What is NFT rarity and why & how it decides the fate of an NFT

The NFT market has experienced transactions worth billions of dollars until now and this number will increase further in the coming time. 

Celebrities are releasing their NFT collections and brands are diving into the technology, which ensures that more and more collections & projects will be released with each passing day. Does this mean anyone can easily enter the NFT space and expect success? Well, with the recent NFT releases in the rapidly evolving space, newbies might face a difficult time.

Now the question is, how to find out that an NFT of one’s choice deserves its price and has the potential to succeed? Here, we have prepared guidelines to help you find the true value of an NFT you are interested in and how to find the best NFTs to buy?

What does NFT Rarity mean?

Certain NFT collections are highly valuable as compared to others; however, not every digital collectible is equal despite being in the same collection. Characteristics and attributes of a digital asset acquired by it in the collection defines the uniqueness of an NFT.  A rare amalgamation of these characteristics shows how complex the process of acquiring an NFT is, which also affects its market value. 

NFTs with unique traits have high selling prices and become trendy. Add-on utilities like unique memberships and direct access to limited-edition merchandise might be a part of collectibles that possess a higher rarity rank.

Taking the example of Bored Ape Yacht Club, every token in the group is visually rare. The rarity ranking of every avatar is different from the other and is based on the clothing of the ape besides what it is doing as well as its background. 

There are seven traits possessed by each ape- fur, clothes, eyes, mouth, background, hat, and earrings. Also, each feature has a variety of various styles and looks. 

Since every look is confined to a certain number throughout the collection, some among them are difficult to come by. An ape that has a mixture of unique attributes has higher chances of being sold at a more price than the ape that has usual characteristics.

Checking an NFT’s rarity 

Dedicated platforms or programs that evaluate and rank non-fungible tokens based on their rarity levels can be used to breakdown an NFT’s rarity ranking. These tools are proficient in accessing both blockchain explorers and various other data sources to calculate the rarity of an NFT by giving users a particular asset’s entire view. These tools also consider aspects like ownership, popularity and trading volume of every non-fungible token

Role of rarity in deciding an NFT’s value

An NFT’s price is calculated by several factors. There’s no doubt that the market value of an NFT largely depends on its rarity; however, other factors also play a major role in affecting the demand of the token. These factors include aesthetics qualities, the funding team of the project, certain applications, community access and reputation of the creator. 

Also, the prices are calculated differently based on the particular properties valued by the community. 

Methods to check an NFT’s rarity

To technically assess the rarity of an NFT, there are four main method as discussed below-

Trait Rarity Model

Under this model, the rarest trait of every NFT is compared. Having said that, the NFT having the rarest trait gets the top position of the rarity score. Though this model does not aim at comparing the entire traits or other traits of the non-fungible token. 

Average Trait Rarity Model

As the name says, this model evaluates the average of each and every rarity of an NFT. Taking into account all characteristics, the averaging technique is utilized to find out a certain trait. In other words, the total of traits in a non-fungible token is considered followed by dividing by the total number of traits in a non-fungible token to calculate a score. 

Statistical Rarity Model

General rarity is integrated in this model which calculates the total rarity possessed by a non-fungible token by multiplying each & every trait together. 

The Rarity Score Model

This model is considered the most accurate and is calculated according to the below formula:

Rarity Score for a Trait Value = 1 / ((number of items with that trait value) / (total number of items in collection))

Using Binance to check rarity rankings 

Binance has a built-in rarity ranking system that allows traders and collectors to conclude wise decisions easily while estimating varying non-fungible tokens in Mystery Boxes. The NFTs are filtered based on rarity rank upon clicking a Mystery Box collection.

It is also possible to look for certain rarity characteristics in each project that’s on Binance. 

  • One needs to visit the NFT Collection page they wish and go to the purpose filter on the left side. 
  • Features to be assessed in the collection are to be selected via choosing attributes like eyes, eyewear and hair. The page also features properties of the particular NFT with the occurrence possibility of each trait. 
  • Click into every NFT Mystery Box page for the overview of the Mystery Box collection’s rarity ranks shown on the detail page. 

Importance of NFT rarity tools

These tools are very much effective and helpful when it comes to serve the purpose expected from them. Some of the major advantages of rarity tools are-

  • Helping collectors to conclude best selling or buying decisions
  • Predicting future NFT drops
  • Deeply understanding NFT projects
  • Being able to analyze NFTs easily and speedily 

Final Words

Rarity is among the major properties that’s utilized to calculate an NFT; however, it can be considered as one among the various elements instead of an exclusive  determining factor. Predicting the value of an NFT quantitatively is not possible and there are collectors who give priority to the aesthetic quality of an NFT rather than its rarity. On that note, it’s all about deep research and spending ample time before coming to any decision.