Study on Non-Fungible Tokens (NFT)

Abstract

Abstract: This study examines the risk and return characteristics of the NFT-based startups listed on the cryptocurrency exchange. Our investigation is motivated by the recent surge in the NFT activity on the part of creators, investors, and traders. We begin by proposing novel classification ofthe existing NFTs that range from NFT blockchains through NFT metaverse to NFT DeFi. Next, we establishthat NFTs: 1) earn 130% on the first-listing-day; 2) yield an average investment multiple of 40 (roughly 4,000%) over long-term, which is four times higher than bitcoin during the same period; 3) deliver positive and significantalpha and exhibit above-average beta. We also show thatthe NFT segment of the cryptocurrency market leads market recovery following the mid-2021 crash and generate a return of close to 350%.