures without guaranteed atomicity are not true regulatory measures.

⚠️ Critical Consideration: Cross-chain atomic enforcement involves complex technical challenges and must consider the unique characteristics and regulatory environments of each chain.

Gasless Regulatory Enforcement: Immediacy in Emergency Situations

Economic Barriers vs Regulatory Efficiency

Traditional blockchain transactions require gas fees. But what happens when regulatory agencies need to take urgent action and the action is delayed due to insufficient gas fees?

This is not merely a technical issue. It’s a philosophical problem of “the swiftness of justice.”

function emergencyRegulatoryAction(
    bytes32 assetId,
    RegulatoryAction action,
    bytes calldata evidence
) external onlyRegulator gasless {
    // Execute regulatory action immediately
    executeRegulatoryAction(assetId, action, evidence);
    emit EmergencyAction(assetId, action, msg.sender, block.timestamp);
}

Gasless enforcement enables regulatory agencies to take immediate action without economic constraints. This is the technical implementation of the philosophical principle that “public good takes precedence over economic interests.”

📋 Important Consideration: Gasless enforcement must be implemented with robust authority verification mechanisms to prevent abuse.

Transparency and Accountability: Ensuring Democratic Legitimacy

Mechanisms for Checks and Balances

For selective decentralization to succeed, checks and balances are essential. We implement the following transparency mechanisms:

1. Complete On-chain Recording: All regulatory actions permanently recorded on blockchain
2. Real-time Monitoring: Community real-time monitoring of regulatory actions
3. Appeal Mechanisms: Right to challenge unjust regulatory measures
4. Regular Governance Review: Periodic reassessment of regulatory authority

“All governance actions—including the approval of high-risk AI agents, the adjustment of compliance thresholds, or the revocation of non-compliant systems—are permanently recorded on the blockchain, creating an immutable, transparent audit trail.”ArXiv, 2025

Democratic Evolution of Algorithmic Governance

Recent Brookings Institution reports provide interesting insights: active policy intervention is necessary to prevent re-centralization risks in blockchain platforms.

Our approach proactively addresses these concerns:

• Governance Token Concentration Limits: Preventing excessive power concentration
• Transparent Decision Processes: Public discussion of all regulatory decisions
• Multi-stakeholder Participation: Participation of regulators, developers, and users

Philosophical Implications: A New Relationship Between Code and Law

Reinterpreting “Code is Law”

Lawrence Lessig’s famous “Code is Law” proposition requires new interpretation. From our perspective, this means:

Code should not replace law, but become a tool for more efficient law enforcement.

This leads to the concept of “co-evolution of law and technology.” A complementary relationship where law and technology advance each other.

Possibilities for a New Social Contract

According to ScienceDirect research, blockchain technology challenges traditional constructivist-rationalist governance paradigms.

Our selective decentralization model is a constructive response to this challenge. It proposes a new social contract:

• Freedom: Liberation from unnecessary regulation
• Responsibility: Voluntary compliance with legitimate regulation
• Transparency: Openness of all regulatory processes
• Efficiency: Minimizing regulatory costs through technology

Future Research Directions: Open Questions

Philosophical Challenges to Address

1. Limits of Authority: How far can regulatory agency authority extend?
2. Global Governance: How to resolve conflicts between different jurisdictional regulations?
3. Algorithmic Bias: How to prevent bias in automated regulatory systems?
4. Privacy vs Transparency: How to balance complete transparency with individual privacy?

Technical Research Challenges

• Scalability: Global-scale real-time regulatory monitoring
• Interoperability: Seamless regulatory action synchronization across diverse blockchains
• Security: Preventing hacking of regulatory systems themselves
• Efficiency: Continuous optimization of regulatory compliance costs

🎯 Research Invitation: These questions cannot be answered by technical solutions alone. Collaboration between philosophers, legal scholars, economists, and technologists is needed.

Conclusion: A New Balance Point Between Regulation and Innovation

Enforceability is the most complex yet most crucial element among NEW-EIP’s five pillars. It’s not merely a technical function, but the implementation of a new governance philosophy.

Our selective decentralization model demonstrates:

• Decentralization and regulation are not mutually exclusive
• Both can be achieved through proper design
• Technology can make regulation more efficient and transparent
• True innovation lies in improving existing systems, not destroying them

“True innovation does not come from ignoring existing rules, but from the process of creating better rules.”

Through Enforceability, we demonstrate that blockchain can be an ally of the rule of law, not an enemy. This is an essential condition for institutional adoption of tokenized capital markets and simultaneously the key to opening new possibilities in decentralized finance.

Future financial systems should pursue freedom through better regulation, not freedom without regulation. NEW-EIP’s Enforceability is the first step toward such a future.

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Learn More

• Check the overall context of the five pillars in NEW-EIP’s Conceptual Framework
• Follow Oraclizer’s official X for the latest EIP development news

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References

[1]. Yadav, Y. (2023). The Centralization Paradox in Cryptocurrency Markets. Washington University Law Review. https://wustllawreview.org/2023/08/09/the-centralization-paradox-in-cryptocurrency-markets/

[2]. Gazi, S. F. (2025). In Code We Trust: Blockchain’s Decentralization Paradox. Vanderbilt Journal of Entertainment and Technology Law. https://www.vanderbilt.edu/jetlaw/2025/01/25/in-code-we-trust-blockchains-decentralization-paradox/

[3]. Beck, R., Müller-Bloch, C., & King, J. L. (2020). Decentralized Network Governance: Blockchain Technology and the Future of Regulation. Frontiers in Blockchain. https://www.frontiersin.org/journals/blockchain/articles/10.3389/fbloc.2020.00012/full

[4]. Halaburda, H. (2025). The hidden danger of re-centralization in blockchain platforms. Brookings Institution. https://www.brookings.edu/articles/the-hidden-danger-of-re-centralization-in-blockchain-platforms/