by Emily Xu
Abstract
Non-Fungible Tokens (NFTs) took headlines by storm in 2021 and have since established their own marketplace. As public interest in the space wanes in 2022-2023, I characterize this emerging space and investigate factors that distinguish top-performing NFT projects within their respective market segments while controlling for external market and cryptocurrency exposures. Literature in this emerging space remains sparse and I contribute in the following ways: 1) My cross-sectional time series panel synthesizes the most recent data from February 2022 to March 2023, utilizing information from five platforms (NonFungible.com, Twitter, OpenSea, ArtIndex, YahooFinance). To the best of my knowledge, this is the first holistic dataset that combines time-varying secondary sales data, Twitter, and market data. 2) My analysis categorizes data points by both NFT market segments and secondary sales performance, allowing for finer comparison between top and low performers within their respective categories. I find that a change in Twitter followers and tweets over time is a statistically significant and positive predictor of secondary sales, indicating that top-performing NFT projects must consistently add value and market to investors in order to generate sustained secondary sales. Additionally, top-performers saturate the space at incredibly high speeds and grand scales. For instance, the median top-performing collectible project has a collection of 10,000 items, attracted at least 60,000 Twitter followers, and achieved over $42 million in total sales, all within 1-2 years of the “NFT hype.” This concludes that royalties generated from NFTs are not passive, requiring creators to be reactive and consistent in their efforts.
Michelle Connolly, Faculty and Seminar Advisor
Professor Connel Fullenkamp, Faculty Advisor
