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

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.