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How Can You Determine the Rarity of an NFT?
The rarity of a non-fungible token (NFT) is one of the most often debated topics on the internet. The rarity of an NFT is one of the most critical elements in determining its value.
Understanding how rarity works is a significant advantage for anyone investing in the NFT market. How can traders learn to measure this feature for any digital asset? Our guide today will share more insight on this critical aspect.
Is It Possible to Measure Rarity?
There has been extensive mathematical research into the importance of NFT rarity. Even though it seems paradoxical, there are several ways to assess the rarity of an NFT in this way.
First of all, we suggest looking at the most important parameters to take into account when measuring rarity. The following subsections will help us introduce all these features.
A Look at NFT Supply
Art collectors search for items that are less in quantity and, as a result, more expensive. Rarity tools can help anyone track the production of digital assets.
As a result of these mechanisms, it is possible to scan how many similar NFTs are available on the market. An NFT’s worth mainly depends on two factors: first, its quality, and second, its scarcity.
VIP Market
According to recent NFT headlines, many celebrities are getting in on the action. Concerts and art exhibits are examples of Metaverse activities where fans can use NFTs. The celebrity status increases the value and demand for NFTs.
A Matter of Market Demand
For some NFTs, demand is simply greater than for others. A digital asset or NFT gains in value when there is a great demand for it.
Many gamers seek fresh and unusual NFTs to add to their game collections. NFTs relating to social media, such as avatars, are in high demand as well.
Rarity means more to those who wish to brag about their digital assets on one network or another.
Look at the Context
In some cases, the historical significance of an NFT increases its monetary value. Think about the first tweet or the first Wikipedia edit as two instances of this functionality in action.
Because certain NFTs represent a limited edition of unique artwork, they might command a premium price. As a result, one can connect NFTs to real-world artworks, which is another factor to consider in estimating its value.
How Does the Market Measure NFT Rarity?
After a general overview, we can mention at least three popular indicators of NFT rarity:
- Ranking trait rarity: Experts can compare NFTs by just looking at the unique feature of each non-fungible token. Even though it is an essential and straightforward procedure, it has a clear flaw. The methodology only examines the rarest attribute of each NFT without looking at the “bigger picture.”
- Averaging trait rarity: Those wishing to consider all the traits of NFTs can average their rarity. For instance, an NFT with three traits at 20%, 30%, and 40% rarity will have a final score of 30%.
- Measuring statistical rarity: Another strategy that experts use is the multiplication of each trait’s rarity. Using the same example above, we will obtain a 2.4% rarity level (i.e., 20% * 30% * 40%).
Tools for Measuring NFT Rarity
Players such as Rarity Tools offer systems to rank the rarity of NFTs. The project considers the number of NFTs sharing a trait and the number of creations in a digital collection.
Rarity Sniper also considers all the attributes of each NFT to return a ranking in a bot-based system.
HowRare.is can offer another way to measure rarity specialized in the Solana ecosystem. All you need to do is search a collection in the project’s database to receive several details.
If you are familiar with OpenSea, you will have noticed that the website also has an in-house trading ranking. Keep in mind that OpenSea does not give you a way to measure NFT rarity. The website provides you with a tool to use together with those listed above.
Final Thoughts
As the name implies, NFTs are non-fungible, meaning that you cannot trade them for other identical assets. As a result, each NFT is one-of-a-kind and distinctive in its way.
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Since all NFTs have different sets of characteristics, it’s essential to find a way to measure their rarity. This guide summed up the current landscape in terms of NFT rarity measurement. It will be fascinating to observe the evolution of the tools we mentioned in the coming years.
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