Unveiling the Paradox of NFT Prosperity

Unlike fungible tokens (e.g., cryptocurrency), a Non-Fungible Token (NFT) is unique and indivisible. As such, they can be used to authenticate ownership of digital assets (e.g., a photo) in a decentralized fashion. Given that NFTs have generated significant media attention since 2021, we perform a large-scale measurement study of the NFT ecosystem. We collect over 242M transfer logs and over 97M marketplace transactions until Aug 1st, 2023, by far the largest NFT dataset, to the best of our knowledge. We characterize the on-chain behavior of NFTs and their trading across five major marketplaces. We find that, although the NFT ecosystem is growing rapidly, it is driven by a relatively small set of dominant centralized players, with suspicious trades activities, e.g., over 23% of the monetary volume is generated by malicious wash trading and the ecosystem has experienced over 157K cases of NFT arbitrage, with a total sum of over $25M USD profit. Our observations motivate the need for more research efforts in the NFT security analysis.