Updating our Valuations

As we collect more data and become more familiar with the Sorare market and the needs of our customers, we want to make sure to keep improving and updating our valuations algorithms. It's important for us to be transparent around these changes as they will have an affect on the number you see in your tax reports.

We have already pushed this update, so you can see the effects yourself.

Valuations 2.0 Recap

A few months ago we the 2.0 upgrade to our valuations saw us implement the following two things:

• We added an outlier detection mechanism. Outliers matter because they can significantly distort a card’s price

• We switched to using an exponential moving average (EMA) for valuing cards. The EMA will always converge to the last price sold over time and will quickly react to changes

Valuations 2.5 Changes

A challenge that we had with our previous algorithm was that all the calculations were done in Ethereum. We then took the Ethereum value we calculated on a given date and converted it into your currency (EUR, USD, etc.). This method meant that for cards with low liquidity, the valuation would converge on the last sale price in ETH and stay that way, potentially for long periods of times. You can see an example below for Cesinha.

The blue dashed line shows you the valuation in ETH, the red dashed line shows you the valuation in FIAT. The fluctuations in the ETH/USD price cause the USD valuation to swing wildly (for example from 40k to 80k between March '21 and April '21).

The change that we decided to implement is to base the valuations on USD prices itself rather than on conversion from ETH to USD. As you can see, this leads to much smoother valuations and is (in our opinion) more appropriate for tax purposes and valuations in general since a lot of users (and tax offices) look at prices from a Fiat perspective.

The yellow dashed line shows you the new valuation in USD/ Now you can see that the valuations in USD are held over time.

Limitations

While we believe this approach to be a significant improvement, there are still some limitations with it:

• We still don't know how valuations change if there is no liquidity in the market for certain cards. We have some ideas on how to correct this and will probably roll out some changes soon. If you want to contribute, feel free to reach out

• The FIAT valuations are now based on USD. If your currency is not USD, you will still experience some fluctuation since your currency might appreciate or devalue against the US Dollar (such as the Euro in recent times).