What is NFT Rarity and How to Calculate it?

Q: What is rarity on OpenSea?

The scarcity of one NFT's qualities in comparison to another in the same collection.

Tanya Sharma
Published on March 15, 2023 01:50 PM

NFT rarity rankings are a metric that measures the distinctness of a non-fungible token's (NFT's) characteristics in comparison to other NFTs in the same collection.

What is NFT Rarity and How to Calculate it

Source: BBC

Non-Fungible Tokens have seen a substantial increase in popularity in recent years (NFTs). These one-of-a-kind digital assets are produced with blockchain technology and are used to symbolize ownership of numerous forms of digital information, including art, music, films, and more.

The scarcity of NFTs is one of their most remarkable characteristics. NFTs, unlike typical cryptocurrencies, cannot be swapped since each NFT is unique and has its own worth. The rarity of an NFT is an important factor in determining its value. The higher the perceived value of an NFT, the more valuable it is as a digital asset.

In this post, we will go deeper into the notion of NFT rarity, investigating what it entails and how it influences the value of an NFT. We will also look at some of the aspects that contribute to an NFT's rarity and explore some of the most costly NFTs ever sold. Thus, let us begin our journey into the interesting realm of NFT rarity!

What is NFT Rarity?

The amount of uniqueness or scarcity of a certain Non-Fungible Token is referred to as NFT rarity (NFT). It is an important aspect in assessing an NFT's worth in the digital economy. The rarity of an NFT is affected by various factors, including the number of editions produced, the quality of the material, the creator's reputation, and consumer demand.

An NFT with a limited edition of one, indicating that it is a one-of-a-kind digital asset, for example, would be deemed exceedingly rare and precious in comparison to an NFT with a greater edition size. Similarly, an NFT developed by a well-known artist or musician is more likely to be rare and valuable than an NFT created by an unknown creator.

NFT rarity is an important aspect of NFT value, and it is one of the variables that contribute to the enthusiasm and buzz around the NFT market.

How Does NFT Rarity Work?

NFT rarity works by creating an impression of uniqueness and scarcity inside a single NFT. Many variables contribute to its uniqueness, including the number of editions produced, the quality of the material, the creator's reputation, and customer desire.

An NFT's edition size is an important aspect of defining its rarity. As compared to an NFT with a greater edition size, an NFT with a limited edition of one, which means it is a one-of-a-kind digital asset, is regarded exceedingly uncommon and precious. Limiting the total number of editions available for purchase might also increase the rarity of an NFT.

Another crucial component in determining the rarity of an NFT is the quality of the material. The more elaborate and sophisticated the NFT artwork or media, the more costly and uncommon it becomes. Also, the creator's reputation is important in determining the rarity of an NFT. NFTs by well-known artists or musicians are frequently more precious and uncommon than NFTs by unknown producers.

Lastly, buyer demand influences the rarity of an NFT. If a certain NFT is in high demand, its rarity and value rise, and vice versa.

How NFT Rarity is Calculated?

NFT rarity is an important aspect in evaluating an NFT's value in the digital marketplace. Investors that understand how to identify uniqueness can have an advantage in NFT collecting. By supplying information on the value trajectory of a given type of NFT over time, they may save time and money while gaining an advantage over other traders in the market.

There are numerous methods for calculating NFT rarity. One method is to use NFT Rarity sites such as Rarity Tools. These websites assess the rarity of an NFT and can give market demand information.

Another possibility is to utilize a Rarity Ranks Extension, such as the Rarity Ranks extension, which offers information about the rarity of an NFT depending on specified factors.

Yet, while employing extensions, it is critical to be cautious because they might pose security threats and steal private data. A marketplace like OpenSea, which allows users to make, purchase, and sell NFTs, is another technique to evaluate NFT rarity.

Users may obtain a sense of the rarity of a given token by seeing the complete collection. Collections typically contain roughly 10,000 objects, however, this might vary depending on the project.

Here are some of the most important factors to consider when determining NFT rarity:

Edition Size: The smaller the edition size of an NFT, the more rare and valuable it is considered to be.
Quality of Content: The more detailed, unique, and impressive the artwork or media within the NFT, the more valuable and rare it becomes.
Creator Reputation: NFTs created by well-known and respected artists, musicians, and other creators tend to be more valuable and rare than those created by unknown or unproven creators.
Scarcity of Concept: NFTs that represent a unique concept or idea that is not commonly found in the digital space may be considered more rare and valuable.
Historical Significance: NFTs that represent a significant moment or event in history may be considered more rare and more valuable.
Market Demand: If there is a high demand for a particular NFT, its rarity and value increase, and vice versa.

How to Calculate NFT Rarity

Determining the rarity of NFTs is a complicated procedure that varies based on the platform and approach employed. Although there is no one industry standard for computing NFT rarity ratings, there are numerous ways that are often used. Trait Rarity Ranking, Average Trait Rarity, Statistical Rarity, and NFT Rarity Score are the four most commonly utilized approaches.

Trait Rarity

Trait Rarity Ranking technique ranks NFTs based on the rarity of their rarest characteristic. The greater the total rarity rating, the rarer the leading attribute. Nevertheless, because this technique only takes into account the rarest attribute of an NFT, additional unusual qualities may be disregarded.

Average Trait Rarity

The Average Trait Rarity approach computes an NFT's overall rarity by taking the simple average of all its constituent features. Unfortunately, this technique has limits because it only considers the aggregate trait rarity rather than the rarity of a particular feature.

Statistical Rarity

Statistical Rarity approach is based on calculating the statistical rarity of each trait in an NFT by multiplying the individual trait scores. It does, however, overemphasize the total rarity of characteristics, as does the Average Trait Rarity technique.

NFT Rarity Score

The NFT Rarity Score technique considers both individual features and total qualities. This approach entails assigning a score to each attribute individually and adding all of the individual ratings to calculate the total NFT rarity score. The higher the score, the more uncommon and precious the NFT. This method is regarded as one of the most complete ways of determining NFT rarity.

Using this approach, you will first assign a score to each attribute individually using the formula below:

[Rarity Score for a Trait Value] = 1 / ([Number of Items with that Trait Value] / [Total Number of Items in the Collection])

The component ratings are then added together to get the total NFT rarity score. The greater the number, the more uncommon and consequently expensive the NFT.

Best NFT Rarity Checker

There are several NFT rarity checkers available in the market, and the best one depends on individual needs and preferences. Here are a few of the most popular NFT rarity checkers:

Rarity Tools
Rarity Sniper
Rarity Guru
Nansen
OpenSea

Rarity Tools: This website offers a comprehensive suite of NFT rarity tools that allow users to analyze rarity based on various factors, including edition size, token score, and trading volume.

Rarity Sniper: This is another popular NFT rarity tool that provides a real-time view of the NFT market. Users can view the rarity score of NFTs on various platforms and track the value of their own NFT collections.

Rarity Guru: This tool provides an overall rarity score for NFTs based on various factors, including edition size, trading volume, and price. Users can also view a breakdown of the rarity score and see how it compares to other NFTs in the market.

Nansen: This platform provides NFT analytics that allows users to track the value and rarity of NFTs across various marketplaces. The platform uses advanced algorithms to identify NFTs with the highest potential for value growth.

OpenSea: This is a popular NFT marketplace that allows users to buy, sell, and trade NFTs. Users can view the rarity of an NFT based on its edition size and trading volume, among other factors.

Why is Rarity Important for NFTs?

The price of an NFT is decided by a number of elements, similar to how tangible artworks are priced. While rarity is a major component of an NFT's market value, other variables such as unique use cases, aesthetic attributes, exclusive community access, and the reputation of the project's founding team or creator can all influence demand for the digital asset.

Additionally, the price might vary based on whatever specific features the community prioritizes. In certain circumstances, an NFT with no uncommon features that were the first in a popular collection, for example, may be more desired by some than a statistically rare NFT.

Conclusion

Since rarity is one of the primary features used to evaluate an NFT, it should be seen as one of several factors rather than the only one. There is no way to forecast an NFT's worth numerically, and some collectors may prefer an NFT's aesthetic appeal over its rarity. When investing in any digital collectables, you should always do your own research (DYOR) and ensure that you understand all of the hazards.

NFT Rarity FAQs

What is an NFT rarity?

NFT rarity rankings are a statistic that measures the distinctness of a non-fungible token's (NFT's) characteristics in comparison to other NFTs in the same collection.