2021 was the year of the NFT with Non-Fungible Tokens seeing widespread adoption and mainstream attention. Indeed, some NFTs now sell for millions of dollars and people make fortunes trading others. However, as is the case in the cryptocurrency world, the earlier you arrive on the scene, the greater your profit potential and NFTs are no different.
Yet, finding an NFT project early on, before it makes major headlines and goes viral, is harder than it sounds. This post will describe some of the most effective research techniques you can use to identify new NFT projects early on, perhaps reaping the benefits that come with a first mover advantage.
What are NFTs?
For those of you who are new to this space, we will start with the basics. However, you can skip this section if you are already familiar with NFTs and the technology behind them.
NFT stands for non-fungible token. A set of codes integrated into digital assets (images, audios, etc.) makes these assets unique and non-interchangeable. It means, unlike fungible assets such as gold or Bitcoin, NFTs cannot be replaced, and each unit is entirely different from the other.
If demonstrably unique and scarce, NFTs are widely treated as an investment option and tradable assets. That is why it is necessary to consider all the risks involved in an investment when putting money into these tokens. More on that later.
Different Ways to Find NFT Projects Early
Tracking down NFT collections before they blow up involves evaluating data and researching different aspects of the project. Following are some of the most productive steps you can follow.
Twitter is the go-to platform for all researchers to learn about new NFT projects and their creators. Every NFT collection has a dedicated Twitter handle. This is where all the creators and teams behind these projects interact with the members of their community. Moreover, multiple accounts constantly tweet about existing and upcoming NFT collections.
You can follow different trends and influencers to stay in touch with the most recent news and updates about the NFT space. Almost every influencer tweets about their purchases, sales, and holdings. You can also manually go through their following list to find out about the projects they are interested in or connected to.
The best way to make good speculation about the future of a project is by assessing how strong the community is built around it. The growth and activity within a community are important factors that determine the value of an NFT. If a project continues to receive more and more hype, the price will certainly increase sooner than later.
The best platform to engage with any community is Discord. Every founder has a separate Discord Server where all the individuals invested or interested in an NFT project communicate with each other. The best thing about Discord is that you can easily cut through the noise that is unavoidable on other social media platforms.
NFT Calendar is one of the most useful sites to discover new and upcoming NFT releases. Creators submit their projects to be posted here for publicity and marketing purposes. Every post gives a brief description of the collection and its creator, a link to the official website, Twitter handle, Discord server, and a link to the marketplaces.
As anyone can get their projects listed on NFT Calendar and the site is updated very frequently, you can find almost every soon-to-be-released NFT collection on the newsfeed. However, you must know that some sellers pay to put their projects on top of the list.
OpenSea is the most frequented NFT marketplace with a monthly trading volume in the billions of dollars. Observing the ongoing activity on OpenSea can be a very efficient way of collecting data. There are three strategies you can use to collect this data:
- Observe the overall market activity to get a good idea about the current market trends and the most popular projects of the moment.
- Sort by a specific chain to see the activity and trades being made on the blockchain you are interested in.
- Follow a specific collection to keep track of all its sales and buys.
Arguably the biggest factor driving the price of an NFT is its rarity. If you can find a rare NFT project early, your chances of finding value in that NFT are increased.
Rarity Tools is a great website to search and sort underpriced NFTs with respect to their rarity. The platform lets you search for rare NFTs within your set budget and instantly make a buy if you can land on a good deal. You can use Rarity Tools for both: quick flipping and long-term investment speculation.
Nansen.ai is a data analysis tool highly recommended for both beginners and professionals. It combines stats and data of Ethereum-based NFTs traded on OpenSea in a very simple and easy-to-digest form. Its massive database contains a huge number of wallet labels. The analytics let you see what projects are drawing the attention of influential buyers and big whales. You can use this data in different ways to evaluate market trends and current hot projects.
RyzeNFT is a chrome-exclusive extension developed by Ryzen Solutions. It is a multifunctional tool pack that gives you access to a rarity sniffer, drop detector, token finder, mint snipping tool, and much more. You get a notification each time an undervalued rare is detected, and it gives you instant access to buying it.
Though RyzeNFT is a pretty expensive accessory, most of the work you have to do manually using other tools is done automatically here. Moreover, the subscription itself is bought in the form of an NFT, so you can sell it on OpenSea if you are not happy with the results after buying the extension.
A white paper is an official document released by the founders of every project who lay out the future plans for the project. It is available publicly and can be found on official websites of the founders. A typical white paper contains important dates, future upgrades, and upcoming events.
Going through the white paper should be the first part of the research process if you are investing in a project for the long term. It can give you a good idea of the future trajectory and what to expect. It also helps you spot fishy projects by assessing the realism and authenticity in the goals set by the team.
Finding the perfect NFT project with all the right properties before it goes mainstream requires energy and skill. However, you will start understanding the market patterns and recognizing golden attributes with time. Always determine the future potential by four key measures:
- Community – A strong community not only lays the groundwork for a successful NFTs sale, but it can also generate buzz that attracts buy-in—and drive more traffic to your profile. Indeed, NFTs are evolving to the point where you must now provide a service or create a community
- Creative team – A team of designers, artists, writers and visionaries is key to project success
- Recent activity – NFT projects that have a clear roadmap and indicate evolution towards something greater or more inclusive, drive value
- Utility – Utility gives NFTs valuations based on the token holders’ access, perks, and opportunities. NFTs that have a clearly defined intrinsic value in addition to the scarcity are much more valuable
Regardless of how many hours you put into the research, there is always a risk that you’ll lose money. That’s why it is advised to allot just a small portion of your investment portfolio into volatile investments such as cryptocurrencies and NFTs. As with any investment, only put in what you can afford to lose.
The next Bored Ape Yacht Club is out there waiting to be found. By following these steps, keeping on top of things in the NFT community, staying active on Twitter and Discord (by contributing-not just lurking) and reading top blogs such as nftnow, you’ll be far and away in a better position to find the best new NFT projects.