Why use rarity checkers when buying NFTs?
Because they give you a massive advantage over regular investors.
NFT rarity tools give you key insights into the intrinsic value of NFTs you browse. Over time, NFTs with more rare traits tend to hold or increase their value better than their less-rare counterparts.
If done correctly, the use of these tools and investing can make you some serious cash in the NFT space.
If you’re not using one of these tools already to evaluate your NFT buys, you need to be.
Trying to profit in cryptocurrency can be painfully slow. The NFT space has been heating up and still has a long way to go to make it to the mainstream. This is good! This means we still have plenty of time to get in on the action and great collections early.
So why are NFT insiders using rarity tools to guide them in their investments? It’s simple.
The rarer the traits an NFT has, the higher price you can get for it when you sell.
But first, you’ve got to find that rare NFT on the cheap. How is this even possible?
NFT markets are highly inefficient. This means that price and value often do not correlate. Price is what you pay; value is what you get.
As the Warren Buffett saying goes, “whether it’s socks or stocks, I like to buy things on sale” – the same is true for NFTs. Get it on sale and you’ve got a fighting chance to make a profit.
What is NFT rarity?
“WTF is NFT rarity?” you might ask. It’s how scarce an item is relative to other items in the NFT collection. The things that make the NFT item scarce are its traits.
If an item has a lot of rare traits- you’ve got a rare NFT.
These tools assign rarity by either giving an item a ranking within the collection or assigning a raw rarity score or (most of the time) both. For instance, Rarity.Tools calculates rarity scores by dividing 1 by scarcity factors.
Why does NFT rarity make something more valuable? It’s basic supply and demand dynamics. Even if there’s a small demand for something rare, that thing is valuable.
Think about diamonds, Charizard Pokemon cards, and limited edition Ferraris- people want them, and they’re rare. Voila! They’re really valuable. People pay insane sums for these items.
rare things can fetch a lot of money
We’re here to capitalize on that insanity.
Before we get started, a warning: the vast majority of NFT collections out there will end up worthless (and I do mean zero). This is because the supply of NFT collections greatly outstrips demand. After all, NFTs are still a very niche space.
Platforms like OpenSea allow anyone including your next-door neighbor to make an NFT collection. So lots of collections are stupid and end up worthless. You’ve been warned!
But that doesn’t mean there aren’t some awesome freaking NFT collections out there with some underpriced pieces just waiting to be discovered!
Common rarity tool features
Most of these tools offer common functionality that helps seasoned NFT investors in their endless search for low prices and high value. They are as follows:
Price filtering- You probably have a good idea of how much you’re looking to invest in NFTs. You use price filters on these rarity tools to help you find NFTs within your price range. If you can’t afford it, looking at it is going to be a waste of time.
Rarity ranking- You use this key metric to find relative value. This ranks all NFTs in the collection from 1 to N, with 1 being the rarest and N (often 10,000) the least rare item. If you see an item with a better rank than other items but with a far lower price, you have a winner!
Token address- This is if you’re checking the value of a very specific NFT item. I use this on items I already own to get an idea of what I can sell them for.
Blockchain- You use this to filter for the NFT blockchain, the most common being Ethereum vs. Polygon. Many other blockchains have NFTs (Cardano, Avalanche, Klatyn, etc.) but 98%+ of collections are going to be on either Ethereum or Polygon.
Collection coverage– Not a feature, but it’s something you’ll need. Is the NFT collection you want even listed on the rarity tool? Not all tools cover all collections. Some tools are better than others for coverage. If one of the tools below doesn’t have the collection you’re looking for, try one of the others.
The best NFT rarity tools
There are only four letters of difference between Rarity Sniffer and Rarity Sniper- which is appropriate given the two tools offer similar functionality. Rarity Sniper is free. Rarity Sniper works by first choosing the collection you want to explore by entering the information into the search bar to the right. Then you’re able to set all the filters you’d like.
The way Rarity Sniper presents traits on the right side menu is particularly useful. It allows you to search for specific traits and see their occurrence in the collection. Below I filtered the headgear feature on Lazy Lions NFTs for ‘Wizard Hat’ and the tool displayed all items that have this trait ranked by rarity.
If you care about which traits your NFT has, this is super useful. Believe it or not, not all of us are in NFTs to just make money. It helps if you actually like the NFT you’re buying!
Rarity Sniper wins the award for best user interface/user experience (UI/UX). Being a product manager working in tech, I can appreciate a great UX when I see one.
Rarity Sniffer does have the nifty little “View on OpenSea” on the bottom of each NFT listed which links directly to that NFT. Rarity Sniffer also has a ‘Latest’ button on the top navbar that can help you catch big NFT collections early.
Rarity Sniffer’s other main advantage is that it appears to rank collections more quickly. Rarity Sniffer also has the upcoming feature that quickly lists newer collections. You can filter these projects for polygon too.
Rarity Sniffer also has nice filtering options on their NFT viewer including results per page, price filtering, and display of the contract address for that NFT collection. The rarity rank filter is especially good if you’re looking to find the best NFT within a specific price range. Let’s say you’re looking to spend around 1 ETH on an NFT- you could filter and find the rarest NFT for that amount.
Rarity.Tools is the original gangster when it comes to rarity checkers. If OpenSea is the OG trading platform, then RT is its checker equivalent.
Rarity.Tools runs a business model where NFT collection owners have to pay a hefty fee to RT to have their collection listed on RT’s site. A lot of collections you want to research just aren’t going to be listed on RT. The positive of this is that you’re only likely to see legit NFT collections on RT.
If the collection you’re looking at is on Rarity.Tools, you know it’s a collection that’s going to retain some value over time.
The site has a standard search bar in the top left to get you to the collection you want. To the left of the collection name you’ll see the OpenSea ranking by volume. The Ethereum figure underneath the collection name is the seven-day trading volume.
Like OpenSea, RT lists top collections based on trading volume. If you’re looking to flip NFTs quickly, trading volume is paramount. This is the ‘liquidity’ of the market. If you were to buy something- how quickly would you be able to sell it?
With cryptocurrency, markets are extremely liquid. It’s easy to instantly sell the amount of crypto you need to.
Not so with NFTs- it could be hours, days, weeks, or months before you actually get a sale on your NFT.
Rarity.Tools needs to be part of your NFT rarity-checking toolkit. I’d always recommend trying at least a trade or two with larger more popular collections like Lazy Lions if you can afford it. Don’t put any money into the NFT market that you aren’t willing to lose.
Are paid rarity tools worth it?
Tools like RankNFT.io make you pay an expensive monthly subscription fee. The added utility of this tool is that it has a browser plugin where you can go directly to OpenSea.io and browse collections and see rarity in the top right corner of the NFT.
Want to save money? Don’t bother with paid rarity tools. The same functionality can be achieved by keeping multiple tabs open on your browser/phone and checking NFTs based on their ID numbers with the tools listed above.
Other things to check in an NFT collection
There are a few other things you should look at besides the rarity of a specific item in a collection. These have to do with the collections themselves. Here they are:
- A strong social media following (Twitter)
- A large and active discord community
- A solid NFT roadmap
There are sooooo many NFT collections out there that you absolutely have to use these criteria to discriminate between collections.
For the social media following, look for collections that have tens of thousands of followers. Look for big discord channels with lots of activity.
Check out the project’s website and see if they have a good roadmap.
Many of these tools are doing the same thing and have the same features, although they may calculate rarity scores and rarity rank within the collection differently.
The important thing isn’t which tool you use, it’s that you’re using a tool and valuing rarity versus actual price.
This evaluation process will help your NFTs hold or increase their value. It will give you a massive advantage over NFT investors who aren’t doing the same (and most of them are not doing this!)
This is a key differentiator between NFT investing and crypto investing- with NFT investing there’s a little more of an art to finding a piece that has value. Cryptocurrency investing is largely just looking at projects. With NFT investing, you get to look at all the variances within a collection. The experience can be fun and enriching (personally and financially).
As always- stay safe on your investing journey, and think long and hard before making any type of investment. It’s a jungle out there- and remember not to stress too much and have fun and learn as much as you can!