Formalising Value Without Institutions: NFTs as a Stress Test of Art Market Architecture

The rise and collapse of the NFT art market is commonly explained through speculative excess, technological immaturity, or cultural backlash against financialisation. This paper argues that NFTs failed as art markets for a more fundamental reason: they attempted to constitute a market for symbolic goods through technical representation and transaction recording, without the institutional authority required to stabilise value across time. Treated as a natural experiment in market constitution, NFT infrastructures solved several problems long identified as sources of art-market fragility — asset standardisation, persistent provenance, public transaction histories, frictionless global exchange. For a brief period one further rule, enforced creator royalties, introduced partial temporal continuity between primary and secondary markets, and some creators were able to exit permanent dependence on primary sales. Those mechanisms had no constitutional grounding. Royalty enforcement rested on voluntary platform coordination rather than binding mandate, and was unstable under competitive pressure. As marketplaces disavowed governance authority and competed on volume, the constitutive rules collapsed; comparability fragmented across venues, arbitrage displaced judgement, and creators were pushed back into high-velocity primary sales. remark[Which constitution failed here, and why the distinction is this paper's own result]rem:nfts-two-constitutions Ghadamian and Ghadamian use market constitution for two different layers, and the corpus now keeps them apart. A transactional constitution governs who may exchange and whether the exchange binds; an informational constitution governs whether what was exchanged stays comparable to what is exchanged next. NFT infrastructures are the cleanest case of one succeeding while the other failed, which is what makes this episode evidence rather than analogy. The transactional layer was not merely present but unusually strong: assets standardised, provenance persistent, transaction histories public, settlement global and frictionless. Those are precisely the deficits long named as sources of art-market fragility, and the technology closed them. The informational layer never existed. Enforced royalties were the one mechanism carrying comparability across time, and they rested on voluntary platform coordination rather than binding mandate — so when marketplaces competed on volume the rule was competed away, comparability fragmented across venues, and value stopped aggregating. A market can therefore have excellent records and no memory: the transactional layer answers what happened, and only the informational layer makes what happened bear on what happens next. âš ï¸ Stated as a correction to this paper's own framing, which describes market constitution as a process by which rules stabilise comparability across time, where ghadamian2026artmarket defines it as a state — shared enforceable rules that let value signals persist. Both readings survive once the layers are separated: the state is what the informational constitution is, and the process is how it comes to hold. The defect was one term doing both jobs across two published papers, not an error in either. remark â­ The result is a stress test, not an anomaly. Where authority is absent, increased visibility and liquidity amplify volatility rather than stabilising value — and the two things the paper calls authority turn out to be different ().