The Economics of Non-Fungible Tokens
100 Pages Posted: 18 Mar 2022 Last revised: 31 Oct 2023
Date Written: March 7, 2022
We construct a comprehensive dataset of a near universe of non-fungible token (NFT) transactions, analyze their properties, and create indices for the NFT market. The granularity of the data allows high-resolution testing of theories of blockchain economics, non-fungible asset markets, and more broadly markets with frictions. First, we show that unique NFT characteristics, including visual features, are important in valuation, establishing a high degree of non-fungibility. Second, the buyer-seller network has a distinct structure with strong segmentation but no clear dominant players. Third, we determine the implications of the frictional market structure on returns and investor performance.
Keywords: Non-Fungible Token, NFT, Asset Pricing
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