How do I determine if an NFT project is good or bad?
Art
Beeple’s “Everydays: The First 5000 Days”, the most expensive NFT in history, was sold for a whooping $69 Million Dollars, setting an all-time high for NFTs. Quality of the artwork is one of the most important factors when determining a good project because, let’s face it, no one wants to buy a piece of artwork that looks amateur or ‘lazy’.
Some projects, though featuring less impressive artwork, offer highly attractive real-world utilities, such as P2E games, exclusive events, community giveback etc. These NFTs are also noteworthy as the incentives behind owning one of their NFTs may create higher demand, thus elevating the value of the NFT in future. Therefore, we highly urge you guys to do your own research on each individual NFT project, including their roadmaps, people behind the project(which we will be covering next), community involvement and social media hype!
Team Behind NFT Projects
The only advice we can give for this segment is: A team that is doxxed is more reliable than anonymous NFT projects. This is because you don’t wanna end up investing in a project that ends up being a scam or rug pull. A doxxed team that is active in the community and social media adds more reliability to the project and allows for closer interaction with community members.
Hyped & Active Community
Many articles would advise you to look at social media numbers when researching on the different NFT projects, it is not always a good indicator of an alpha because oftentimes, follower numbers can be botted. One way to find out is to look out for engagement levels. 10k followers with only 3–4 replies? Followers are likely to be bots. We advise all to spend some time actually being in the NFT Discord channel so that you can evaluate the potential of the project from within, instead of hearsays.
Here are some things that makes the project ‘hyped”:
- Active interaction within discord channel — Active participation from team members
- Active discussions about the project’s future/roadmaps and NFT utilities
- Regular updates on the progression of the project
- BONUS: Efforts to help NFT newbies understand the concept of NFTs and its terminologies.
Utility
We’ve talked about NFT utilities numerous times, but it is definitely one of the most important factors in determining the value of NFTs. Here are some commonly-seen utilities promised in most NFT roadmaps.
Staking: As NFTs are essentially tokenised assets, they could be transferred to a platform that takes care of their safekeeping. Once the NFT is transferred to the ‘staking platform’, governance could be assigned to determine the tokenomics. Once an annualised yield (APR) is established, the NFTs can be staked and holders will be able to claim rewards. CyberKongz is a good example of successful NFT staking.
Play-To-Earn Games: This is one of the most popular utilities that incentivizes people to invest in NFTs(think Axie Infinity) because you are essentially being paid to play games! An alpha project will be those that releases trailers and teases about their video game regularly, so you know that your investment will be worthwhile!
Airdrops: Who doesn’t like free stuff? Many projects offer free airdrops to their first few community members, so it is definitely a bonus incentive to be a pioneer in new NFT projects.
In conclusion…
The possibilities of NFT utility are vast and we are only beginning to uncover them one by one. Another way to determine an good project is if the project roadmap includes community giveback, where NFT investors will be rewarded for their support. Other green flags would be: donating to a cause and allowing the community to vote for the future movements of the project.
