My current thesis on the value of serial numbers in NBA Top Shot.

One of the more fascinating things about NBA Top Shot is the fact that different serial numbers are valued differently by the market. I mean really, who could’ve predicted there would be a lack of fungibility IN NON-FUNGIBLE TOKENS.i

But why? And by how much?

The why is quite interesting here. In the world of conventional sports collectibles, condition is king and condition is determined, or at least confirmed in a somewhat impartial manner, by grading. As with diamonds and law degrees, the grade’s source matters a great deal, so it is that specific grading houses like PSA (or GIA or Yale) wield disproportionately more weight in the marketplace, but since NFTs are all digital and therefore all equally perfect in terms of condition, and therefore indistinguishable to “graders,” what’s the proxy for evaluating the market value of an individual moment within an otherwise identical set? Quite simply: serial numbers. 

Air GordonDapper Labs knows this, or at least they’ve figured it out since their closed beta testing started way back in June 2020, and so the serial number is actually displayed when you view your moment in your showcase (ie. vitrine). So the whole world knows that your particular serial is, for example, #14/299.ii This seems to be a minor and even banal observation at first but it’s in fact a very different vector for value analysis compared to any other series of art and collectible. Outside of the NFT space, one wristwatch or one lithograph in a series is essentially identical in commercial value to all the others, with perhaps a really rather insignificant exception for #1 in a relatively large series – so it’s one of the biggest noodle-scramblers I’ve come across in a long time to see that the Top Shot market makes such a stink about serial numbers. It’s definitely something unique to this space and it’s something that would-be investors speculators degenerate gamblers must absolutely pay attention to. The future value of our portfolios depends on it.iii

Now if you’ve spent any time at all on the platform, you’ll have surely noticed that #1/Jersey serials are the most valuable, but it’s probably not obvious how much they matter at a glance, so let’s look at a few instructive approximations:

NBA Top Shot Serial Number Relative Value - March 2021 - updated2

In short, quite a lot! And exponentially moreso in the single-digits and lower double-digits. You can graph this line and it’ll look very much like a Zipf distribution (ie. hockey stick).

Of course, these relative proportions are just snapshots in time and will evolve over the months and years to come, especially for Series 2 with its “large” circulations, but even then it’s not just about serials! Players matter too (*cough*LeBron*cough*); the quality, excitement,iv and historical importance of the moment matter (*cough*Kobe*tribute*dunk*cough*); and the tier matters (eg. Common, Rare, Legendary, Ultimate).

So there are definitely a few things to try to piece together, especially if you haven’t been living and breathing professional basketball for the last decade. All in all, it’s been a hell of a ride these last two three sleepless weeks trying to make sense of all this, iterating my thesis hour-by-hour and day-by-day. I haven’t been this excited for a new technology in almost exactly 8 years! And we all know how that last one turned out…
___ ___ ___

  1. As you may have noticed, I’ve been trying to refute the value of NFTs in general since last November or so. In recent weeks, however, I’ve succumbed to the conclusion that NFTs are going to dominate the collectibles market and quite possibly the fine art market too. I’m less sentimental about losing the former to bits and bytes, but I’d be lying if I said I wouldn’t shed a tear for the physical artists out there who aren’t ready to pivot. Now who’s ready for the first $1 bn artwork at auction to be digital?
  2. Matt Levine has said it before but it bears repeating: everything is seating charts. And if this doesn’t prove that sitting closer to God (0) makes you more holy (rich), I’m not sure what does.
  3. I’ll be curious to see how Dapper Labs integrates serial numbers into their upcoming “Hard Court” arcade-style video game, which will apparently differentiate between tiers and allow players to “upgrade” their player’s skills with moments owned with rarer moments yielding a greater benefit. But how about lower serials? We’ll see in the next year or so!
  4. The “quality” and “excitement” of a moment, which is essentially just a 10-second video clip, ties back into Walter Benjamin’s observation about the power of film:

    The technological reproducibility of the artwork changes the relation of the masses to art. The extremely backward attitude toward a Picasso painting changes into a highly progressive reaction to a Chaplin film. The progressive attitude is characterized by an immediate, intimate fusion of pleasure-pleasure in seeing and experiencing-with an attitude of expert appraisal. Such a fusion is an important social index. As is clearly seen in the case of painting, the more reduced the social impact of an art form, the more widely criticism and enjoyment of it diverge in the public. The conventional is uncritically enjoyed, while the truly new is criticized with aversion. Not so in the cinema. The decisive reason for this is that more than in the cinema are the reactions of individuals, which together make up the massive reaction of the audience, determined by the imminent concentration of reactions into a mass. No sooner are these reactions manifest than they regulate one another

    Which is true of any theatre, whether broadway musical or sports game.

2 thoughts on “My current thesis on the value of serial numbers in NBA Top Shot.

  1. Pete D. says:

    By popular demand, the serial number table has been updated with more specific references.

  2. […] I blew a similarly sized hole in my wallet on NBA Top Shot despite an intense month of “research” and many a feverish night scanning the market for […]

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