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It’s no secret that pricing NFTs is really difficult, so we built an NFT appraisal product powered by peer prediction. https://medium.com/upshothq/hot-or-not-for-nfts-d5d221f2a452
NFTs are non-fungible and low-velocity. That means the open market has a tough time pricing them. How am I supposed to know how much an NFT is worth if its only changed hands once over the past 6 months?
This lack of an efficient price-discovery mechanism hurts UX and stands in the way of a number of exciting areas for experimentation with NFTs.
Right now, there’s a lot of cool work being done to try to solve this problem with market mechanisms (e.g. @NFTX). While a big improvement, market mechanisms still fall short sometimes. We’re taking a slightly different approach in our solution.
To solve the problem, we started by looking for how other low-velocity assets are priced. The two best examples of these are real estate and physical art.
Both of these asset types rely heavily on appraisals in discovering their value. Appraisals let us query experts’ opinions regarding an asset’s worth.
However, appraisals rely heavily on trust, the appraiser’s reputation, and their desire to have a job tomorrow. We need additional incentives in place to to trust the quality of an appraisal in a decentralized, pseudonymous setting.
Luckily, peer prediction solves this exact problem. It considers the structure of information to identify and incentivize honest answers to subjective questions.
UpshotOne Alpha groups NFTs into groups and allows different ‘experts’ to weigh in on different NFTs’ values. Experts’ answers are regularly compared against each other and scored using the DMI-Mechanism.
The results of these scoring rounds determine how honest an expert was, their reward, and an estimate of an NFT’s value -- think of it as a “Zestimate” for any NFT.
With reliable price estimates, we’ll see UX improvements across the board, new users entering the space, and a number of new, powerful NFT products being created.
This product is still in an alpha stage - there’s much more to improve. We’ll open it up to a small set of appraisers in the new year, opening it up more publicly shortly after.
If you’d like to get involved or be part of this initial testing phase, don’t hesitate to reach out.
If you’d like to get involved or be part of this initial testing phase, don’t hesitate to reach out.
