How to Calculate the Value of NFT’s – Valuation Methods
Posted On January 19, 2020
Knowing how to valuate NFT Assets is an extremely important part of NFT Trading or Investing. Knowing when an asset is a ‘good deal’. You could easily over pay due to the nature of NFT’s and the fact that the market is so young, (little data).
There isn’t much knowledge out there and publicity and buzz can create FOMO to have people buying assets that are not worth what they may seem at the time.
The most important takeaway from this tutorial is,
“valuations are based on SOLD history/prices not LISTED prices.”
It’s easy to look at a Land on Decentraland like the below and think it’s ‘worth’ 150,000 MANA.
It’s better to look at what the land has historically sold for. Transaction history.
This image shows that the land above has sold around 5 times over the last year in the 40 – 60k MANA range.
This, and the fact that similar parcels, especially the one below that is also connected to the same main road, sold for 50,000 MANA 13 days ago.
So if you were interested in land connected to Vegas District Main road like the lands above, you should aim to get it in between 40 – 60,000 MANA. That’s a better view of what’s a ‘fair’ price or at least in a range where if you want to sell it, you shouldn’t lose money.
This is the same for Gods Unchained cards or any other NFT Project.
The below card is a promo card, there’s only around 60 of them out there in the wild.
Historically it’s sold for 10 – 18 Eth. Most recently around 16 – 18 Eth.
The cheapest listing currently is 27.675 Eth so if you were to buy it at this price, you’d be way overpaying based on historical data!
NFT Sales History
Sales History gives us the best indication as to what these assets are worth.
We can see certain cards like the below have gone up in value since they first started trading,
The volume bars show us that there is decent interest around the 0.1 Eth mark too. We just have to make sure it’s not just one buyer who’s pumped the price artificially to this. Can be done easily by checking OpenSea sales activity.
There are a few awesome tools out there that show us sales history on certain games.
nonfungible.com is perfect to search through sales history for specific games especially Decentraland.
If you monitor these sales daily, then in a week you’ll know exactly what prices to evaluate each land at whether it’s connected a road, a district, centre genesis plaza or on the far outskirts of the map
Other projects like Gods Unchained have sales history for each card like the images in the first section of this article.
You can simply browse through each category like ‘legendary’ or ‘epic’ and check the price on the bottom left of each card, (most recently traded price). Because Gods Unchained is different in that not every card is different, eg, there are at least 1,000’s of every card, the last traded price is ususally a good indicator of what you should expect to pay.
Websites like nonfungible cover many NFT projects and their transaction histories.
You can click into these and see sales history for each project. I would advise to check it daily for every transaction, (unless there’s 1,000’s of transactions like Gods Unchained where a better indicator is checking top card graphs on TokenTrove.
Valuations Take Time to Learn
No matter what NFT project you get into, make sure you explore the sales history first before putting your money in.
It took me a good 1-2 weeks to constantly monitor Decentraland prices, (every single sale), till I was comfortable buying ANY land if my buy conditions were met.
This space is not as simple as jumping in within a day. It’s extremely important to do your research so you’re not overpaying for your assets.