Elements to evaluate an NFT project
Applications and potential of NFT in the future
What an NFT can achieve is one of the most significant aspects about it. Questions such as, “What is the role of the NFT?” must be clearly defined. What is your position in the project/Dapp? What advantages will the holders have? … For example, in the Axie Infinity project, each NFT Axie plays a key part in the game, providing advantages to the owner and assisting the owner in earning SLP tokens. Or the Lewis Capaldi NFT Collection on Binance NFT, which allows users to obtain additional incentives such as tickets to a studio session with each Mystery Box collection.
One caveat: NFT applications may not need to be completed at the time of purchase. Like other financial assets, the selling price of NFTs might represent an investor’s future expectations. These expectations can be developed based on promises made in the project’s plan or information contained in project AMAs. As a result, you must maintain a close check on the projects you are interested in in order to gather knowledge and experience the community’s enthusiasm and FOMO energy. In numerous occasions, the price of newly sold has soared multiple times in a matter of minutes.
These include the Binance NFT market’s Mysteries box sales, which include a random NFT that varies in rarity and may be utilized in their respective projects. The Binance NFT market mystery boxes for each project typically have varying pricing, ranging from 10 BUSD to 50 BUSD or 100 BUSD. Many times, these boxes were sold out and “sold out” in less than a minute; immediately after, the price of the mystery boxes jumped many times over the mint price.
The ecosystem that the project implemented on
Choosing which chain to join is a critical decision that may have a significant impact on your earnings, liquidity, and investment time. When a chain has a significant number of users and investors, it indicates that the projects will be highly supported, have a wide community, and have high liquidity. Famous chains of NFT projects, such as Ethereum chain, Binance Smart Chain, Solana, Near…, generate a lot of wealth.
It should be noted, however, that not investing in any NFT enterprise that runs on these chains will be lucrative. Profit is determined by a variety of factors, which are discussed in detail in this page. And because the profit is generally computed in the primary token of that chain (ETH, BNB, SOL, NEAR…), if the market is down, your profit can only come from growing the number. I’m not sure about the possibility of your tokens to rise in value when converted to USD. If the market goes up, you can earn compound interest since the profit from the NFT grows in price when selling tokens and the token increases in price when selling to USD.
The exchange platform that the project traded on
Typically, NFT initiatives begin with users minting NFTs, after which these items are sold on exchanges (marketplace). If the project is sold on significant markets, it signifies that there will be a huge number of secondary purchasers, providing liquidity, price rise, and safety for the NFT project. Depending on the chain, several marketplaces may exist, such as Opensea, Binance, Rarible, Paras, Solsea, and so on.
Another consideration is the quantity of NFTs accessible on the secondary market, whether at Opensea or other markets based on the chain. The Bored Ape Yacht Club collection, for example, now lists roughly 7% of the overall supply, which is fairly impressive. If the projects have a higher number of listings, it indicates that the selling demand is greater than the purchasing demand, which does not bode well for future price increases. The number of distinct wallets that possess 1 NFT is also of importance, thus monitoring the change in this figure on a weekly or monthly basis. This might be viewed as an accurate forecast of market demand.
As a result, in order to reduce liquidity risk, only invest in projects that are traded on the chain’s key marketplaces. Avoid trading on marketplaces with a well defined user base or on marketplaces that are too fresh.
Community size and community FOMO
The community, like token projects, is a deciding factor for these projects, directly affecting the liquidity and profitability of NFT. The larger the community, the greater the word of mouth, the more people embrace it, the liquidity will be excellent, and the potential to create value and restrict devaluation will be greater. A popular NFT gallery, for example, Bored Ape, has a huge and active community that helps present the project to a broader audience.
NFTs with long-term community support can become more valuable as the project maintains or gains traction over time, demand develops, and they become more popular, rarer, and precious.
One element to consider is the NFT project’s “sold out” status when the public ring is minted, which verifies the community’s FOMO power and creates possibilities in the future. The fact is that the sooner a project “sold out,” the faster the price rises, especially if the project “sold out” in a few minutes or less. The NFT Beatles belonging to the ETHW ecosystem, which increased 3000 times compared to the mint price of 0.01 ETHW/NFT, is a recent example that has gained a lot of attention from the community and has been quite FOMO.
Typically, in order to maximize profits, you must follow the project from the start, gather information, and engage in the project’s events. You can receive reduced tickets (Whitelist) for a lower price if you buy them before the general sale, or you can get a free airdrop if you’re lucky. At the absolute least, you can mint NFT in the public mint at the original price, putting you in a favorable position to keep the asset rather than having to buy it back on the secondary market at a potentially high price. several times the original price
You may follow the project’s events and activities on the official Twitter page or at the project’s Discord/Telegram, depending on the community and chain that the project selects. You may learn about new projects by following chain influencers on Twitter, project information channels, or Dapps that introduce new projects.
Project development team
Any user may make NFT, and there are several marketplaces where you can sell your own NFT, but nearly no one will pay money to acquire your NFT. When analyzing an NFT project, it is critical to learn about the originator, who is the artist. Is anyone working on the project development team? A respected Venture has invested? Is the initiative supported by a market maker team? …
These elements will have a significant impact on the project’s profitability. The more well-known the artist and the more renowned the development team, the more likely their work will be valued in the market. In many situations, significant persons in the community promote and shill initiatives, allowing the price to rise steadily, drawing the attention of the community, and creating liquidity. rose considerably
The “Art” factor
NFTs are not like tokens in that each one is unique and typically has a varied rarity. Trading is based on the buying and selling basis. Unlike tokens, they are not depending on the price established by the liquidity pool. As a result, just because you prefer a certain piece in the collection and are prepared to pay a premium price does not imply that many others would. In terms of aesthetics, even collections with extremely simple drawing styles are worth many times more than elaborately spent NFTs. As a result, the personal choice and aesthetic “Art” aspect is frequently rated last in this selection criteria.
AI “artists” have recently made significant advances; these artworks are generated in seconds, are of high quality, and come in a range of styles. As a result, the aesthetic aspect in evaluation is becoming increasingly hazy.
The Loot #6250, for example, is just 8 lines of text on a black backdrop that was sold for 14 ETH. In this item, the aesthetic aspect is basically non-existent. However, if we use AI to make a design based on the information in Loot #6250, we will be able to build an unexpected product in under a minute.
In conclusion, the appraisal of a possible NFT project is influenced by a variety of elements, as discussed. Most investors’ primary aim is profit, therefore you must regularly watch projects and market developments in order to make judgments that maximize earnings while minimizing risks. to the most basic level imaginable.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.