When it comes to NFT, Gian Volpicelli, a senior editor at Wired say, “The idea of paying for the symbolic ownership of a digital image that lives somewhere on the web and can be captured on a screenshot or right-click-download, is so alien it seems either idiotic or ironic.” Is that true?
Factors that Drive an NFT’s Value
As we already know, non-fungible tokens (NFT) are unique and cannot be replaced by any other token.
Determining the precise value of an NFT is difficult since the asset class is relatively new. While tangible artworks like the Mona Lisa or physical collectibles like baseball player cards have defined values, investors looking at NFTs may have a hard time deciding whether a given asset or collectible is worth their money and whether they want or need it.
Sure, everyone can download a copy of “Everydays: The First 5000 Days” from the Internet with a simple click. And anyone can see pictures on the internet of the most expensive artworks, posters are sold in museums, but it’s the ownership that creates value.
With NFTS you have ownership written on the blockchain so that ownership is transparent for everyone to see. Even better, blockchains are also able to keep track in a secure, immutable way, of how a token originated and changed hands over time.
As NFTs make their way into a lot of industries in less than a year and reach high levels of valuation, three main factors have emerged for gauging their worth.
Utility
The utility of an NFT comes from its real application, in either physical or digital worlds. For example, some NFTs are collectibles like digital artwork, trading cards, or rare stickers. While some NFTs are more than just collectibles since they can be used in games, like virtual lands, spells, or characters. This characteristic of NFTs gives them immediate value, which accrues over time depending on the popularity of the underlying project. As the community of a decentralized game’s players grows, more of them will be willing to pay top dollar for a unique card.
Rarity
This factor translates literally into how rare and “hard-to-get” a specific NFT is. Good examples of rarity are the first-of-its-kind artwork from a famous creator in the digital arts industry or an NFT created by a celebrity. Another factor of rarity is the effect such an NFT would provide in, for example, a video game.
People are drawn to such NFTs because of their intrinsic value, where the owner of the NFT holds the blockchain proof of ownership. This gives a sense of distinction and determines the premium value of an NFT.
Solid examples of the unique effect in the crypto industry are the first CryptoKitties, Everydays — The First 5000 Days by Beeple, and others.
Future Value and Liquidity Premium
The future value of an NFT is derived both from valuation changes and future cash flow. Valuation is driven by speculation and can sometimes be the main driver behind price appreciation. Some may argue price movement that is driven by valuation is negative to NFTs, but speculation is human nature and is a non-trivial part of the current financial system. If the right balance is made, developers can increase NFT value and attract new users. Valuation is driven by scarcity of supply and speculation. Speculation can be guided by including price performance charts of NFT items or by highlighting NFTs that appreciate.
Future cash flow is the interest or royalties earned by the original owner of the NFT. NFTs are assets and can be leased and collateralized to create additional cash flow.
High liquidity translates to a higher value of NFT. The liquidity premium is the primary reason why tokens that are created on-chain should have a higher value than off-chain assets. Investors prefer to invest in NFT categories that have a high trading volume because liquidity lowers the risk of holding the NFTs. In an extreme scenario where the NFT loses its utility value after the associated platform is closed, a highly liquid NFTs still has value as long as people are willing to buy and sell.
MetaPoo NFT Intrinsic Value
Value is largely a matter of personal perception, but intrinsic value does obey several market rules.
MetaPoo is the first NFT-integrated DeFi protocol on Solana, giving our NFT intrinsic value tied heavily with every product in our ecosystem. MetaPoo is one of the first DeFi Protocols that tightly integrates NFT into its products.
MetaPoo Development Team is aware that, despite the recent exponential rise of NFTs, most NFTs remain just collectibles with no other tangible utility. Many collectors spend hundreds of thousands of dollars on these NFTs just to have them sit in their wallets idle. This is mostly due to the absence of Intrinsic Value in existing NFTs.
In order to increase the intrinsic value of NFTs, we have given specific features to MetaPoo’s NFTs that allow holders to receive extra benefits just by holding or staking their NFTs. Additional functions will also be added to the next generation of MetaPoo NFTs soon.
Poo Series is our first generation in the series of unique feature NFTs. Holders of Poo Series NFT can stake the NFT together with LP tokens, granting them a bonus $MTP reward alongside the normal staked reward.
Each Poo Series NFT will have its own set of performance metrics, such as percent boost and pool eligibility.
With NFTs from Poo Series, users will achieve a much higher APR% on their liquidity positions. Users just need to stake them together with LP and single asset tokens to receive boosted rewards.
Also, MetaPoo’s products include:
- Auto Market Maker DEX, built on Solana.
- NFTs, NFTs Marketplace, and NFTs Auction House.
- Auto-compounding staking pools.
- DAO Mechanism for token holders.
- Decentralized Launchpad, which assists anybody who wants to use MetaPoo’s platform for crowd-funding.
Follow our Social for the latest news!
- Official Twitter: https://twitter.com/Metapoo_Solana
- Telegram Announcement Channel: https://t.me/metapooann
- Telegram Chat Group: https://t.me/meta_poo
