Investor Experience Matters: Evidence from Generative Art Collections on the Blockchain

In the market for non-fungible tokens (NFTs) on the blockchain, experienced investors systematically outperform inexperienced investors. Controlling for holding period, experienced investors make 8.6 percentage points more per trade on average. This outperformance is mostly explained by experienced investors’ greater participation in primary market sales of NFT collections, which produced significantly higher average returns during our sample period. Our results shed light on the frictions present in NFT markets, and have implications for the design of NFT investment strategies.