# UNIC META-511 Session 6-1: Key Considerations in the NFT Space By [Semui](https://paragraph.com/@semui-2) · 2023-07-15 --- **Session 6-1**: This article is a thread originally posted on Twitter (linked [here](https://twitter.com/iamsemui/status/1606245602576039936?s=61&t=Fg8O8TxI-jEkPdxWQu4RvQ)) summarizing study notes from the Fall 2022 semester of the University of Nicosia’s online course, META-511: NFTs and the Metaverse. Course materials can be found at the UNIC META-511 github account [here](https://github.com/UniversityOfNicosia/META511MC-Course-Materials). The author is not affiliated with University of Nicosia or the META-511 faculty. * * * 1/ Summarizing my notes from session 6-1 of [@unicmetaverse](https://twitter.com/unicmetaverse) META-511 ✍️ In this session [@punk6529](https://twitter.com/punk6529/) walked through key concepts around NFTs; collectibles, aesthetics, rarity, and NFT-Fi If you are a philatelist (stamps) or numismatist (coins), you may already be familiar👀 * * * 2/ Sometimes people refer to collectables in a negative way, but to collect is a very human desire and is something many of us do irl. These can be stamps, trading cards, gemstones, beanie babies, even luxury handbags. Many physical collectibles have long term established value. * * * 3/ Rarity tends to be important in collecting things. For something to be deemed valuable, it must have limited supply, and price reflexivity itself factors into how rarity is perceived. 6529 reflects that a great deal of what drives collectibles may be, unconsciously, “status.” * * * 4/ As a collector, the intention behind obtaining an NFT may be to complete a set, to build a digital museum, or to enjoy a search for the perfect digital artifact. On a biological level, it may be akin to how birds collect shiny objects in their nests, to demonstrate prowess 🪺 * * * 5/ When the demand far outpaces supply of something, it creates a bubble, with people willing to pay a large amount for an item. Bubbles tend to be caused when companies (or other groups) try to capitalize on popular demand and increase supply, leading to a crash in price. * * * 6/ For something to sustainably hold value, it must be viewed as rare, it must be relevant to the values (or what is valued) in that era, and the supply must be well controlled. Birkin bags are a good example of a collectible that has stood the test of time. * * * 7/ Rarity matters when it comes to collectibles. A good example is how misprinted stamps or coins tend to be valued more, because they are rarer than those without defects. Rarity is important when there are well defined traits in a collection. * * * 8/ When traits in a collection are well defined, rarity is valued more than aesthetics. CryptoPunks tend to be priced higher with rarer traits (e.g. Aliens), or with more traits (e.g. the only 7 trait Punk). Aesthetics tend to matter more when it comes to 1 of 1 of x artwork. * * * 9/ The Tulip (Fidenza #313) is an example of an NFT that is not particularly rare based on traits. However, it is aesthetically rare and sought after because the end result of entropy during minting resulted in an output that looks like a tulip. ![Fidenza #313](https://storage.googleapis.com/papyrus_images/f24deec4a845c5bb6ed212e83d4954bc8f276d579ba1ecdeaee10e5bbcb9aa92.png) Fidenza #313 * * * 10/ NFTs are a very young asset class, and there are many experiments ongoing around composability. This means to make them usable in protocols such as those that enable collateralization or fractionalization. This enables NFT holders to “monetize” their NFTs by obtaining loans. * * * 11/ While it may be a quick way to obtain liquidity, you always run the risk of losing your NFT, as it is effectively depositing it in a pawn shop. While ETH lost can be rebought (because it is fungible), there may never be another opportunity to reacquire a particular NFT. * * * 12/ It is also difficult to setup market makers for NFT marketplaces if they need to pay royalties on every trade. To this end, some protocols (e.g. Forward) experiment by differentiating market makers and end-user participants. Enabling liquidity for NFT is a complex endeavor. * * * 13/ That’s it for session 6-1! I always find it interesting how NFT collections tend to bring out everyone’s unique tastes in aesthetics and color. My favorites tend to be the simpler collectibles with fewer traits 😃 The replay is available here 👇 [https://github.com/UniversityOfNicosia/META511MC-Course-Materials](https://github.com/UniversityOfNicosia/META511MC-Course-Materials) --- *Originally published on [Semui](https://paragraph.com/@semui-2/unic-meta-511-session-6-1-key-considerations-in-the-nft-space)*