📋Evaluating NFT Projects

With a large number of new launches every week, NFT buyers are spoilt for choice these days as to what projects they can buy into (perhaps sometimes even overwhelmed by choices), and it can be easy to ape into projects that you’ve received “alpha” about or seem to be gaining a lot of traction.

In order to wrap one’s head around these projects and with rug pulls and scams seeming to be a regular occurrence these days, it is critical that buyers arm themselves with knowledge on ways to evaluate NFT projects and, perhaps more importantly, learn about their own preferences and formulate their own strategies - all of which should ideally lead to wiser buying decisions in the long run.

Different people have different strategies; some are generally long-term holders of the NFTs that they purchase, some could be “flippers” who are looking for a quick profit, and others could have different motivations. Individuals within each group could also have different preferences.

For example, let’s say I am generally a long-term holder and a big fan of metaverses - I love to get in on projects that have grand visions with a credible, hardworking team in place that is able to secure partnerships with big players in the space. My friend could also be a typical long-term holder, but instead be a big fan of PFP projects and hence focuses a lot more on quality and originality of artwork, as well as community engagement.

Therefore, before anything else it is very important that you know yourself and your own preferences, and what your motivation is for buying NFTs (whether in general or for specific projects). Do you want to hold an NFT to be a part of an amazing community of holders and build it together? Are you looking to buy projects that support new upcoming artists? Are you only interested in making money? All these would likely significantly affect the way that you would approach the evaluation of specific NFT projects.

Hence, this is not a definitive guide to evaluating all NFT projects for everyone. To summarize the above points, the way that an individual evaluates an NFT project would ultimately depend on two primary considerations:

  • The individual’s strategy and preferences, and

  • The NFT project’s key value propositions and characteristics.

In this guide, we go through a general framework that can guide newcomers in assessing aspects of an NFT project and help them form their own evaluation process.

To prevent this from becoming an extremely long read, we will focus solely on general aspects of most projects as well as evaluating project quality, and will not go into detail about niche projects, trading-related analytics (e.g. supply, volume, floor price trend, number of holders, etc.), or specific strategies heading into new launches or trading on secondary markets.

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