Since entering the NFT scene I have come across the term Blue Chip NFT many times. At first, I wondered what that term actually stands for.
Let me explain to you what a Blue Chip NFT means.
Most of the content you come across comes from the US. As always, the trend originates on the other side of the ocean and is spreading to Europe and the rest of the world.
We already know that NFTs are a form of digital art that is mainly traded through the OpenSea and Rarible marketplaces.
The art resides on a public network called the blockchain.
Trading in NFTs is mainly done using the cryptocurrency Ethereum.
So you need a ‘Wallet’ with Ethereum to be able to buy and sell NFTs.
So much for trading NFTs in ‘a nutshell’.
Blue Chips, what does that mean?
The term Blue Chips originally comes from the game of poker. In the game of poker, you have 3 types of chips to play with.
The white chip has the lowest value, the red chip is the second highest and the blue chip has the highest value.
The term Blue Chips has subsequently been adopted into the stock market or ‘stock market’.
This rewards those companies whose shares show the highest value over a longer period (years).
For example, you should think of companies such as Coca-Cola, Disney Productions, Apple, and IBM.
These types of companies are considered the Blue Chips in traditional finance or TradFi. Investing in blue chip stocks is also seen as low-risk investing.
Blue chips and NFTs
It is good to explain the origin of the term Blue Chips in the NFT world.
You cannot say 1 on 1 that Blue Chip NFTs have by definition proven their worth for years.
Not like in the stock market.
Simply because the NFT scene has only been around for such a short time.
So where in the stock market there are blue chips for shares that have proven their worth for a long time, we cannot say that in the NFT world.
At least not yet!
Simply because we have only really talked about NFTs since about 2017.
Crypto Punks, an NFT set that has been around since 2017, is seen as ‘one-off the original’ NFTs. To this day, this set has a very high and stable value, so a real Blue Chip NFT set.
But also the second most successful NFT project since April 2021, Bored Ape Yacht Club (BAYC), is also classified as Blue Chip NFT.
So you see that in the NFT scene age is not so much a determining factor for the status of the NFT.
So what do people mean when they talk about a Blue Chip NFT
When does an NFT become Blue Chip?
When one uses the term blue chip NFT, it generally means that the project will maintain a high value well into the future.
In other words, the NFT project will behave like a traditional blue-chip stock in the future.
Hundreds of projects have been launched since the inception of the NFTs. This makes it impossible to keep track of and analyze all projects.
There will always be NFT holders tweeting that this set is definitely going to be a Blue Chip.
But really, no one can look into the future and make such statements with certainty.
The vast majority of such statements will therefore absolutely not come true.
The big question for you and me is, therefore; how do I recognize a future Blue Chip NFT?
What makes an NFT a Blue Chip NFT?
If you want an absolute answer to this question, you’ve come to the wrong place. That answer simply does not exist.
NFTs are great fun to trade but also very risky!
It is extremely difficult to ‘predict’ which projects will retain their value over the longer term, several years.
In fact, it is difficult to estimate that in the short term, read days or weeks.
People spend an enormous amount of time researching projects and analyzing data.
A lot of time is also invested in buying and selling on marketplaces such as OpenSea and Rarible.
There are heated debates on Twitter about whether or not a Pudgy Penguin will outperform a Lazy Lion.
(Disclaimer: we have no idea!)
Everyone is looking for that one NFT stunner that will allow them to retire to a tropical beach, preferably in the metaverse!
For the time being, the term Blue Chip is only used by the market.
It is by no means an exact science or official status.
Hopefully, the NFT market will still be ‘Alive and Kicking’ in a few years’ time and we can see which sets have really proven themselves as blue chip in the longer term.
As a result, the concept of Blue Chip NFT may become a real status through analysis.
What we already know is what conditions an NFT ‘must’ meet before the market talks about a Blue Chip NFT.
Broadly speaking, we can name the following conditions:
- The art
- The artist and the ‘brand’
- The developers and added value or revenue model
- The floor price and the sales volume
- community or community
Blue Chip & Art
I will not start a discussion about “what is art” 😉
This topic has been debated at the highest level for decades, if not centuries. Art is very subjective.
That also applies to NFT Art, one form will appeal to you more than the other.
It’s a good rule of thumb to collect art that you enjoy, regardless of any value.
If you’re not sure about your taste in art, check out what other types of media you enjoy, from music to movies, games, or TV.
Ask yourself what you like about those particular pieces of culture and see if you can find art that makes you feel the same way.
Over time you will hopefully develop your own taste and collect art that you enjoy with confidence.
When it comes to the NFT scene it is good to look at which types of art already score well.
It’s all on a personal level, but markets are made up of individuals all working together.
That’s why we see trends in all forms of media from TV to movies, music, games, etc. NFTs are no exception and successful projects are immediately copied in style or structure.
So back to the question: what makes “blue chip” NFT art?
We can look at the projects that are already well on their way to blue chip status: CryptoPunks and Bored Ape Yacht Club.
Already in 2017, CryptoPunks started one of the few sets that can lay claim to the blue chip status.
Since CryptoPunks became popular, there have been countless derivative punk projects.
You can think of this as copy-cats, but the Punks became popular with a large audience, and then others jumped on the trend. When Punks were first launched, it wasn’t met with a positive response.
People even gave them away for free(!).
Compare it with great artists who first went for pennies along the smaller stages before they drew full stadiums.
Eventually, NFT collectors started collecting Punks because they thought they were cool and loved the art.
Since then, Punks’ pixel art style has taken over the NFT scene and pixel art projects feature prominently in the NFT Space.
CyberKongz and CrypToadz are good examples of other successful pixel projects.
Bored Ape Yacht Club (BAYC)
The Bored Ape Yacht Club has only been launched on the blockchain since April 2021.
It is already one of the most valuable NFT sets out there.
BAYC’s vector style has been “copied” into the Lazy Lions, Hall Of Fame Goat Lodge, Superlative Apes, and many others.
The projects listed here are all valuable and are already considered blue chips. Part of that calculation is based on how the market feels about the underlying art.
From a different angle, let’s take a look at abstract generative art like Tyler Hobbs’ Fidenza collection.
Each piece is an abstract work with the same elements. The bottom price on a Fidenza is 70 ETH at the time of writing.
Fidenza is not only considered a blue chip NFT, but even a luxury blue chip NFT.
This is largely due to the appreciation of the art, but also of the artist himself.
We will discuss the artists in more detail in the next section.
Looking at Fidenza, it’s easy to imagine this collection in a real art auction where high prices are offered by a select club of people.
The way the traditional art market values art aesthetically can certainly play a role in the NFT space as well.
But the art itself is only our starting point.
Let’s talk about the role of the artists.
The Artist and the Blue Chip status
If an artist or artist has already gained a lot of fame with a large audience, an NFT set designed by him will have a greater chance of success.
The same goes for well-known graphic designers and, for example, fashion designers.
A good example of this is the well-known street artist Ron English.
He has been seen as ‘the godfather of street art’ since the 1980s.
On November ’21 Ron English launched his LightCultCryptoCLub on the Ethereum network.
Already this project is seen by insiders as a possible Blue Chip NFT.
is also a must in this list Gary Vaynerchuk.
Gary has become known not so much as an artist but as an entrepreneur and writer of several books.
As the co-founder of a restaurant reservation software system and a wine company, he has earned his record as an entrepreneur.
Over the years he has grown into an internet personality and is renowned for his knowledge in the field of digital marketing.
His NFT project is known as VeeFriends.
The art was designed by himself and is loved by many.
The NFT scene also puts new and unknown artists in the spotlight.
A very good example of a project that scored highly was Doodles.
This NFT project has done great justice to the name of the artist, Burnt Toast aka Scott Martin.
His colorful illustrations and bold outlines are recognized all over the world.
Was he already more or less successful through collaborations with Dropbox, Red Bull, and Google, he certainly is after the success of Doodles!
These 3 projects have extremely active and popular artists who, along with the rest of the core team, are the voice of the brand.
Without their involvement, the NFT set would likely lose significant value.
Developers and Utility (benefits or revenue model)
Besides the art itself and the artist, the Developers and the Utility are just as important for the success of an NFT.
The Developers or Dev team and the Utility add value to an NFT project.
The developer team is responsible for coding the smart contract and coding a revenue model or utility for the NFT.
The skills and track record (past performance) of the developers are critical to assessing their value in the future.
It’s a good thing when a project’s team is completely transparent so you can view their resumes.
If the developers remain anonymous, there is a chance that they will withdraw from the project after launch.
This is not always the case, but before you buy an NFT from a set where the team is not known, you have to pay extra attention!
If developers remain active on a project after launch, it means they remain involved in future releases. Because of this, you can expect the same quality in terms of encoding.
The developers are at the heart of the Utility, both in terms of initial and redeemable benefits.
Utility is very important to create a Blue Chip NFT project.
The utility or utility of an NFT answers the key question “What else can this NFT do for me besides just selling it and making a profit?”
The utility has become one of the hottest topics of conversation in the NFT space.
Following are some of the main types of Utility projects:
- Utility tokens
Many projects offer a token that users who hold their long-term NFTs, the hodlers, can earn.
Earning a Utility token may or may not require the holder to cease their NFT. He then locks his NFT in a liquidity pool.
- Token-Gated Merch
As projects increasingly see themselves as brands, it has become popular to release exclusive merchandise to holders of their NFTs.
This is a great way to represent the brand and create some fame in the world.
While NFTs are still largely unknown, it will be seen wearing your BAYC t-shirt or CryptoPunks hoodie to an NFT event.
- Free NFT
Issuing a free NFT to holders is one of the most common forms of utility offered.
This gives the original keepers an edge over the collectors who step into the project after them.
It provides them with an NFT that they can sell for liquidity if necessary.
And who doesn’t love “pay 1 get 2”?!
- Collab NFT
A specific way to offer a 2nd NFT is by making it a collaboration (Collaboration) with another project.
Collaborations between projects are a solid cross-promotional strategy for bringing two communities together.
- A Game
Games have become hot in the metaverse. NFTs on their own are nice, but you can’t do much with them other than display them and that’s about it. However, if a project offers a game where the NFT will have some extra value, this gives the holder of the NFT much more reason to stay in the project.
- IRL (In Real Life) Events
At NFT.NYC, the BAYC hosted high-end parties exclusively for Ape holders.
These VIP parties (I’m told) are attended by celebs like Chris Rock and bands like The Strokes, all free to the BAYC community.
As an ‘ordinary’ individual it is almost inconceivable that you can gain access to such an event.
By making things like this possible for holders of an NFT, a strong community is created.
An NFT’s Utility is the key to being rated as a Blue Chip.
Floor Price and Sales Volume
The floor price
This factor is fairly obvious. The higher the floor price of a project to purchase, the more valuable it is.
The floor price is of course determined by the market of supply and demand.
Projects with a steadily increasing floor price usually increase in value.
A floor price of 1 ETH for new projects is the frame of reference to determine the blue chip trajectory.
The speed at which a project reaches the 1 ETH floor is particularly relevant to this demarcation.
However, you must be careful to only use the floor as a criterion for blue chip.
Projects like CryptoPunks and BAYC have essentially become blue chips because of the constantly rising bottom price.
However, because they remain extremely popular, you can rightly call them blue chips.
Sales Volume or Sales Volume
Now the floor price is only relevant as long as there is sales volume or turnover.
You can put a high price on an NFT, but if no one is willing to buy it, you will be left with it!
The sales volume ensures as it were, that the floor price is achieved.
When the floor goes up, the paper hands will sell their NFTs to make a quick flip.
This will decrease the number of transactions, but the total dollar amount will increase as the floor rises again.
If there is consistently buying and selling in a set at higher prices, the NFT grows in value.
The more valuable the NFT eventually becomes, the closer it gets to blue chip status.
Celebrity’s Influence, aka Influencers
It has long been known in marketing that putting a famous person’s name on the brand can lead to a huge promotion.
Consumers like to be guided by their idols.
This is no different in the NFT scene.
Who doesn’t like it when rapper Snoop Dogg or NBA basketball player Stephan Curry takes an interest in your NFT set?
Celebrities can give an extra dimension to the art and cult status of the NFT project.
So if there is in the Discord from a set or via the Twitter channel an announcement comes that some famous star has stepped in, this can drive the set and therefore the value up.
Not infrequently, however, it turns out that there is only a contractual agreement.
It is therefore important to find out whether the star has really bought into it because of personal interest.
Only then will the set have more prestige in the long run and therefore give it more value.
Last but not least, there is the community.
The communities being built around projects like BAYC, Cool Cats, Doodles, and Creature World are impressive.
They show the strength of the underlying NFT and how excited the holders are about the long-term prospects of the project.
Communities themselves are also a form of utility, as members have unique access to the rest of the community.
People have always had a strong urge to ‘belong’.
This is reflected in all possible forms of our society.
Whether in the world of sport, music, study, or religion.
NFT communities are no exception. It gives people the opportunity to connect with like-minded people, in this case when it comes to digital art.
It is remarkable what communities are doing to support the creativity of the project.
People tend to congregate where the real value is.
You can see that in the ever-lasting popularity of student associations. And certainly those at the established universities.
‘Community creates the Blue Chip?’
Because it takes quite some time and effort to create a strong community, its value will prove itself in the future.
And that actually applies to several of the aforementioned factors.
In conclusion, I would like to say that the blue chip status depends on many factors.
And that soon people are shouting on Twitter or in the Discord that this project will be blue chip.
If there is 1 world that is related to terminology and catchphrases, it is the NFT scene.
So watch what you’re doing and never step blindly into a project.
Do good research and analyze the already existing data of a project.
If everything is right in your opinion and your feeling about the Art is good, feel free to step in.
Try to trade with as little emotion as possible and be guided by facts & data.
Only then you have a chance to succeed in the NFT scene.
Note: These are not Blue chip NFTs
Just a final note. There are several sets on OpenSea that have a blue checkmark as you can see in the picture here.
It does not mean that these are Blue chip NFTs!
This blue check mark on the collection’s account or by the artist’s name means it has been verified by OpenSea.
OpenSea reserves the right to give this ‘award’ to the NFT set or the artist. This must meet a number of things before they proceed to this action.