NFT art

How do you value an NFT?

How on earth do you value an NFT? This is the burning question. Short answer – it’s more art than science. However, there is still some science to it. We will be discussing this in more depth in our coming blog, but for now, let’s look at a few attributes that tend to drive the demand for an NFT.

Let’s summarize some of the key features and attributes that drive the price of an NFT. Remember that some of these factors contribute to what we call tangible or utility value (i.e. ‘intrinsic value’), while the others contribute to what we call speculative (demand/belief driven).

  • Creators
  • Scarcity
  • Price history
  • Content
  • Marketing 
  • Blockchain of the collection

Remember that all of the above affects each collection by different magnitudes. Let’s take a section at a time.

NFT Collectibles
NFT art collectibles

Creators: Street cred matters

The creator’s profiles are arguably the most important driver of price, primarily in episodic or singular NFT projects. The credentials of the artists, their artworks, and their following will be scrutinized by the buyers before placing bids. For example, Beeple, a popular digital artist, made a collage of 5000 digital artwork that he had created over 13 years, which recently sold for $69 million. The reason behind the extraordinary valuation was his reputation.

Scarcity: Don’t produce too much

As we have discussed in our previous blog, NFTs carry value because they are scarce. But scarcity in this context means limits on the uniqueness of the associated content. This scarcity is only dictated by the promise and trust of a creator to make only a limited amount of a given collection of content, known as the release pace. If a project offers unlimited mints of an NFT, the individual NFT or the collection begins to rapidly lose exclusivity and loses value as a potential collectable. Moreover, even within a collection, scarcity remains valuable – items with more scarce features (i.e. rarity) tend to be more valuable.

Content: It can’t all be apes

Content of course while, deeply subjective, generally has to have originality, creativity, and at some level, aesthetics. Collections should also have a specific theme (like the Bored Apes collection). Moreover, newer NFT collections are offering gamification, like evolutions and events, to keep the users engaged. An emerging trend is have the NFT linked to a specific utility, either real world or metaverse related. For example, the Bored Ape owners have an exclusive members-only access to their annual meet up. This is an example of an NFT with an access utility. 

Marketing: Where’s the hype at?

It’s no surprise that marketing plays a key role in the participation of an NFT project. Marketing primarily drives the initial discoverability of a project – i.e. to gain the critical mass – after which the factors we discussed earlier come into play. Nevertheless, just because a  project has many social media followers, it doesn’t mean it’s successful. The quality of the NFT community (e.g. number of heavy hitters/‘whales’ ) matters more. Always keep in mind that NFTs are still young and appeal to a very niche audience, as such their marketing campaign should be highly targeted.

Price history: Look out for the manipulation! 

The previous owners play a key role in adding authenticity, brand value, and hype. If a high roller had owned your previous NFT, that immediately makes it a valuable collectible. As all transactions are publicly visible, there is an audit trail of the price action associated with an NFT. So if you know specific wallet addresses of famous people that are linked to certain projects, there is a significant chance that the price will be affected accordingly. Moreover, high transaction volumes for NFTs or their corresponding collection mean they are highly liquid. This also means they are easier to flip, which again is an attractive proposition. Finally, price momentum, i.e. the price trend, is also a key indicator of an NFTs appreciation potential. 

However, these indicators must be taken with caution. Price actions can be manipulated via ‘wash trading’, a mechanism by which NFT traders exchange the same NFT through multiple wallets owned by them in order to create the impression of price momentum and liquidity. According to AI NFT analysis firm Scour, 20% of NFTs are affected by wash trading on average. 

Blockchain: Exposure to the right user base

Finally, the blockchain on which your NFT is minted is also a significant contributor to the value primarily because of the volume of users associated with them. For example, despite Ethereum having very high transaction fees, the largest NFT marketplace, Opensea, resides on Ethereum. Marketplaces based on high volume chains naturally have exposure to a larger audience, and thus better discoverability and liquidity. Nevertheless, several newer chains are actively supporting marketplaces that are based on their chain (e.g. Solana) which may have their own benefits. The point here is that NFTS are much more likely to sell at a higher price on a chain with much more active users than on a lesser one.

In conclusion

In conclusion, all of the factors above combine to give rise to the communities that support NFT projects. As an NFT artist, you have to show a clear value proposition and a plan at the initiation. The plan should clearly ensure the scarcity of these NFTs and have unique or original content. The artists should continue to engage with the community post the launch. If a collection does all of the above correctly, it can attract disproportionate attention. According to research by PubMed Central, very high volume traders (aka ‘whales’) tend to trade within single collections, making at least 73% of their transactions in that one collection.


[1] Nadini, M., Alessandretti, L., Di Giacinto, F., Martino, M., Aiello, L. M., & Baronchelli, A. (2021). Mapping the NFT revolution: market trends, trade networks, and visual features. Scientific reports11(1), 20902.