The world of Non Fungible Tokens (NFTs) is like a diamond in the rough, with an array of uncut gems just waiting to be discovered. People are now more into a query, What is NFT Rarity, and How to calculate it? Rarity is a key factor in determining the value of an NFT, and understanding how to calculate it can be the difference between a valuable and worthless asset. In this article, we are going to explore what NFT rarity is and discuss various methods to calculate it.
What is NFT Rarity?
NFTs are here to stay in the future, and it is a digital assets whose ownership rights are cryptographically verifiable on the blockchain. These assets can represent anything from art and collectibles to digital gaming and real estate.
Rarity itself is a measure of how scarce an NFT is or how unique it is compared to other assets of its type. Rare NFTs are more desirable and valuable than common ones due to their limited supply. The rarity of an NFT is determined by several factors, including its uniqueness, scarcity, historical value, and the asset’s overall desirability.
The rarer an NFT, the greater its value of owning it, as it is unlikely to be available elsewhere. Have you ever heard the term limited edition? That’s right, limited edition NFTs are much rarer and more valuable than non-limited edition ones.
How to Calculate NFT Rarity?
There are several methods for calculating the rarity of an NFT. However, basically, to calculate the rarity score of an NFT, you can use a Trait Value which is calculated as follows:
1 ÷ ([Number of Items With That Trait Value]/Total Number of Items in Collection). It simply divides the number of items with that trait value by the total number of items in the collection to give a ratio and relative score.
Alternatively, the given ways help you out:
Rarity Ranking
In this, the rarest trait of each item is compared to the entire collection and not the overall rarity of the item. For this, you can use the Trait Value formula to determine the rarity of an NFT item. You never feel it’s too late to get into NFT rarity calculation.
Average Trait Rarity
This method uses all the traits of an item to calculate its overall rarity but fails to consider any extremely rare traits. Here you need to examine each trait probability and then take their average.
Suppose an NFT has 5 traits with probabilities of 5%, 35%, 50%, 15%, and 10%; the average trait rarity will be (5+35+50+15+10)/5=23%. So, this method can calculate an NFT’s overall rarity.
Statistical Rarity
This approach works by multiplying all trait rarities with one another. To use this method for a given NFT item, you must multiply each trait’s probability together.
For instance, if an NFT has 5 traits with probabilities of 5%, 35%, 50%, 15%, and 10%, the overall NFT rarity would be (5% × 35% × 50%× 15% ×10%)= 13.125%.
NFTHelpr
NFTHelpr is an online platform that allows you to measure and track the rarity of your NFTs. The platform works by using an algorithm to assign a numerical score to an NFT. The score is based on the number of traits, their rarity, and the item’s historical value.
The algorithm also takes into account the current market demand for the NFT. The higher the score, the more rare and valuable an NFT is considered to be. It is integrated with OpenSea, a popular NFT marketplace. It easily provides the token’s rarity score, rank, floor price, and market analysis.
Why It is Important to Calculate NFT Rarity?
- Rarity is essential in the Non-Fungible Tokens (NFTs) industry because it helps determine the market value of a certain NFT. A rare NFT will typically have a higher market value than one that is more common.
- Calculating rarity can also help buyers and sellers make informed decisions when trading and investing in different types of NFTs. Knowing the rarity of a certain NFT allows traders to better understand their investments and manage risk accordingly.
- NFT is becoming increasingly popular, and the rise of secondary markets like Binance is creating a demand for more accurate rarity calculations. By studying the data around an NFT, investors can better understand what it’s worth and how much they should pay for it.
- Calculating NFT rarity can also be useful for creators and developers. Understanding the rarity of a certain NFT can help them make more informed decisions when designing, developing, and promoting their own products.
Bottom Line
Calculating NFT rarity is an essential part of understanding and trading Non-Fungible Tokens. Knowing the rarity of a certain NFT can give traders, creators, and developers valuable insights into the current market value of an item. It also helps them make more informed decisions when trading and investing.
There are multiple methods available to calculate NFT rarity, and each method has its own advantages and disadvantages. Using the right combination of tools and techniques is essential to get the most accurate results.