The Nansen NFT indexes are designed to benchmark active strategies when investing in the NFT market. It sets out an underlying index for investors seeking to track an index representative of the market or a specific market segment. Alternatively, the indexes serve as a mechanism to measure the performance of the NFT market over time. This research article serves as an introduction piece to the Nansen NFT indexes. The aim of this research article is three-fold. Part one establishes why investors look for NFT exposures and how they can achieve this through an NFT index. Part two outlines the Nansen NFT indexes. Lastly, part three illustrates the market trends signaled by the Nansen NFT indexes.
Download Our Top Whitepaper : Building Reliable and Secure Fintech Systems in 2022 NFT exposure for investors through an index
A market index enables investors to measure the value of a portfolio of holding with specific market characteristics. For example, the three most popular stock indexes for tracking the performance of the U.S market are the Dow Jones Industrial Average (DJIS), S&P 500 Index and the Nasdaq Composite Index. Within traditional finance, there is extant literature demonstrating that index investing can outperform active management of funds over time. Additionally, a market index provides investors with historical data that may help investors to make sound investment decisions.
Applying this to the NFT market, the indexes consist of different NFT collections representing different NFT market segments (e.g. Social, Gaming, Art and the Metaverse). Investors can follow the different market indexes to gauge market movements and performance. It is important to note that inventors cannot invest directly in an index. Instead, funds and investments are constructed and balanced in accordance with the index benchmark, thereby developing index funds. Understanding the NFT market using Nansen NFT indexes
The Nansen NFT indexes allow investors to track a specific NFT market segment. Alternatively, the indexes serve as a mechanism to measure the performance of the NFT market over time. For collections to be included in the Market benchmark index, they are required to meet a set of eligibility criteria (see Index Methodology).
The group of indexes adopted a market capitalization weighting strategy, with the market capitalization denominated in Ether (ETH). To learn more about how Nansen calculates the market capitalization of NFT collection using its adjusted (7-day) mode price valuation model, see here. The group of Nansen NFT indexes consist of:
> Nansen NFT-500
Nansen Blue Chip-10
Nansen Social-100
Nansen Gaming-50
Nansen Art-20
Nansen Metaverse-20
Each index centers on an NFT category typically based on the NFT collections’ use cases or applications. The following section expands on each index. Nansen NFT-500
The NFT-500 index is calculated daily and rebalanced every 30 days, where the index constituents are re-assessed and re-balanced accordingly.
The benchmark index consists of 500 NFT collections and represents an average of 85.4% of the daily market volume since 1 January 2022. This index aims to track the activity and movement of the NFT market. NFT 500 Nansen Blue Chip-10
The Blue Chip-10 index is calculated daily and rebalanced every 90 days, where the index constituents are re-assessed and re-balanced accordingly.
The Blue Chip NFTs index is a collection of notable and classic NFTs. It is also the first index constructed by Nansen. While the old index consisted of 20 constituents, the revised Blue Chip-10 index consists of ten well-established NFT collections weighted by market capitalization. Blue Chip-10 Nansen Social-100
Social NFT collections occupy the largest market share with the NFT market. The Social-100 NFTs index consists of 100 NFT collections, which are further classified into the sub-categories: Social-100 The Social-100 NFTs index is calculated daily and rebalanced every 30 days, where the index constituents are re-assessed and re-balanced accordingly.
Profile pictures (PFP), Access & Membership, and Utility (e.g. Decentralised Autonomous Organization). Nansen Gaming-50
The Gaming NFTs index is calculated daily and rebalanced every 30 days, where the index constituents are re-assessed and re-balanced accordingly.
Gaming NFT collections are the fastest-growing segment of the NFT market. The Gaming NFTs index consists of 50 NFT collections, which are further classified into the sub-categories: Play-to-Earn (P2E) games, Role-playing games (RPG), DeFi-related games (GameFi). Gaming-50 Nansen Art-20 The Art NFTs index consists of 20 NFT collections and covers NFT collections on ERC-1155 and ERC-721. The purpose of this index is to showcase notable NFT art pieces that are traded in the market. NFT collections within this sector can be further classified into sub-categories such as Generative Art, Physical Art and Music. Art-20 For […]
Protected by Patchstack