NFT GAMING COLLECTIBLES VALUATION METHODS, CHALLENGES, AND FUTURE DIRECTIONS

Abstract

The explosive popularity of blockchain-based gaming has brought non-fungible tokens (NFTs) into the fray, as tradable collectibles that connote not only monetary worth but an experience as well. In contrast to traditional in-game items, gaming NFTs exist in two domains of use, on-chain marketplaces and off-chain ecosystems, providing new twists to their valuation. This paper analyzes the approach, issues, and possible developments of the NFT gaming collectibles valuation by consolidating the knowledge in economics, data science, and digital games research. We then present a taxonomy of value drivers, gameplay utility, rarity, provenance, community effects, and tokenomics, to develop a conceptual background. We then compare the relative advantages and (*) disadvantages of popular valuation methods, including hedonic pricing models, repeat-sales indices, machine learning, and liquidity-adjusted approaches. We also identify structural issues of this nascent market, including wash trading, fragmentation of liquidity, evolving product utility, mutability of metadata, and regulatory uncertainty. Critical synthesis helps us see how valuation practices are susceptible to abuse on both sides: how we can abuse the market, but also how we can design the technical aspects of markets to cheat. Lastly, we discuss research directions in the form of standardized benchmarks, dynamic valuation frameworks, interoperability-adjusted models, and integrity checks. The paper will contribute to both the academic and practice worlds as it will provide a reproducible course of action by scholars, game development companies, investors, and marketplaces interested in designing open and sustainable valuation methods for the gaming NFTs.