CoinShares launches experimental AI Bot that tries to calculate fair price for an NFT
Europe-based digital asset management platform CoinShares released an experimental artificial intelligence (AI) bot on Thursday that may help traders determine a fair price for some non-fungible tokens (NFTs).
The experimental project, called CoinSharesNFTAI, aggregates various sets of data to provide a user with what it determines is a reasonable price for a rotating list of top NFT collections on OpenSea, the most popular NFT marketplace. To interact with the bot, grab the OpenSea link for a particular NFT of interest and tweet it to the bot. In turn, the fine will respond with an estimated value.
CoinDesk interacted with the bot using Doodle #8859, which last sold on October 18, 2021, for 4.5 ETH, or about $16,800 at the time. According to the fine, NFT has since weakened in value to 9.61 ETH, or about $12,234.
CoinShares says the bot runs an algorithm every week to calculate the prices of “the latest collections.” For the week of October 10-16, this includes blue chip projects such as CryptoPunks, Bored Ape Yacht Club, Clonex, Moonbirds, Doodles, Azuki, and 44 others. In the future, the bot will have permanent collections that it returns prizes to, but per on Thursday it listed no NFT projects as a “permanent collection”.
“Pricing NFTs is no easy task,” the company tweeted on Thursday. “Their value is fleeting and millions of them are available on the market, from established projects like Bored Ape Yacht Club to more obscure artists with no commercial history.”
According to the bot’s research paper, the algorithm builds on the hedonic model to construct a price index from “thousands of NFT transaction records.” Their data focuses on Ethereum NFTs and uses Opensea’s official API to download the properties and past sales of certain NFT collections.
On Thursday afternoon, a number of people had tweeted to the robot, and the robot spat out numbers as in some cases were much lower than the current best offers on OpenSea. More users expressed skepticism of the tool’s accuracy when the estimated value of their owned NFTs came back lower than expected.
“Your model sucks lmao,” tweeted Jack Hermes, aka systemic_blissif the GoblinTown NFT that he bought on July 8 for 2.6 ETH (about $3,170) was valued at 0.88 ETH, or about $1,124.48.
“The AI thought the value was below [current] floor price,” he told CoinDesk. “That was interesting, so I think that suggests the price that is being bought the fastest.”
A CoinShares spokesperson said that while NFT prices may seem mysterious, prices are driven by “many factors” such as hype, rarity and real-world usage.
“Some of these qualities are quantifiable – even hype is not as elusive a factor as it may seem,” the spokesperson said. “To evaluate the hype of a specific collection, we can count followers on social media platforms, as well as the volume and value of past transactions. The same applies to the rarity of a collection, by looking at the characteristics of the asset.”
“An NFT collector may rely on market research or follow sentiment on social media to get a sense of each NFT’s value, but they may not put a specific number behind it,” the spokesperson added. “Our model has access to the same data, but uses complex mathematical operations to make the best possible price prediction.”
Still, the spokesperson noted that the bot is still a “prototype” that uses relatively little data compared to the large number of possible calculations found in the NFT market.
“Use it to experiment with NFTs and your collection, and not as the sole data point to make buy and sell decisions,” the spokesperson said.
