Anno 2022 the NFT space is expanding massively and projects are being built in a rapid tempo. Most of the NFT collections fail to succeed despite a 100 K marketing budget! For investors having thousands of art collections to choose from it is your job to do your research thoroughly. If you know where to look for you can find that blue chip NFT project in an early stage and be ahead of the game. We developed a mnemonic “U PART of the V(olume)” concept to find a good NFT project in an early stage.
One of the key success drivers of a NFT project is the Utility behind it. No one is just buying a PNG file for 200 USD. Yes, this worked out for projects a few years ago, but that time is over now. An interesting story that recently came out is the first ‘Jack Dorsey’s First Tweet’ NFT what was bought for $ 2.9 mln, it was listed for $ 48 mln, but only got a highest bit of $ 277. Not surprising to me as there is no utility behind it. Don’t fall for these social influence traps as this happens frequently on a minor scale as well!
The better projects nowadays provide reason to HODL your NFT for future benefits. The benefits can vary from real life utilities in the form of an exclusive access membership, digital utilities in the form of earnings or play2earn concepts in gaming environments. You can evaluate the utility of NFT projects by analyzing the Roadmap or Whitepaper (if available). Another way to do so is just ask questions to the team and get a better feeling what the vision of the Founders are to retain a long term growth strategy.
Last year Metaverses like Decentraland and the Sandbox which are working towards a Play-2-Earn concept for NFT projects took a major sprint in market adoption. Gaming NFT are increasing in popularity as it solves a problem in the current gaming industry, which makes the tradability of game assets more accessible.
The upcoming metaverses in higher resolutions like NetVrk has a huge market potential for coming years, as these metaverses enable Virtual Reality (VR) environment and better user experiences. Projects like ‘Angre Ape Army’ in which floorprice increasing to 4 Ether is gaining popularity. Early NFT projects betting on these new metaverses is a trend which you definitely could consider investing in.
The best project are backed by an active community. Engagement is very important for long term growth of the projects. In order to evaluate the traction the projects get you can look at the following factors: • Social Presence on Twitter and engagement on tweets • Engaged online community on Discord
Obviously a good sign of traction is when key opinion leader (KOL) are entering the Project and buying NFT’s. Usually their community will follow these trading signals and projects becoming more attractive to a broader audience. Lately the so called “Alpha” channels are getting more popular, which are exclusive memberships in which people
Although the artwork determines not the success of a NFT project it is a very important factor. The design should be attractive and the more people can identify themselves with the character the better. Many investors use their own NFT as a Profile picture on Discord, Telegram or Twitter. For instance if other online users see your CryptoPunk as profile picture it gives you legendary status!
For evaluating the artwork you can look at who the designer is of the artwork. Usually before Mint date the team provides sneak peaks of the artwork (before reveal) in such you get a feeling how the collection will look like.
Related to the artwork the rarity strategy is another important factor of the collection. NFT collections are made with a generative art code in which a number of traits in layers are randomly assigned to create perfect good looking artwork. Some traits in the collection are more rare than others, and the value of the NFT is correlated with the % how often a Trait occurs in the collection. We call it the “Meta Data” of the artworks. The Meta Data is displayed on the open market places like Opensea.io but also on Raritysniper.com is very useful too to indicate how rare your NFT is.
It is very clever for you as an investor to get a feeling of how the collection is generated. The better project reveal a rarity table on their website so you get a feeling how many traits are in the collection. To get a varied NFT collection there should be at lease 250 Traits and at least 5 layers to get an attractive collection.
Another common mistatke in rarity strategy is that there are for instance 100 hand drawn NFT’s and the remaining 9.900 NFT’s are very similar in rarity. Most of the buyers will dump their NFT as they think they do not own a special NFT. This can decrease the floorprice and might have a major impact on volume after the collection is revealed. What many people don’t know is that the Bored Ape Yacht Club (BAYC) did a very nice job on this subject by creating theme characters. If you observe the collection very closely you see certain traits like a stuntman hat and a stuntman jacket, in which the combination makes it more rare than other NFT’s in the collection. An awesome concept which I haven’t seen a lot in other NFT collections.
One of the most important factors is possible the Team. Does the team have the expertise of fulfilling their roadmap and longterm vision? A diversified team is one of the main keydrivers to thrive on aspects like art, blockchain development, marketing, but also the legal aspects. Regarding laws & regulations this a tough job for NFT creators to comply with. You don’t want to be in that one project where the owners are vanished after the mint and website went down. Therefore you see the term ‘Doxxed’ recurring frequently in the NFT space. Who are the owners? Is there a company behind it? Are they registered in a chamber of commerce?
As an investor you should dive into this topic in such you recognize red flags in a early stage!
After the genesis collection is launched it is the job of the team to keep investing in the roadmap and marketing of the project. Visibility and Social Presence is a key factor to retain traction. Experienced investors look at the price action in trading markets, but also in NFT collections this is a useful tool. An increase in price volume is the first trading signal that the value of the NFT collection will surge in coming weeks. There are many tools online to check the trading volume, but also the open marketplace gives you a good idea of how price will develop. In order to signal price action in a early stage you can keep you eye open for: • Major Announcements like a free airdop for holders • Major partnership announcement consistent with the roadmap • Succeeding on Milestones in the roadmap • Social presence and traction of Key Opinion Leaders (KOL) in the market
The Bet Placer’s Club applies the mnemonic “U PART of the V(olume)” in their growth strategy and comes up with unique selling points which are new in the NFT marketplace. Feel free to contact the team in Discord to discuss your ideas and thoughts on any project with us.