Each day we are greeted by a shiny, new NFT project looking to take a slice of the very lucrative cake. With the huge success of big players such as Cryptopunks, Bored Ape Yacht Club and Zed Run, there has been a draw to the industry with many creators aiming to cash in on a big pay day. The problem with this is that 90% of these new projects are poorly put together and will inevitably lose you money in the long term. The aim of this article is to give you some ammunition that you can use to decipher the code and understand if a project is worth your time and more importantly, whether or not it is worth your hard earned Eth.
1. Social Proof
The first thing I usually take a look it is the social proof gained by the project. Your first stop is usually going to be Twitter. Take a look and see if they have amassed a decent amount of followers.
Note: Check to see that they have been grown organically and are not fake followers.
You should also check Instagram and have a nose around certain podcasts to see if they have been mentioned anywhere as well as delving into a few big NFT players socials and seeing if they have backed up the new project.
If you are incredibly early then there may be very little social proof. However, good projects do tend to attain traction fairly quickly and if none of the above points seem fulfilled then chances are the NFT project may be a dud.
Bonus: Check how long ago they set up their Twitter account (it says by default inside their bio). If it was set up less than a month ago, then you know they have not been working on the project long and this could be a red flag pointing towards a cash grab.
2. Discord Community
Community is king when it comes to NFTs. I truly believe that. If there is not a strong community adding value to the NFT itself then the project simply will struggle to have legs. If you want to learn how a good community looks, go and hop into the discords for the following:
- Bored Ape Yacht Club
- Cool Cats NFT
- Art Blocks
- Gutter Cat Gang
Whilst very different tones, each has a large amount of active users supporting each other. The best example from that list in my opinion is Bored Ape Yacht Club. It has become a safe haven for members to chill out and relax with each other. Not just that, but almost every verified member of the server has switched out their avatars for their Apes. This shows confidence and loyalty within the community over any other projects they may be a part of.
Before diving into a project – check the Discord group. If it is dead – avoid the project.
3. The Founders
I’ll keep this plain and simple. Anonymous founders = bad news. If the founders who you are considering forking over your Eth to are hiding behind a jpeg without any real commitment then it is a red flag. There is a higher risk that they will rug pull and walk off into the sunset drinking cocktails. Now, I understand we are in the crypto space and given that, people don’t want to DOX themselves or risk giving up personal information. However, it didn’t stop Gary Vaynerchuk launching Vee Friends? There are many projects with non-anonymous founders and there is really no excuse not to put their reputation on the line if they truly believe in what they are building.
That being said, at the very least the founders should be willing to talk in Twitter spaces or Clubhouse rooms as hearing a humans voice does go someone to showing they aren’t completing hiding behind their avatar.
This shows faith that they are most likely not out to scam anyone. They believe in the project and hopefully are all in.
4. The Contract & Minting Process
The way the solidity contract is set up can be something worth looking into. I am not a solidity dev and so ask others for this advice, however, there are some factors you can check and should look for in terms of the minting process.
Things to check:
- Which type of ERC token are they using?
- Is it a random mint?
- Is it an instant reveal – if not, then Devs have time to map the metadata to ensure their pals get the rare ones
- Are the assets stored on IPFS? Are they centralised or decentralised?
5. Quality of the Art and Roadmap
The final thing to consider is a little more subjective. You need to look at the product that is being offered and then you need to understand if a lot of time and dedication has been put into creating it. If good money has been spent on supremely talented devs and artists then you can have confidence that the founders are taking this seriously.
This not only applies to the NFT itself but the website, the minting process, the road map and the uniqueness of what is being offered.
Right now, way too many incredibly low effort projects are instantly selling out. Yet a week later, the floor is way below mint price. It was very easy to anticipate this as these projects look very quickly fumbled together to jump on the gravy train and cash grab whilst the hype is high.