Trading Network Formation in NFT Markets: Evidence from BAYC and Azuki

Abstract

We study the formation and evolution of trading networks in non-fungible token (NFT) markets using transaction-level data from two major collections, Bored Ape Yacht Club (BAYC) and Azuki. We introduce a simple transaction-based clustering rule that identifies dynamically evolving trading networks formed by buyer-seller interactions. These networks correspond to persistent trading structures linking wallets through sequences of transactions. We document three main empirical regularities. First, trading networks emerge endogenously and exhibit heavy-tailed size distributions consistent with preferential attachment dynamics. Second, the internal connectivity of large networks displays scale-free degree distributions characteristic of growing trading systems. Third, the lifetime of trading networks follows approximately exponential statistics, indicating a memoryless extinction process. These findings suggest that NFT markets are organized around evolving clusters of trading relationships rather than isolated transactions. The results replicate across collections, indicating that trading network formation is a robust structural feature of NFT markets. Our findings provide new evidence on the microstructure of digital asset markets and the mechanisms governing the formation and persistence of trading relationships.