5 Factors impacting the value of an NFT project
5 Factors impacting the value of an NFT project:
Rarity
Utility
Liquidity
Future Value
Ownership History
Rarity
This factor translates into how rare or scarce the specific NFT is. Great examples of rare NFTs are the first-of-its-kind artwork from various famous illustrators in the digital art industry.
- Utility
The utility value of any NFT is dependent on how that NFT can be used. Two major categories of NFTs have high utility value and these are tickets and game assets.
- Liquidity
Higher the liquidity, the higher the value of an NFT. Liquidity is the main reason why a token built on-chain should have a higher value than off-chain assets. Investors always prefer to invest in those NFTs that have high trading volumes because high liquidity reduces the risk of holding the NFTs.
- Future Value
The future value of the NFT is a product of two factors future cash flow and valuation. Although speculation is the main driver of valuation sometimes it also acts as the main driver behind price appreciation.
- Ownership History
In certain cases, the value of an NFT depends on the identity of the issuer and the previous stakeholders of that NFT. NFTs that have high ownership history value are often the work of famous artists or companies that have a strong brand presence.