Non-fungible tokens (NFTs) have taken the world by storm. In 2021, the NFT market did $25 billion in sales and NFT, and non-fungible tokens, was the most searched word of the year.
The meteoric rise of NFTs has made many people curious about the nascent technology, from individuals to big businesses. In fact, it seems like nearly every day another well-known brand or company enters the NFT space, and celebrities are buying into NFT collections and releasing their own projects left and right.
But for people interested in purchasing NFTs or creating their own exclusive NFT project, understanding what makes them valuable is critical.
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According to the founder of Rarity Sniper, though there are several pillars needed for a successful NFT project, rarity is the most important.
We’ll examine rarity in NFTs, how it works and why it’s important, and we’ll look at some tools that are available to help you determine an NFT’s rarity, such as Rarity Sniper. Lastly, we’ll conclude with some tips about how you can create the best rarity ranking for your own NFT collection or project.
What is Rarity Sniper?
For collectors, understanding rarity and how it affects an NFTs price is critical before making a purchase.
The rarity of an NFT is calculated based on the rarity of different traits that it’s compiled of.
Rarity Sniper also covers NFT news, staying on top of the latest trends and happenings in the NFT, cryptocurrency, Web 3.0 and metaverse spaces. In the future, the company aspires to become the most trusted media brand in NFTs as well as create an open rarity standard for the NFT space.
Why Is NFTs Rarity Important?
If you’ve ever wondered why certain NFTs sell for hundreds of thousands or millions of dollars while others from the same collection go for much less—the answer is rarity.
Rarity refers to how uncommon an NFT is within a collection, and it is a critical element to making generative NFT collections not only exciting for collectors but also valuable.
The rarity of an NFT is determined by the frequency in which the traits and characteristics that comprise it appear within the given collection.
Of course, rarity has always played a critical role in the value of collectibles and other types of art, which the creators of CryptoPunks understood when they created a collection that would serve as a blueprint for generative NFT collections to come.
It’s also worth noting that there will never be more than 10,000 original CryptoPunk NFTs in existence. This means that each CryptoPunk NFT is a rare digital asset in itself, regardless of its rarity ranking.
In this sense, CrytpoPunks and most of the derivative NFT projects, are layering rarity on rarity to create value—the limited number of NFTs in a collection + the rarity ranking of each NFT within that collection.
What is a NFT Rarity Score?
When Rarity Sniper tools determine an NFT’s rarity ranking within a collection, a rarity score is given.
Using the example above, if we take the trait category Headwear and fill it with 7 unique traits, those traits might consist of a top hat, baseball cap, beanie, fedora, sombrero, cowboy hat, and no headwear. Perhaps the “no headwear” trait appears only 200 times in a 10,000-piece collection, which would make it a rare trait and more valuable than a trait that appears 1,000 times in the collection.
It is recommended that you have at least 150 unique traits in your NFT collection
In the Bored Ape Yacht Collection, for example, the Dagger Mouth trait appears only 49 times out of 10,000 Apes, making its rarity rank .49%. Ultra-rare traits create scarcity within NFT collections and add excitement for collectors.
For profile picture (PFP) NFTs, traits might consist of a face, mouth, eyes, headwear, background, accessories, and whatever other characteristics make up the NFT.
In the popular NFT collection Bored Ape Yacht Club, for example, the Bored Unshaven Pizza Mouth only appears 26 times out of 10,000 in the collection. This makes each NFT that contains the trait extremely rare since only .26% of the NFTs in the collection have the Unshaven Pizza Mouth.
Unsurprisingly, six out of the top 20 most rare Bored Apes contain this trait.
Even less surprisingly, since NFTs that possess unique traits or a combination of unique traits have higher rarity rankings, the Bored Apes that have an Unshaven Pizza Mouth are extremely valuable.
When you don’t know how rare your NFT ranks within a collection it is nearly impossible to accurately determine its value.
One-of-one legendary traits are even rarer than rare traits. One of the best examples of legendary traits comes from the popular Cool Cats NFT collection, which contains several Cool Cats that are hand-drawn and do not have any computer-generated traits at all.
Another thing to think about when creating a generative NFT collection is what type of media you plan to use.
Deciding whether you’re going to use animation, images, video, or audio with your NFT project is critical.
Rarity Sniper recommends that using a mix of media is ideal for a successful generative art NFT project.
And collectors who get lucky enough to mint a rare NFT from a successful collection can be rewarded.
How Does Rarity Affect NFT Prices?
By looking at sales from a classic NFT collection such as CryptoPunks, we can see how rarity affects the value of each NFT. Listed below are some of the top and bottom sales of CryptoPunks over in 2021-2022:
- Punk 5822.
Sale Price: $23.7 million. Rarity rank: 17th. Special traits: 1/9 Alien Punk. 1/333 Punks with only 1 attribute. Sale date: Feb. 12, 2022.
- Punk 7804. Sale Price: $7.57 million.
Rarity rank: 11th. Special traits: 1/9 Alien Punk. 1/254 with cap forward. Sale date: March 11, 2021.
As you can see the two top-selling Punks are extremely rare within the collection.
Conversely, here are two examples of Punks that are more common:
- Punk 4778. Sale Price: $194,573. Rarity rank: 8538.
DolphinSwap DAPP Technical Analysis
DolphinSwap dApp is a crypto asset from the DeFi category built on the protocol. Now it’s ranked as #13 in general dApp rankings according to the user count, and #130 in the Gambling category, which gives you a good idea of how DolphinSwap dApp performs among its competitors.
By analyzing DolphinSwap dApp data in the last 30-day window, it’s evident that the dApp’s Balance is $19.8K, and the Volume is bullish with $3.7K.
DolphinSwap has generated 6.9K Transactions with a -16.18% drop in the 30-day period.
CryptoPunks transferred this idea to digital artwork and the NFT game was never the same.
There are 10,000 NFTs in the CryptoPunk collection and most of the Punks are humans; 3,840 Female and 6,039 Male. There are also 88 Zombies, 24 Apes, and nine Aliens.
Aside from each character type, there are 87 additional attributes. The rarer attributes include beanie (44 in the collection), and choker (48).
It is also rare for a CryptoPunk to have no attributes at all (8), or 7 attributes (only 1).
Unsurprisingly, Alien Punks and Punks with rare attributes like a beanie generally fetch higher prices than more common types and traits make up most of the collection.
By making each CryptoPunk NFT unique and some rarer than others, Larva Labs created a hierarchy within their collection and generated excitement among collectors.