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A Deep Dive into NFT Whales: A Longitudinal Study of the NFT Trading Ecosystem

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  • Na Hyeon Park
  • Hanna Kim
  • Chanhee Lee
  • Changhoon Yoon
  • Seunghyeon Lee
  • Youngjin jin
  • Seungwon Shin

Abstract

NFT (Non-fungible Token) has drastically increased in its size, accounting for over \$16.9B of total market capitalization. Despite the rapid growth of NFTs, this market has not been examined thoroughly from a financial perspective. In this paper, we conduct methodical analyses to identify NFT market movers who play a significant role in potentially manipulating and oscillating NFT values. We collect over 3.8M NFT transaction data from the Ethereum Blockchain from January 2021 to February 2022 to extract trading information in line with the NFT lifecycle: (i) mint, (ii) transfer/sale, and (iii) burn. Based on the size of held NFT values, we classify NFT traders into three groups (whales, dolphins, and minnows). In total, we analyze 430K traders from 91 different NFT collection sources. We find that the top 0.1\% of NFT traders (i.e., whales) drive the NFT market with consistent, high returns. We then identify and characterize the NFT whales' unique investment strategies (e.g., mint/sale patterns, wash trading) to empirically understand the whales in the NFT market for the first time.

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  • Na Hyeon Park & Hanna Kim & Chanhee Lee & Changhoon Yoon & Seunghyeon Lee & Youngjin jin & Seungwon Shin, 2023. "A Deep Dive into NFT Whales: A Longitudinal Study of the NFT Trading Ecosystem," Papers 2303.09393, arXiv.org.
    • Handle: RePEc:arx:papers:2303.09393
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    References listed on IDEAS

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    1. Matthieu Nadini & Laura Alessandretti & Flavio Di Giacinto & Mauro Martino & Luca Maria Aiello & Andrea Baronchelli, 2021. "Mapping the NFT revolution: market trends, trade networks and visual features," Papers 2106.00647, arXiv.org, revised Sep 2021.
    2. Dowling, Michael, 2022. "Is non-fungible token pricing driven by cryptocurrencies?," Finance Research Letters, Elsevier, vol. 44(C).
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