Benxit’s Underdog Report #1
Hello NFT fam and welcome to the first edition of my Underdog Report. The purpose of this publication is to share my point of view on which NFT collections are underrated and why I feel that way. This is not meant to be financial advice, and I am often wrong. Please fact check everything I’ve shared here before making any decisions for yourself, and most importantly, trust your gut and never over-extend yourself.
This report is focused on projects with a floor price below 0.1 ETH. As of this writing, I am holding one or more NFTs from all of the collections listed. Future reports may cover higher priced collections that I believe are still underrated. I will focus on the following collections for this report:
- The Bored Ape Comic
- DeadHeads Skull Troopers
- Toddlerpillars
- Bushidos
- GenX by House of Kibaa
- Deathbats
- Tools of Rock
My thesis is this: From what I can tell, most people buy NFTs for two reasons. They want to make money and they want to be part of something bigger than themselves (the word “community” is used to summarize this desire). When one buys an NFT in the hopes of making money, they are wagering a guess that demand from new collectors will outpace the impatience of existing holders. We wager this guess for many reasons, and it truly is just that, a guess. With that said, these guesses can be informed by a variety of factors, making it an educated guess rather than a random roll of the dice. I submit that there are factors that make some projects a better bet than others. It is those factors upon which I make my calls that I will share here.
Here are the assumptions and opinions upon which the foundation of this report is built:
- Most people who buy NFTs with a goal of flipping them for a profit want to see 5–10x returns or more rather than the single- or double-digit percentage returns they can see on traditional investments.
- Many NFT collections are currently overpriced, and many more are currently underpriced. This is a factor of cheaper projects being ignored and expensive ones getting lots of social media attention. I believe a correction will happen that brings many expensive collections down, and many “cheap” ones up. (I recognize that $100 is not cheap to many people; I use it here only as a relative term)
- The only cheap collections that are likely to go up are those with something truly unique to offer that can break through the noise of the oversaturated NFT market.
- It is more likely for an NFT collection with a 0.03 ETH floor price (for example) to reach 0.6 than it is for one with a 3 ETH floor price to reach 60. I’m all about percentages.
- If “A-list” projects* warrant a floor price of 2, 3, 10, or even 80 ETH for a single NFT, then many others with something interesting/valuable to offer warrant at least a price of 0.1 ETH
- Once the floor price gets above 0.1 ETH buyers seem to be more likely to buy (my guess is because a smaller percentage of the overall cost goes to gas), meaning it’s likely to stay above 0.1 if it gets past that hurdle.
*I like the term A-list instead of blue chip which I think is a ridiculous term for something that has existed for less than a year.
Some calls I have made previously that have proved correct so far are:
- Cryptojankyz: I called it at a floor price of 0.03 ETH and the floor is now 1.14 ETH
- Fang Gang: I called it at 0.06 ETH and the floor is now 0.23
- Expansion Punks: I was buying the floor at 0.02 when the project was less than half sold out. Floor is now 0.25 ETH.
- Boss Beauties: I took notice of this project when Marvel first tweeted about it, so I can’t claim prescience on that one, but I continued to buy at 0.2 after the first Marvel Twitter Spaces when many people were dumping because they expected more from the initial Spaces. Floor is now 0.935. This one may be the perfect example of my strategy. The project leaders made it abundantly clear that this is only the beginning of the Marvel partnership that got everyone so excited, but so many people couldn’t even wait a few months to see what happens. The fall from 0.4 to 0.2 between early Dec ’21 to early Jan ’22 is what inspired this tweet of mine.
If you’re still with me, here are my reasons for believing in the projects included in this report. I’ll try to keep them clear and concise.
1. Bored Ape Comic — Floor price: 0.038 ETH. Mint price: 0.04
In addition to just being a great story with top-notch art that focuses on one of the world’s most astounding cultural phenomena (BAYC), Bored Ape Comics will later this month be able to burn and stake the comics to participate and own fractional shares of a DAO vault worth nearly 800 ETH (viewable here). This fact alone means that each one of the 10,000 comics should be worth a minimum of 0.08 ETH. That fact is compounded by this one: most comics likely will not be burned during the burn window, so the fractional shares of the burned ones will be worth even more, which in-turn will also reduce supply. More information can be found here and here. Finally, the floor price represents the cost of the cheapest rarity (silver). Gold, Chromium, Holofoil, and Prism comics exist as well and have additional value for the vault/DAO (per the tokenomics listed in the link above).
2. DeadHeads Skull Troopers — Floor price: 0.06 ETH. Mint price: 0.1 + (Dutch auction)
DeadHeads is the world’s first NFT-enabled, decentralized multimedia brand. Holders of the NFTs retain full intellectual property rights (as outlined here). Skull Troopers are the antagonist characters in the series. Think of them as the Sith to the DeadHeads’ Jedi. The same IP rights are conveyed to these NFTs as with DeadHeads. Most Skull Troopers were minted for 0.1 or more (Dutch auction style) but roughly 3,000 were minted for free as a perk to DeadHeads holders (1 per 2 DHs owned). As of this writing the mint is still live. My guess is that it hasn’t sold out yet because many people are hesitant to mint something that has a higher mint price than its current floor price (as it can convey a lack of demand/confidence in the project). What isn’t apparent at a glance on OpenSea is that most of the Skull Troopers listed below mint price are owned by people who own many Skull Troopers and who mint more every time their lower-price ones are purchased. These people are hunting for one of the two remaining fuzzy troopers (out of four total). What is also not apparent at a glance is that while the floor is indeed below mint price, the 90 day average sale price is 0.13 (30% above mint). See the Troopers in action here: https://youtu.be/OAqnGzXFAvM?t=362.
3. Toddlerpillars — Floor price: 0.045 (less than a week ago it was below 0.02). Mint price: 0.04
My belief in this project is less sophisticated than the two listed above. I am bullish on Toddlerpillars for two simple reasons: 1) The community always has good vibes (I think “it’s all about the community” is often cliche or fake, but it’s really true here) and 2) Jon Beinart (founder) and Tim Molloy (illustrator) are working their asses off on this project and they will not relent anytime soon. These aren’t just a couple of 23 year-old degens who decided to sell some jpegs for the lulz (no offense, 20-sometings). These guys are established artists who own a gallery in Australia and have many connections in the art world. If someone is willing to stake their entire reputation and career on an NFT project, then I’m sure as hell willing to bet on it. Also, how awesomely weird are these things?
4. Bushidos — Floor price: 0.04. Mint price: 0.088
This one is pretty straightforward. I am bullish on this project for four reasons:
- I believe the upcoming burn of Bushidos & Daitos to get a Ronin will be popular because of how good the artwork looks (first picture below).
- Jeremy Booth (artist) is extremely dedicated to the project’s success.
- The upcoming Bushidos comic book series with the amazing team at Macroverse looks really cool.
- The team works at Coinbase. They have not explicitly stated that this means they will be featured on the upcoming Coinbase NFT platform, but come on. Come on 😐. They were even featured alongside some of Jeremy’s other art on the Coinbase NFT twitter account when it only had 4,800 followers (second picture below).
5. GenX by House of Kibaa — Floor price: 0.09 (less than a month ago it was 0.03). Mint price: 0.2
House of Kibaa is a project that was the first virtual home for many people as they entered the NFT space (mostly from Top Shot). The team is comprised of some incredible designers and engineers. Membership offers special perks, including, most recently, white list access to the hotly anticipated HAPEBEAST NFT project. The GenX collection is HoK’s first 10k avatar project. Shortly after the mint, the team hired a CEO and other leadership team members. It is not just an NFT project. It is a digital design studio with top-notch talent. GenX avatars (robots) will inhabit the metaverse that is currently being built in Unreal Engine 5 (design art pictured below), which will also have a habitat for BAYC and Gutter Cat Gang. The HoK team was commissioned by the BAYC and GCG teams to turn their 2D pfp characters into fully rendered 3D avatars that look awesome IMO.
There was some disgruntlement after the initial mint from people who were disappointed by how the avatars looked. Art is subjective, but even still, I believe these people were ignoring (or didn’t understand) that in the metaverse, the GenX robots won’t look like the first image below (which still look pretty cool IMO), they’ll look like the second when fully rendered (way cooler).
GenX is also being developed into a card-based strategy game and a live-action/CGI series featuring professional acting and production talent. Finally, the formation of a DAO for the GenX ecosystem is upcoming as well, and will be based on the number of NFTs owned. Don’t believe me? Visit their discord and type ?wendao.
6. Deathbats Club by Avenged Sevenfold — Floor price: 0.05. Mint price: 0.08 (still live; almost sold out)
Deathbats are a project from metal band Avenged Sevenfold. We’ve all seen many celebrity cash grabs come and go, but this band is seriously involved and completely dedicated to the success of the project. Among other perks, they have already airdropped 2 concert tickets (as NFTs on polygon) to all Deathbats holders, meaning the NFTs have already almost paid for themselves. Additional perks include thing like care packages, meet & greets, guitars and guitar lessons, and even a private golf outing with front man, M Shadows. These special perks only go to a handful of lucky minters, but additional value is being delivered regularly to all holders. The project is just getting started and I believe they are paving the way for many other bands to follow suit. Despite the backlash they have received from some of their audience who don’t understand NFTs and therefore criticize the project, the Avenged Sevenfold/Deathbats team stay positive and focused on delivering value to their community from now ’til death. As with Toddlerpillars mentioned above, if a successful artist (band in this case) are willing to risk their entire reputation on an NFT project, count me in.
8. Tools of Rock — Floor price: 0.015. Mint price: 0.069 (plus one free if you had a mint ticket)
Tools of Rock are building an epic virtual music venue for metaverse concerts. What else do I need to say? Oh, it’s being built with the amazing designers at House of Kibaa. I believe this is one of those projects where the floor is only low because so many people have zero patience in the NFT space. I expect it to jump suddently and drastically when the metaverse concert venue goes live and books its first big show, and I won’t be caught unprepared. Also check out their related collections, Gods of Rock, ToR VIP passses, and Demigods of Rock each of which has its own utility in the project. More info on the various utility can be found here. Finally, I have met the project founder, JJ Lane and I can hear the passion in his voice when he talks about the project. Sometimes, that alone is enough for me to place a bet on a project.
In summary, I believe that there is a major opportunity in the NFT space for disciplined and risk-tolerant investors to take advantage of the impatience of others. One must look at the underlying fundamentals that attracted buyers to mint in the first place. If those fundamentals are still there, and even better, if the vision they promised on mint day is drawing closer (ToR’s virtual music venue, Bored Ape Comic’s DAO, DeadHeads landing a Netflix/Amazon deal, etc.) then my experience tells me that the floor isn’t low because the project is a dud. It’s only low because the NFTs listed there are owned by the 1–2% of holders who are the most impatient. Let’s remember, 200 is only 2% of a 10k project and a big announcement can easily result in 500 or more NFTs selling on the secondary market in 24 hours or less. I’ve seen it time and time again.
