Introducing our new NBA Top Shot Valuation Model

Introducing our new NBA Top Shot Valuation Model

byDanny Adkins

2/11/2022

Nearly one year ago, we introduced Moment and account valuations to the NBA Top shot world. A lot has changed since March 2021, and today we’re updating our valuation model to reflect that. Starting today, we’ll be rolling out new valuations that will be more accurate across the board for NBA Top Shot Moments. 

The valuation model is used across our entire NBA Top Shot platform: from the marketplace page to the account page to the MomentHQ. This is a big change, and we’ve worked hard to make sure we do it right for the community. 

Our previous Top Shot valuation model

Our existing algorithm was based on two criteria: lowest listing of a Moment which was used as a baseline valuation, and the Moment’s serial number, some of which are more valuable than others (low serial numbers, jersey numbers, and “perfect” serials). 

However, one key shortcoming that we heard from the community was that lowest listings are often overinflated valuations, especially for illiquid Moments. 

For example, consider the LeBron Holo MMXX Moment. The lowest listing price is $500,000, yet the Moment hasn’t sold in nearly a year since one was purchased for $99,000 in February 2021. In this case, very little useful information is derived from the lowest listing price. The actual base value of the Moment is more easily derived from the sales history of the Moment and similar Moments. 

Furthermore, we’ve factored in more historical data for training. Our new model is more adaptive to market changes. It should reflect current market sentiment around pricing, which has changed significantly over the past year. 

The new Top Shot valuation model

Our new model is based on a mixture of architectures, but the premise is simple:

  1. We can determine the “base price” of a Moment is from historical sales moreso than from lowest listing.
  2. We can determine the importance of different serial numbers from historical sales.
  3. We can fill in pricing information when a Moment hasn’t transacted in a long time by comparing to other similar Moments. 

More accurate for low serials

Our new model can be expected to be more accurate for low serial number valuations. We prefer to avoid overestimation of any and all values, and previously, our low serial number valuations were too high relative to actual sale prices. 

Low serial numbers are weighted more accurately now, closer to actual market sentiment. As such, you will likely see the estimated value of lower serial Moments drop in the new model.

More accurate on Rare and Legendary Moments 

We are no longer prone to manipulation or inaccuracies for illiquid Moments where the lowest listing is not reflective of true market sentiment. This will reflect in more accurate valuations across Legendaries. You’ll find that some valuations are lower than the lowest listing; this is by design to more accurately reflect the actual price you could sell a Moment for on the market. 

Other findings

In the new model, jersey matches on low serials can contribute to even higher valuations, which we previously did not factor in. For example, LaMelo Ball’s jersey number is 2, and the new model places a premium on the #2 and jersey match combo that was previously not present. 

Overall, we find that the NBA Top Shot market cap remained very similar between the two models: $830 million before the update, and $827 million after the update. 

Help us improve the model

We want the model to be as accurate as possible for the Top Shot community. If you find any Moment valuations that seem off, please report them in our Discord and we’ll be sure to look into it.

You can also send us your comments or feedback on Twitter: @MomentRanks.