Market Microstructure of Non Fungible Tokens
It addresses the problem of distinguishing genuine NFTs from scams for investors in the rapidly innovating NFT market, offering practical guidance but is incremental as it surveys existing issues without introducing new methods.
The article examines the market microstructure of Non-Fungible Tokens (NFTs), focusing on price formation, market structure, transparency, and applications to financial areas, while surveying market manipulation like wash-sale patterns and providing due-diligence pointers for investors to mitigate trading risks.
Non Fungible Token (NFT) Industry has been witnessing multi-million dollar trade in recent times. With rapid innovation of the NFT market environment by technology, innovation, and decentralization, it is becoming hard to distinguish between genuine NFT from fads and scams. This article discuss the NFT market microstructure, with a focus on price formation, market structure, transparency, and applications to other financial areas. Market manipulation in NFT market with the context of wash-sale patterns has also been surveyed. The article concludes by providing pointers on due-diligence activity that can be adopted by investors to mitigate NFT trading risk.