What Makes A Good NFT Project and What To Look Out For Before Buying
Why are some NFTs more valuable than others? What makes an NFT project good? Make your investment count by checking if the project you are interested in is valuable, or a dud.
A major issue with finding good NFT projects is that the market is highly saturated. With the marketplace being as lucrative as it is, its not surprising that many projects are valueless, rug pulls or scams. This makes it difficult to find a genuinely good project to invest in. The trick is to know what to look for and distinguish the good form the bad.
The issue with NFTs is the market is too saturated for the level of demand out there. This means its increasingly difficult to spot a valuable NFT project, but not impossible. The trick is to find projects with real value and utility by creators that have their feet firmly planted in their future.
So, the first order of business… What makes a good NFT project?
Well, a good project must have valuable NFTs. NFTs have value when the creators or the community give it a purpose in the digital or real world. Remember, you don’t just invest in the NFT, you are also investing in the creators and the community.
A good indicator of this is through a “roadmap”. A roadmap is a comprehensive outline of the creators goals and aspirations for the project, which often includes expanding their brand and developing utility. This is important because it shows you what the creators want to achieve in the future and how your NFT can be valuable in that space. For example, projects that create a game in their universe can give NFT holders certain perks within that game, giving that NFT value.
However, value doesn’t just come from utility. NFTs that are associated with a trusted brand or reputable artist can also hold value by association. People are willing to pay more for an NFT if they think it will give them status by association. For example, Board Ape Yacht Club (BAYC) have built trust and reputation with their holders since launching in 2021 that their NFTs are now worth hundreds of thousands. While their NFTs have limited utility (at least for now) their value has sky rocketed since launching in 2021 because owning a board ape has become a status symbol in the cryptocurrency space. In other words, because the board apes are so coveted, they have value.
Another reason NFTs may have value is if they have digital scarcity. There is only a finite amount of NFTs available from a project or collection, so when this number is limited, they can increase in value. This is not the case for every project, but projects that are selling out quickly or have a high trading volume and limited supply are going to be more valuable than those without such scarcity.
If you are interested in a project, answer the following questions:
1. Do you know the creators’ names? The creators do not have to dox themselves completely (we all have a right to privacy) but some sort of identifiable characteristic to show they are a human is appreciated.
2. Do they engage regularly on social media? They should post regularly about their project or values and interact with comments on their posts.
3. Do they show genuine passion for their project? They should show genuine love for their work and appreciate the ups and downs of a difficult market.
4. Are they engaging in an interesting way and avoiding spam? Their comments and interactions should be meaningful. If they are shilling their project or constantly asking people to buy, this is a red flag.
5. Is their a suitable community following that regularly engages with the creator? If there is a community following the project and regularly commenting and liking posts, chances are they are following it for a reason.
6. Have they disclosed their NFTs utility? This shows the creators have thought about the future and are planning on being in the space long-term. There is also more potential for the NFTs value.
7. Do they have a clear website that loads fast? As NFTs are all focused on innovation and technology, its good to have a clear website you can navigate. If the website is poor and difficult to navigate, it can suggest the creators haven’t taken much care, so what else have they cut corners on?
8. Does their website have a clear roadmap with achievable goals and milestone markers? The roadmap should be concise and express how they are going to achieve each step. If the roadmap looks loud, flashy and unrealistic, the more likely the creators won’t follow through with their promises and you will be stuck with a useless NFT.
9. Does the project have a brand name attached to it, such as moto GP NFTs? If not, like us, the creators may be using their NFT project to build their brand. If this is the case, you will need to look at their roadmap, website and social media to determine how reputable the brand is.
If you answer no to any of these questions, take the time to do the extra research. This doesn’t mean dismiss the project but consider turning over every rock and stone to make sure you have a good understanding of the project before you invest. The world of NFTs and digital assets are not well regulated and there often isn’t much help available when thigs go badly. Taking this time to investigate the project proves invaluable when it saves you from a rug pull or bad project.
Additionally, don’t assume a project is safe and profitable just because it matches the above criteria. There are scams everywhere, especially when there is money involved. I encourage you to do as much research as possible to make your own decisions on a project.
A key thing to remember is that, weather you are looking to flip an NFT, support an artist you love or gain access to certain project’s utility, you are an investor in the NFT space. This means you need to carefully select your projects and ensure you are making the right decision before you invest.
Remember: A roadmap is not legally binding, and creators can abandon a project once sales targets have been met. This is more likely if the creators don’t run their project like a business, fail to maintain utility or uphold their roadmap. Additionally, once the funds have been raised, there is no incentive to keep with a project. But don’t worry, not all creators are this way. A lot of artists want to use their projects to build their brand, innovate and gain support for their ideas. Get to know creators you are interested in to see how serious they are about their project.
If you found this post interesting, please leave a comment to share your thoughts. We love to here new ideas and information on NFT technology so feel free to start a conversation with us!
We launching our own exciting NFT project where we will run a community project, donate to the beloved charity NABB and give out fun prizes, including a classic motorcycle! Join the ride by saying hello in our Discord server. Follow us on Medium, Twitter, Instagram or YouTube to keep updated on the project.
