An Advanced Pricing Mechanism for Nonfungible Tokens (NFTs) Based on Rarity and Market Dynamics

The nonfungible tokens (NFTs) are unique cryptocurrencies that exist on a blockchain and cannot be replicated. However, today's NFT market lacks a sensible pricing framework, which causes NFT price fluctuations to interfere with the investment market. The purpose of this research is to build a dynamic pricing mechanism for NFT based on NFT features, validate the improvement of factor analysis on the pricing model, and integrate the rarity-based model with market factors in an online market. We presented and implemented a prototype pricing algorithm through a designed NFT market. This implementation shows that this advanced pricing mechanism could be used in a real-world pricing scenario and could provide a reasonable price change when market factors change. Furthermore, the experimental results demonstrated that the rarity scores of the features and market factors can potentially induce price fluctuations within the range of negative 0.4 to positive 0.4.