The rarity factor of an NFT has a significant impact on its commercial viability. Successful builders design and develop their NFT projects by deploying a strong rarity strategy first. Likewise, top collectors are fully aware of how the rarity factor influences the NFT trade.

Rarity diversifies a project by providing various and varying degrees of traits and utilities and also helps create a demand for NFT projects. For additional information on how rarity affects the business prospects of NFTs, read our blog post on "super-rare" NFTs.

Understanding Rarity

The rarity of an NFT is a measure of its uniqueness. Rare NFTs in a collection have distinct characteristics that set them apart from the rest of the collection. There are several methods for calculating the rarity level of an NFT based on the unique elements present in a collection.

Calculating Rarity

There are four different ways to calculate the rarity of NFTs

• Trait-based Rarity
• Average Trait Rarity
• Statistical Rarity
• Scoring Rarity

Trait-based Rarity

NFTs are ranked by comparing the rarest trait of each NFT. It does not consider the overall rarity. Instead, it only takes into account the rarest trait.

Average Trait Rarity

The rarity of all traits found on the NFT is averaged. It considers the overall rarity of all of the traits. However, the super rare traits are undervalued because their rarity is diminished by the other traits in the NFT.

Statistical Rarity

The overall rarity of an NFT is determined by multiplying all the NFT traits.

Scoring Rarity

This is one of the most reliable methods for calculating the rarity of an NFT. In this method, the rarity score is calculated as a fraction. That is, the rarity score is the fraction of the number of NFTs with a given trait value divided by the total number of NFTs in the collection.

Why do we need a rarity strategy?

Rarity is an essential factor in determining the value of an NFT. It is directly correlated to the price and excitement of an NFT. It drives demand in an NFT project and ensures diversity in the project by providing varying levels of traits and utility. Therefore, creating a foolproof rarity strategy can add more excitement, and diversity and increase the value of your NFT project.  NFT projects would be incredibly dull if they lacked rarity.

NFT Traits

Understanding traits is critical for developing a successful rarity strategy. Traits determine whether an NFT is considered rare or not. A creator can devise a viable rarity strategy by combining the right traits.

Each NFT in a collection has characteristics of its own known as traits. There are different levels of a rarity since traits are not distributed uniformly across the collection. Traits are, to put it simply, graphic design elements that are placed one on top of the other to create an NFT. Background, body, attire, headgear, skin tone, ears, accessories, and many more traits are among the most typical NFT attributes.

Trait Groups

The Foundation of a collection is made up of trait groups. These are the highest grades of trait categories. Numerous sub-traits with various rarities can be found within the trait groups.

There are five trait groups, for example, in the Cool Cats collection. These are the body, face, hats, shirt, and tier.

Sub-trait Groups

The attributes that make up a character's final form in the NFT collection are called sub-traits. The rarity of the NFT is significantly impacted by sub-traits. The lower the number of sub-traits, the rarer it is. For example, in the Cool Cats collection, there are 252 sub-traits. Space is a sub-trait within the trait group “Body”. Astro Fishbowl is a sub-trait within the trait-group “Hats”.

Developing a rarity strategy

The factors to consider to develop a good strategy are:

• Trait categories
• Unique Traits/Sub-Traits
• Rare Traits
• Low Visual Impact Traits
• Legendary 1/1 Traits

Trait Categories

Trait categories are the foundation of the NFT project. Determining your trait groups/categories will help you structure your unique traits/sub-traits. The recommended number of trait groups is 7. Adding a good number of trait categories will make the NFT collection visually appealing and diverse.

Unique Traits/Sub-Traits

Sub-traits define the traits further and help bring uniqueness to the art. For instance, if Eyes are a trait category, then Heart Eyes, Laser Eyes, and Blue Eyes would be the sub-traits.

It is advisable to have a minimum of 150 sub-traits.

Rare Traits

Rare traits, as the name suggests, occur rarely throughout the collection. These are scarce in number and enhance the value of the NFT project. Ideally, the number of rare traits should not exceed 1 percent of the NFT collection’s quantity.

Low Visual Impact Traits

Unique traits should be visually noticeable in the collection. Buyers may not find an NFT collection appealing if the traits are too subtle and not visible. It is advised to avoid traits that have a minimal visual impact.

Legendary 1/1 Traits

These are limited edition traits that are extremely rare to find within the collection. Such traits add immense value to the collection. Instead of being generated, these features could be manually drawn, or they could be entirely distinct from the unique traits. The number of NFTs with legendary traits should be less than 10 in a collection.

Bored Ape Yacht Club’s rarity strategy - a Model Strategy

Now that we’ve understood how to develop a rarity strategy, let’s look at the popular NFT collection Bored Ape Yacht Club, and try to understand how the above-suggested strategy applies to the collection.

The Bored Ape Yacht Club has 10,000 items in the collection.

Trait Categories in BAYC

It has 7 trait groups. They are Background, Clothes, earrings, Eyes, Fur, Hat, and Mouth.

Sub-Traits/Unique Traits in BAYC

There are 168 sub-traits. Each sub-trait has a different frequency of occurrence in the collection. Some sub-traits are rarer than others. An earring is a trait group with 6 sub-traits/unique traits such as Silver Hoop, Silver Stud, Gold Hoop, Gold Stud, Diamond Stud, and Cross.

Rare Traits in BAYC

For instance, there are only 46 (0.46%, which is less than 1%) Solid Gold Fur, but 1229 Black Fur. This makes the Solid Gold Fur an ultra-rare trait. Hence, its rarity score is high too.

The collection does not contain any Low Visual Impact items. It does not have any Legendary 1/1 traits, but it boasts 25 ultra-rare traits each of which constitutes less than 1% of the collection.

After reviewing various aspects of rarity and its impact on NFT trade, it must be clear how critical it is to develop and implement a rarity strategy before the launch of an NFT project. We hope that as a builder, you find this information useful and will use it to your advantage.