A rather odd phenomenon happened over the weekend. Three Arrow Capital have now become the latest victim of NFTs devaluation. Their NFTs fund Starry Night Capital, was reported to be valued at $3.7 million as at Tuesday. This statistic was reported by DappRadar.
NFTs community on twitter did not like this figure. Many of them believe that the NFTs collection is greatly undervalued. They believe that these NFTs should be worth a lot more.
Majority of responses received were furious ones. The feedback to the article poured in very fast on Friday last week. The Twitter NFTs community was buzzing when they figured out that the fund is now worth less than $5million.

Blame The NFTs Valuing Tools!
Like many in the industry who probably do not understand the yardstick for valuing these funds, they will play the blame game. Blame was put on the DappRadar valuation tool which was only using the floor price of the NFTs. They were using the lowest price possible to buy into the project.
DappRader has now come to state that its tool uses a machine-learning algorithm. This algorithm helps them to determine the market prices based on current market conditions.
A DappRadar spokesperson stated clearly in an interview what their algorithm is all about. In his very words “Our algorithm calculates what is the price of an NFT, which is consistent with the historical sales data. It is not precisely predicting, but finding a price that makes sense for the current market conditions. This methodology allows the investor to evaluate how good the trade price is, whilst also assessing the importance of the sale within the collection’s market.”
Sadly, tools that only use floor prices for the collection, will end up messing things up. These tools will end up valuing the wallet at an even lower price. For example, Value.app which mainly tracks the floor prices has now put the wallet’s value at around $1.6 million.
Overvalued At Another End
At a different end, the wallet is valued even higher. NonFungible.com has now valued the wallet at about $19.7 million. However, the figure uses the USD price at the date of the sale. It was stated by the head of contents. NonFungible.com, Maxime Laglasse.
Consequently, if an NFT is purchased for $750 ETH in late October, when one ETH was equal to $4,000, nothing changes. NonFungible.com suggests that the NFT purchased is still worth $3 million even though those 750 ETHs are now currently worth just $867,770.
“An art asset bought for $3 million months ago can’t be devalued because the ETH/USD price lost 50-60%,” Laglasse said. “Only an NFT sale can make the price move in a way or another. That’s up to the last buyer to sell or not his asset to make this price move.”
The problems with that argument are that NFT sales are denominated in ether and million-dollar JPEGs are a product of the peak decadence of the bull market. You can’t maintain that an NFT is still worth the last price it was paid for in ether when that ether buys a lot fewer dollars now than it did last year.
DeepNFTValue’s Method Of Valuing NFTs
DeepNFTValue, a project from CryptoPunk collection, prices NFTs a little differently. They make use of an artificial intelligence-based pricing algorithm to determine a CryptoPunk’s NFT value. They compare this result to the asking price and time on the market. This keeps “valuing” current, unproblematic and up-to-date.