How to Calculate the Rarity of an NFT

NFTs have become widely accepted projects in the blockchain sphere.

With over $10.5 billion Total Market cap–according to CoinMarketCap–the trend has been projected to grow to over $147 billion by 2026.

Furthermore, “NFT” became the Collins Dictionary word of the year in 2021. All of these validate that the adoption will be more hysteric in the years to come.

An NFT–Non-fungible token–is a rare blockchain-based token that can’t be
interchanged with another of its kind due to its differential properties.

A creator can mint 5 NFTs on a whim; this doesn’t mean both five are the same and can be interchanged. 

No!

All the five collections might look alike and got minted together, but they all have distinct properties that distinguish them from one another.

What is NFT Rarity?

Have you ever wondered why some NFTs are worth millions of Dollars and some worthless?

Do you also think the marketplace determines the value of NFT listed on it or the blockchain it was minted on?

Many people had wrongly thought these, and many more are the drive behind NFTs’ rising value.

So what is the driving force behind NFTs’ value?

RARITY!

Since the word “rarity” is synonymous with scarcity or how rare a piece or object is, NFTs’ rarity means how rare or incomparable an NFT is, determining how valuable, such collectible will be.

Most collectors demand rare NFTs because the rarer a collectible is, the higher the value price.

This is why most NFTs’ enthusiasts always desire to know how rare an NFT is before acquiring it or how rare the NFTs in their collections is to determine how much they can list them on the marketplace.

So, How do We Calculate the Rarity of an NFT?

It is easy to determine the rarity of two separate NFTs from different collectors, for example, Okay Bears and Bored Ape Yacht Club. Both creators and collectibles are diverse when juxtaposed. You can discern
this seamlessly.

But, when it has to do with NFT collections that have a couple of hundred NFTs, the gross rarity of each NFT is determined by comparing the attributes or properties of each NFT in that collection with one another.

This gross rarity is determined either by looking for the rarest attributes or by rarity assessment via statistics. The essential consideration is always based on the gross features of NFTs, not a single attribute; this prompted Rarity Tools to develop the "rarity score" approach or method.

According to rarity tools,

“the total Rarity Score for an NFT is the sum of the Rarity Score of all of its trait values.

Attributes or traits considered are usually physical attributes like

clothes, earrings, fur, hat, spectacles, background, necklace, etc.

There are four different methods used to calculate the rarity of NFTs. For each of these methods, various factors were considered as a tool. When compared to one another, some methods were deemed inferior as they considered a particular trait leaving out others.

The methods used are:     

-Trait rarity model        
-Average/Mean trait rarity model        
-Statistical rarity model        
-Rarity score model

Trait Rarity Model

This ranking model examines the rarest trait of NFTs as a comparison tool. For example, let’s compare the following Apes:

From the above:

Ape #4317’s rarest trait is Short Mohawk which 3% have.

Ape #8520’s rarest trait is Prom dress which 1% have.

Ape #4688’s rarest trait is Stuntman Helmet which 2% have.

Using the “Trait Rarity model,” the order would be #8520, #4688, and #4317.

The limitation of this model is that it doesn’t consider the overall traits of NFTs; only the rarest trait is considered instead.

Average/Mean Trait Rarity Model

This model uses the mean or averaging method to calculate the rarity of NFTs. It considers all traits and uses the averaging method to determine a particular NFT trait before comparing NFTs.

So with this model, Ape#4317 has the rarest trait, followed by Ape #8520 and Ape #4688

The limitation of this model is that it doesn’t consider if an NFT has a very rare individual trait despite considering the gross rarity of every trait.

Statistical Rarity Model

This model also incorporates general rarity; however, it differs from the mean model in some ways. The overall rarity of an NFT is calculated by multiplying all of the traits of such NFT together.

Using the same NFTs above for example:

Ape #4317 = 13% * 9% * 5% * 5% * 3% * 7% = 0.000000061425%

Ape #8520 = 12% * 1% * 17% * 12% * 3% * 2% = 0.000000014688%

Ape #4688 = 13% * 8% * 12%* 2% * 16% = 0.0000039936%

So with this model, Ape #8520 has the rarest trait statistically followed by Ape #4317, then Ape #4688

Rarity Score Model

The rarity score is almost like the trait rarity model, but the rarity score is usually calculated fractionally, unlike trait rarity, which is generally in percentage. The rarity score model is one of the simplest and most reliable ways to rate how rare NFTs are. Most NFT sites employ it.

According to Rarity tools, the total rarity score of a particular NFT is the sum of the rarity score of all trait values in a specific NFT. 

Using the previous Apes as an example:

The higher the rarity score, the rarer the NFT is in this model. With that, Ape #4688 is the rarest, followed by Ape #8520 and Ape #4317.

Conclusion

As shown and proven above:

• Trait Rarity considers the rarest trait.   
• The Average trait and Statistical Rarity consider the gross traits in an
  NFT while not giving preponderance to the single rare trait as done for some models.   
• Rarity score scores NFTs by considering a single rare trait and gross
  traits in its calculation.

It is worthy to note that NFTs are valued differently based on the respective NFT community.

• CryptoPunks community gives priority to “attribute count” to rank NFTs
  as the rarest, which doesn’t count for other communities.
• Waifusion’s community prioritizes matching “clothing and style” to rank
  NFTs, which doesn’t count for other communities.

So each community has its preference for what to prioritize to rank NFTs as the rarest.

You might wonder why it takes so much trouble to determine the rarity of NFTs—knowing how rare a collectible is part of your due diligence. Its knowledge helps determine what to purchase and decide which piece will yield a higher ROI.

If you can’t undergo the diligence procedure yourself, some websites rank NFTs such as:

• Rarity tools
• Etherscan Token Tracker
• Rarity sniper
• Traitsniper
• HowRare   
•  Icy.tools 

Happy Reading!!!