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Value creation and capture in decentralized finance markets: Non-fungible tokens as a class of digital assets

Author

Listed:
  • Jan Schwiderowski

    (IT University of Copenhagen)

  • Asger Balle Pedersen

    (IT University of Copenhagen)

  • Jonas Kasper Jensen

    (IT University of Copenhagen)

  • Roman Beck

    (IT University of Copenhagen)

Abstract

Information technology (IT) has radically changed the financial services industry, with the most recent transformation toward Fintech and decentralized finance (DeFi), driven by blockchain. Especially, non-fungible token (NFT) assets within DeFi are redefining how value is created and disseminated, for instance, in the art industry. However, DeFi and NFT market dynamics are not yet well understood. Using a thematic analysis based on 14 interviews with major NFT stakeholders (i.e., marketplace providers, artists, and investing collectors), we identify these NFT stakeholders’ different motivations and strategic options and explain the value creation and capture dynamics in the NFT art market resulting from their interactions. We argue for decomposing an NFT’s value into an NFT-intrinsic and an NFT-extrinsic part. Finally, we elaborate that art NFTs are not a new class of assets because many of their properties are similar to related assets such as physical art and cryptocurrencies.

Suggested Citation

  • Jan Schwiderowski & Asger Balle Pedersen & Jonas Kasper Jensen & Roman Beck, 2023. "Value creation and capture in decentralized finance markets: Non-fungible tokens as a class of digital assets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 33(1), pages 1-16, December.
    • Handle: RePEc:spr:elmark:v:33:y:2023:i:1:d:10.1007_s12525-023-00658-z
    DOI: 10.1007/s12525-023-00658-z
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    Cited by:

    1. Chong Guan & Ding Ding & Jing Ren & Jiancang Guo, 2024. "Unveiling the aesthetic “wow factor”: The role of aesthetic incongruity and image quality in NFT art valuation with computer vision," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-16, December.
    2. Vítor Ribeiro & João Barata & Paulo Rupino Cunha, 2024. "Modeling inter-organizational business process governance in the age of collaborative networks," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-27, December.
    3. Christian Zeiß & Myriam Schaschek & Lisa Straub & Christoph Tomitza & Axel Winkelmann, 2024. "Re-intermediation of the crypto asset ecosystem by banks: An empirical study on acceptance drivers among the populace," Electronic Markets, Springer;IIM University of St. Gallen, vol. 34(1), pages 1-24, December.

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    More about this item

    Keywords

    Decentralized finance (DeFi); Non-fungible tokens (NFT); Blockchain; Digital assets; Financial markets; Value creation;
    All these keywords.

    JEL classification:

    • G19 - Financial Economics - - General Financial Markets - - - Other

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