How do you rate an NFT set, the team, and the community? Buying and selling NFTs, how do you make an informed choice?
Do you follow the NFT hypes or do you use common sense?
If you’re just getting started in the NFT space, the temptation is to blindly follow the hype.
Going along with a hype seems easier than doing good research.
If you see that NFTs are being sold for thousands of dollars, there is a great danger that you will enter unknowingly assuming that what you have purchased will also be a success.
But this is only rarely the case.
Don’t follow the crowd but make your own informed choices based on your own research.
DYOR (Do Your Own Research) is King!
In this article, I will give you the most important conditions to consider before you decide to get into an NFT project.
Ape-ing in, the big pitfall.
Before I go any further on this, let me explain what Ape-ing in means.
Ape-ing occurs when you bet too much on 1 horse and invest more than you can actually bear.
The NFT space is seen by many as a way to make quick and big profits.
Although this may indeed be the case, this approach is often counter-productive.
Betting everything on 1 set and expecting big returns within a few weeks is the same as going to the casino and putting your life savings on RED. In the casino, you still have a 50/50 chance of winning, when ape-ing into an NFT set you have a lot less chance than that…Don’t gamble, do proper research.
Like me, there are many people who say that a long-term vision is a key to success and the most important factor for success.
As an example I would like to cite the Mekaverse NFT set here.
At the end of last year, the NFT drop of this set caused a lot of attention and movement. Many new people in the space saw this as their possible breakthrough NFT.
Prior to the project’s reveal, the floor price had rocketed to just under 10 Eth.
However, just weeks later, that floor had collapsed like a house of cards to 1 Eth.
There was a lot of criticism surrounding the set which caused its value to plummet as quickly as it had risen.
Those who entered the peak with large investments lost tens of thousands of dollars in value.
The team behind the project made several million dollars and to this day also royalties from sales on the secondary market.
The collapse of Mekaverse isn’t just due to poor marketing or emotional buying.
This was truly fraud.
The insiders in the project had access to hidden metadata and snatched the mint money from the unsuspecting collectors.
Even the developers of this project were involved, a real shame!
This is a good reminder to always pay close attention to a project before getting into it.
It has taught many not to make impulsive decisions and to always ask yourself what a good project must meet.
It is interesting to note that it has also caused a shift in the market; so-called ‘high-profile’ projects are increasingly difficult to sell out, partly due to the oversaturated market.
Where previously many projects sold out in no time, this now only applies to the most unique and interesting projects.
Assessing an NFT collection
It is very easy to get caught up in the hype and fall victim to FOMO (fear of missing out) in the NFT space.
As described above, it can lead to irrational decisions and the disappearance of your hard-earned money.
Of course, the NFT market is very volatile and any investment is risky, but there are ways to assess the intentions of a project before stepping in.
Who makes up the Team?
It is important to know who makes up the Team.
Not infrequently, when a team is anonymous, they don’t share their identity with the community, nor are their intentions to stay involved in the long term.
This is not to mention how interesting a project may seem.
While there are real examples of successful projects with an anonymous team, transparent teams are more likely to get the support of the community.
Especially since back pulls and scams are increasingly penetrating the NFT space as well.
There are 3 forms of identity:
- Completely anonymous – no Twitter account no personal background
- Semi-transparent – Twitter account known with no personal background
- 100% Transparent – twitter account and personal background visible (also called a doxxed NFT team)
You could even make a small checklist for yourself that you use when you will investigate the team.
- How long has the Team been visible on Twitter?
- Is there meaningful interaction with the community
- Are other projects in the space supported?
- Who has worked with before and is there experience with launching projects?
- Is the team supported by other creators in the NFT space?
- Are there links to previous projects and experiences?
Knowing exactly who is behind the Team makes you convinced of the project and gives you the assurance that it is a project for the longer term.
Who is in the community, and do they stand behind the project?
Suppose you dive into the Discord of a project and you are immediately confronted with terms such as when Lambo? ‘drive the price up’ and ‘lets pump the floor’.
Then alarm bells should go off right away.
These are indisputable proofs of an ‘artificial’ community.
This probably means that many who invest in the project are only doing so to quickly ‘flip’ and line their pockets.
This is of course never an ideal community from an investment perspective.
Never trust only numbers of community members, half can consist of so-called bots.
If the project has a Whitelist, it often happens that members create multiple accounts to get a spot on it.
It is much more important to look at the content of the interaction between the community and the team.
- Are the community members friendly to each other?
- Are they excited about the future of the project?
- Are questions asked and do you want to learn more?
- Do the members lift each other up and support others?
- Is there constant interaction between Team and Community?
- Are new members of the community welcome?
These are just a handful of factors that are important to consider when looking at a community.
They are all signs of organic growth and more often than not will lead to something meaningful.
It may be a long road, but organic growth ultimately beats the ‘fast’ projects.
True success is not built in a few days, it takes time!
Is it an original roadmap or does it look more like a copycat?
Nowadays, roadmaps are less of a guiding factor in the decision to get into a project.
Just last year, the roadmap was an important component that served as a compass for steering the project and the community in the right direction.
Today, roadmaps are much less authentic because many sets copy those of predecessors, simply because that’s how they should be.
Many of the promises made in the roadmap can be meaningful, such as giving to charities, airdrops to holders, and competitions.
This will certainly be valuable for projects that have the right intention.
But if projects only do this to measure and mirror themselves, such a roadmap will serve much less of a meaningful purpose.
Some of the most successful projects, like CrypToadz, don’t offer a roadmap at all.
Supergremplin created a collection of 10,000 pieces and the community created the value.
Although roadmaps were the benchmark for a while, they are no longer a prerequisite for success.
Of course, you can’t say that roadmaps no longer serve any purpose, they still are.
Roadmaps help set the vision and future of a project which is essential when making your choice to invest.
But it’s much more the authenticity that matters!
Responding to the Market
How do the team and community react to the market environment?
It is very likely that the floor price in the NFT space will fluctuate, just unavoidably. What is important is how this is responded to.
The most successful projects will have the floor price as a point of discussion on the daily agenda, what matters is how deep those discussions go.
Are they completely fixated on the floor price, do they spread FUD (fear, uncertainty, doubt) when prices plummet, and do they encourage the Hodling of NFTs?
Or do they embrace the market, keep building the project and assure the holders that it is a long-term project?
The latter are the signals you need to pick up.
Successful projects will continue to build even in a bad market, indicating that they care about the long term.
The longer you spend in the NFT space, you will eventually make your own checklist that will help you move forward.
As long as you always take the right steps and do your own research thoroughly.
You learn to pick up on those signals that distinguish successful projects from bad ones. This way you will also make a profit by buying and selling NFTs.