Discoveries from the NFT Market

Abstract

The aim of this chapter is to extract and analyze transaction data about the non-fungible token (NFT) market, and objectively present its development status, characteristics, and relationship with other crypto assets. Specifically, our research is divided into two major parts. First, we analyze the basic features of the NFT market by selecting five representative NFT tokens, Decentraland (MANA), Axie Infinity (AXS), Theta Network (THETA), Enjin Coin (ENJ), Sandbox (SAND). We describe the evolution and characteristics of NFT tokens and markets through a series of statistical indicators. Second, we examine the spillover effects (or dynamic relationship) between the above NFTs and mainstream crypto assets based on GARCH-type models, including Bitcoin (BTC) as well as Ethereum (ETH) and Solana (SOL), which issue the most NFTs. Overall, while NFTs have already made a significant impact in industries such as art, sports, law, ticketing, digital collectibles, and gaming, they may also expand to financial markets and the digital world at large in the future. However, so far, the NFT market is mainly speculative and is very closely linked to other cryptocurrency markets. Without further optimization and improvement, the potential of NFT cannot be realized.