Not all non-fungible tokens (NFTs) are the same. Some have unique characteristics that are not commonly shared. Sometimes collectors stumble upon these nuggets and want their value to reflect that. However, it can be difficult to distinguish rare tokens from regular tokens.
Now, that said, ranking non-fungible tokens has become easier on OpenSea with the launch of a new tool called “OpenRarity”. The American marketplace has thus described its new factor as “rarity”, a method which standardizes unique digital images.
NFTs for the private collector
In a post, OpenSea explained: “The ‘scarcity’ ranking allows us to describe the relative scarcity of attributes of a non-fungible token compared to another in the same collection”.
“An NFT with rare attributes will have a lower rarity ranking (like 1 or 2) than an NFT that shares attributes with thousands of others in the collection,” it added.
Scarcity comes with a strong correlation to value. This is the reason why exclusivity is an important factor for NFT collectors. In the absence of a standardized ranking mechanism, however, it is difficult to determine the exclusivity of the characteristics of one non-fungible token over another.
According to OpenSea, this has created a chaotic situation. “When rarity rankings vary from platform to platform and use different methodologies, it can confuse buyers and sellers, and complicate the use of the rarity factor for buying decisions and of sale”.
The goal would then be to create “a unified, open, transparent, and repeatable standard for rarity ranking across the NFT industry.”
Why classify your NFT?
OpenRarity is a joint venture between OpenSea, icy.tools, Curio and PROOF. Its users have the option of indicating whether their collections are found to be rare or not. A collection that opts for this option will have to display a number marking its rarity rating on the item page as well as on its collection page.
According to OpenSea, this classification is crucial in interoperable markets, where different NFTs can be traded.
The platform explained: “If you hover over the numbers, you will see the percentage ranking. OpenRarity rarity ratings directly reflect attribute data published by the creator, and may change over time if the creator makes changes to the item’s metadata.”
Pudgy Penguins, one of the first NFT collections available on OpenRarity, listed 8,888 non-fungible tokens of various attributes. According to a description of the collection on Rarity Tools, the Pudgys “embodies love, empathy and compassion.”
It is this description of a “source of good vibes and positivity for all. Each holder gets exclusive access to experiences, events, IP licensing opportunities, and more.”
As of Friday, September 27, Pudgy Penguin’s floor price averaged 3.8 ETH, or around $4,900, down 2.7% on the day. According to data from NFT Floor Price, the collection saw 66 ETH (about $86,000) in sales in the past 24 hours, down 30% from the previous day.
Cool Cats, another collection, has 9,999 randomly generated non-fungible tokens on OpenRarity. According to its concept, its holders can participate in exclusive events such as free NFT requests, raffles or even community gifts, among others.
At the time of writing, Cool Cats are selling at an average price of 2.95 ETH (~$3,800) each, up 7.2% in the previous 24 hours, with volume at 96.89 ETH (around $126,000).
Scarcity, a magic formula?
However, a recent study from the Stevens Institute of Technology found that scarcity may not be the magic formula for NFTs. Indeed, according to this study, there are several potential drawbacks.
Jordan Suchow, a cognitive scientist who led the study, warned that the hype around rare non-fungible tokens needs to be managed, as collectors can end up getting bored.
“Knowing that NFT trading data is public, it gives us a great opportunity to examine why people perceive value for certain things, and how that changes over time,” Suchow said.
Mr. Suchow has studied Bored Ape Yacht Club collectors and observed a decline in interest in these NFTs over time.
A monkey token wearing accessories is considered rare, compared to a more soberly dressed monkey NFT. This can be interesting at first, says Suchow, but as the collection grows, the monkeys can end up all looking the same.
“It’s a bit like a stamp collection: the stamps all look alike. So if there’s a misprint or some other rare feature that sets a stamp apart from others, people will pay a lot more to acquire it,” he explains.
“Today, a newcomer to trading Bored Apes sees these rare apes all over the place and perceives them to be much more commonplace than they really are.”
Jordan Suchow added:
“If someone wants to know what a dog is, they can go to a dog park and see several common animals. On the other hand, going to an experimental breeder and only looking at rarer breeds would skew his perception of the type and value of a given dog.”
The scientist thus concludes that the scarcity factor could become self-defeating, as it would deter trading in the more common coins that make up the bulk of the market.
The concept is not new
Scarcity is not a new concept. In traditional art and music, for example, there are so-called ‘collectibles’, which are not designed for the mainstream market.
Wu-Tang Clan hip hop group for example sold the single copy of his album “Once Upon A Time In Shaolin” to a crypto group as NFT, worth approximately $4 million. The content of the album is not yet available to the general public.
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How to measure the rarity of your NFT? A tool helps you answer this question – BeinCrypto UK
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