Calculating NFT Redemption Value (NFTRV)

Toju Ometoruwa · November 3, 2023
Calculating NFT Redemption Value (NFTRV)

The following is an excerpt from the white paper How Web3 Unlocks New Forms of Engagement, Monetization & Discovery in Media & Entertainment”. To download the full PDF, click here.


  • Defining NFT Redemption Value (NFTRV): NFTRV is the value of NFT prizes allotted by brands for web3-enabled sweepstakes, aimed at gauging the worth of giveaways and measuring their impact. By setting a prize value range, brands can adjust the number of prizes based on factors like participant count and program impact to date, ensuring cost-effective sweepstake management.
  • Mathematical Framework for NFTRV: Brands can employ a formula, NFTRV = Number of Participants × Desired Impact Per Participant × Discount Factor, to mathematically determine their giveaway value. This formula takes into account the estimated participants, the achieved impact per participant, and a discount factor that modulates the total reward value relative to the program's overall impact.
  • Enhanced Transparency and Engagement in Web3: Implementing the NFTRV formula within a web3 framework allows for transparent engagement metrics, motivating higher collective participation for better rewards. Through smart contracts and blockchain, the process ensures fair reward distribution, aligning brand and audience goals, and fostering a mutually beneficial engagement ecosystem.

#What is NFTRV?

NFT redemption value or NFTRV is simply the value of tangible prizes that a brand gives away for their web3-enabled sweepstakes. One of the biggest challenges with any sweepstakes program is calculating what the value of a giveaway should be as well as measuring impact. One way to determine giveaway value is establish upfront a minimum and maximum value for prizes that you are willing to give away. 

For example, let’s say an artist is releasing a new album and plans to launch a 6 month campaign where they will give away concert tickets to boost album sales. Rather than anchoring themselves to a specific number of concert tickets to giveaway, the artist can establish a range between 10 and 50 tickets. 

The artist can then use other factors such as the number of sweepstake participants and the desired impact of the program to date (e.g the dollars earned, subscribers generated, etc) to determine exactly how many tickets they should give away.

Naturally, the more participants and the higher the total impact, the more tickets will be rewarded. Establishing a range for NFTRV allows brands to manage sweepstakes costs strategically and ensure that the appropriate amount of giveaways is met with desired impact.    

#Calculating NFTRV

In web3, these calculations can be seamlessly programmed into a brand's sweepstake plan and executed via smart contracts. Using the following formula, brands can determine various factors such as the value of their giveaways (NFTRV) based on desired impact, number of participants and a discount factor:

NFTRV = Number of Participants × Desired Impact Per Participant × Discount Factor


  • Number of Participants: Estimated or actual number of people participating in the giveaway.

  • Desired Impact Per Participant: Total dollars, subscribers or likes attained from program launch to date divided by number of participants.

  • Discount Factor: Factor that adjusts the total NFT rewards given away in a sweepstakes program based on its overall impact.

    • For instance, a 0.1 discount implies that the rewards value won't exceed 10% of the program's total impact. The appropriate discount depends on the impact metric; a 0.1 discount might work if impact is measured in dollars, while 0.01 or 0.001 might be better if impact is measured in likes or subscriptions. Keep in mind that this is an arbitrary number that may require various trials to determine an optimal discount factor.

These formulas can help brands take a more mathematical approach to determining how much to spend on giveaways for a sweepstakes program. Furthermore, by Integrating feedback loops into the NFTRV formula can allow brands to continuously collect data, analyze it, and refine the assumptions and parameters used in the formula. This iterative process can lead to more accurate estimations and better-aligned giveaway strategies over time.

#Boosting Collective Engagement Through Transparency

Utilizing the NFTRV formula in a web3 context enhances transparency, aligning brands and their audience on engagement levels required to unlock rewards. Brands can create reward tiers, escalating in value with increased participation and desired impact per participant. This transparent setup motivates fans to collectively boost NFTRV to attain higher-value rewards. With metrics tracked and stored on the blockchain, and high-value digital rewards secured in smart contracts, fans are assured that their promotional efforts for the brand will be duly rewarded.

Looking forward, we invite readers to delve deeper into the untapped potential of Web3 technologies and explore new forms of engagement and loyalty by downloading our comprehensive whitepaper:  How Web3 Unlocks New Forms of Engagement, Monetization & Discovery in Media & Entertainment

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