The Economics of Non-Fungible Tokens

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

Suggested Citation: Suggested Citation

Borri, Nicola and Liu, Yukun and Tsyvinski, Aleh and Tsyvinski, Aleh, The Economics of Non-Fungible Tokens (March 7, 2022). Available at SSRN: https://ssrn.com/abstract=4052045 or http://dx.doi.org/10.2139/ssrn.4052045