Characterizing the OpenSea NFT Marketplace

Abstract

Non Fungible Tokens (NFTs) are unique digital identifiers used to represent ownership of various cryptoassets such as music, artwork, collectibles, game assets and allow for an unalterable and provable chain of creation and ownership. The market for NFTs exploded in 2021, and much of the public is being exposed to this new digital ownership medium for the first time. While uptake of this new medium is relatively slow, we feel the prospects of blockchain technology are up-and-coming. NFTs are still largely misunderstood by the wider community, and as such, this provides a fascinating opportunity to explore the NFT marketplace in greater depth. We analyzed sales data from OpenSea - the NFT marketplace with the most extensive user base and sales volume. Our study considered 5.25 million sales that occurred between January 1, 2019, and December 31, 2021. We first lead by presenting an overview of our data collection process and summarizing key statistics of the data set. We examine user behaviour in the market to show that a small subset of heavy-hitters is driving massive growth. Secondly, we review the economic activity within the network to show how these power users drive extreme price volatility within the Art and Collectible categories. Lastly, we review the network of buyers and sellers to show that despite the sparsity that exists in the network, communities of users are forming, and most power users tend to congregate in these structures. These findings shed light on areas of the NFT marketplace that have been relatively unexamined and provide a multi-level analysis of a multi-billion dollar market.