DYNAMIC VALUE DETERMINATION AND PERFORMANCE BASED ROYALTY CALCULATION OF NON-FUNGIBLE TOKENS CREATED FOR AGRICULTURAL ASSETS

Smart overview of the Invention

The patent application outlines a method and system for determining the dynamic value and calculating performance-based royalties for non-fungible tokens (NFTs) linked to agricultural assets. This approach aims to provide a reliable and transparent system for ownership tracking, reducing biases in asset valuation, and enhancing royalty distribution. Unlike traditional valuation systems, this method employs a dynamic and performance-based approach, addressing biases related to location, time, and human judgment.

Technical Field

The invention is situated in the field of agricultural asset valuation, particularly focusing on NFTs created for these assets. It leverages blockchain technology to tokenize agricultural assets like cropland and livestock, offering unique identification and metadata that facilitate ownership transfer and trading. The method addresses challenges in current valuation systems by providing a structured and standardized approach to evaluating agricultural NFTs.

Challenges in Current Systems

Traditional valuation methods for agricultural assets often suffer from biases due to subjective evaluations by human valuators. These methods lack a continuous time-series data approach, which can lead to incomplete assessments. Furthermore, there is no standardized process for valuing agricultural land, often resulting in price biases based on location alone. The invention offers a comprehensive methodology that accounts for the dynamic nature of agricultural assets and their time-sensitive characteristics.

Proposed Methodology

The disclosed system involves an agricultural asset valuation server that processes requests for NFT valuations or royalty calculations. It dynamically generates an attribute tuple comprising geographical, economical, and sustainability attributes for each NFT. Scores are assigned to these attributes based on their relevance to the NFT type. The system integrates these scores to generate an overall score, which is then weighted according to the significance of each attribute type. This weighted sum determines the NFT's valuation.

Royalty Calculation

The method also includes a process for calculating performance-based royalties distributed among current and previous NFT owners. For cropland NFTs, royalties consider factors like ownership duration, productivity, and sustainable practices. Farm diary NFTs reward increases in gains due to unique practices, while farm art NFTs provide static royalties to the creator. This royalty structure incentivizes innovation and sustainable practices in agriculture.