What Determines the Price of NFTs?

TL;DR

This paper investigates the factors influencing NFT prices by analyzing on-chain and off-chain data, revealing that content features explain within-collection price variations and social media presence correlates with trading volume.

Contribution

It provides a comprehensive analysis of how content and social factors influence NFT pricing, highlighting limitations in generalizing content features across collections.

Findings

Content features explain within-collection price variations.

Social media presence correlates with trading volume.

Features do not generalize well to new collections.

Abstract

In the evolving landscape of digital art, Non-Fungible Tokens (NFTs) have emerged as a groundbreaking platform, bridging the realms of art and technology. NFTs serve as the foundational framework that has revolutionized the market for digital art, enabling artists to showcase and monetize their creations in unprecedented ways. NFTs combine metadata stored on the blockchain with off-chain data, such as images, to create a novel form of digital ownership. It is not fully understood how these factors come together to determine NFT prices. In this study, we analyze both on-chain and off-chain data of NFT collections trading on OpenSea to understand what influences NFT pricing. Our results show that while text and image data of the NFTs can be used to explain price variations within collections, the extracted features do not generalize to new, unseen collections. Furthermore, we find that an NFT collection's trading volume often relates to its online presence, like social media followers and website traffic.