The digital asset marketplace announced on Twitter that will launch OpenRarity, a community-driven, open-source rarity calculation tool in collaboration with Curio Tools, icy.tools, and Proof Collective.
NFTs derive their value from a few different parameters, such as hype, chain security, and rarity. OpenSea defines rarity as “the mathematical scarcity of attributes.” Hence, the rarer an NFT or an attribute is, the more valuable it will be based on a financial supply and demand model.
OpenRarity will reportedly use a novel model for calculating the rarity of NFTs and traits to form a new standard for NFT valuation.
OpenSea stated that the official OpenRarity launch will take place sometime next week.
Problems with current rarity models
When doing research into the topic of scarcity-driven value, OpenSea reports finding three significant issues when it comes to rarity. OpenSea said that the rarity rankings currently on the market are generated by closed source code, allowing tool providers to often charge creators for rarity rankings. Because of the current set-up, OpenRarity states that large-budget projects are at an unfair advantage.
OpenRarity expresses that the current concept of a rarity when it comes to NFTs is blurred with factors other than scarcity. The project tells that the mathematical concept of scarcity of attributes is conflated with market value and creator tiers into one “rarity” label. The three concepts need to be separated from one another to reportedly provide accurate data on the actual rarity of an NFT or NFT attribute.
A mathematical solution to ranking
To solve the reported issues, OpenRarity introduces a new methodology for a new mathematically-based rarity ranking algorithm that will be open source. The transparency of the project will reportedly create a level-playing field for smaller budget projects needing to value NFTs.
OpenRarity forgoes the commonly adopted function of a rarity score based on the sum of the probability of each trait normalized by category distribution. The new ranking algorithm that OpenRarity will utilize is based on Information Content, a mathematical concept already being used to solve problems involving something being scarce.
Developers will be able to access OpenRarity scores and rankings through an API with the OpenRarity beta code library, which is now available to download.