How to Do Your Own Research (DYOR) on NFT Projects
The expression Do your own research (DYOR) is a common reminder to practice responsible investing.
It's good to thoroughly research a project's fundamentals to avoid scams and bad investments.
From assessing a project roadmap to analyzing a project’s community, there are many ways to evaluate an NFT project.
Here are seven ways to conduct due diligence on NFT projects.
From CR7 NFTs to gaming NFTs, there is a huge variety of non-fungible tokens (NFTs) that you can buy on the Binance NFT Marketplace. But before you take risks, it’s helpful to do ample research to avoid NFT scams, poor investments, or buying copyrighted artwork.
But what does it mean to do your own research (DYOR)? There is no one-size-fits-all approach, but here are seven areas you can look out for when evaluating an NFT project.
If you have your sights set on a particular NFT, research the past sales performance of that asset or collection. Has the value increased or decreased? Does it look overbought or oversold? Is there still demand? Are you planning to invest long-term, or is it a short-term trade?
You could also observe the larger market trends by seeing what type of NFT is performing well in the current market. Gaming, music, utility NFTs like event tickets, collectible art, and domain name NFTs are some categories in the NFT world.
On Binance NFT, you can get more insight into the dynamics of the NFT space. Check out the Binance NFT Ranking page to learn about current NFT rankings, recent activities, and more.
To dive deeper, click on an NFT collection page to check out the historical price data and charts. You can also go to an NFT Detail page to view the price history of a specific NFT you’re interested in.
Check out how the project communicates with the public and the quality of its website, social media channels, and marketing materials. Are they engaging and free of errors? Marketing materials of poor quality can be an indicator of the effort and competence of a project. While it’s not always true, you can expect a similar level of quality for future developments based on the current state of the project.
NFT projects usually present a roadmap with detailed information about their features, upgrades, and development plans. Joining a project’s Discord or Facebook page can be a good way of keeping up with roadmap updates. But keep in mind that it’s easy for any project to draw a roadmap and make promises. The important part is to monitor whether they meet their targets and deliver what’s being proposed, ideally with high-quality products and features.
You can use these questions to evaluate the roadmap:
Goal: Is the roadmap helping to achieve a project’s vision and mission?
Utility: What are the current and future use cases of the NFT?
Users: How is the project going to increase its user base?
Partnerships: Are there plans for collaboration, and if yes, with who?
Delivery: What has the project already delivered? How good are these products?
It’s always good to know who’s behind the project you are interested in. For some NFT traders, it’s more reassuring to see a team with relevant experience in the crypto space. A project led by a professional team with a proven track record is generally a good start. You can check the personal LinkedIn, Twitter or Instagram profiles of each project founder to evaluate their experience. And although it’s not necessarily a precursor for success, some NFT collectors argue that having a famous artist or pop icon can also help bring visibility to the project.
Check out Binance NFT’s premium event launches to collect NFTs from established creators, such as Alan Walker and José Delbo. Join the Binance NFT Community on Telegram or follow Binance NFT on Twitter, Instagram, and Discord for first dibs on the latest releases!
Binance NFT has also integrated many reputable NFT collections, such as Bored Ape Yacht Club, Wonderpals, and Cool Cats NFT.
Sometimes, the value or popularity of an NFT can be directly related to the creator behind the digital art. Usually, an artist that has a strong fanbase, a renowned reputation, or a history of selling art is more likely to succeed in the NFT world. You could even check the artist’s portfolio and see if they have other exciting work and whether it’s consistent with their style.
You can also check the creator’s Binance NFT user profile to assess the quality of the NFT collections they have created, view NFTs they have favorited, check the number of followers they have, and be directed to their social media profiles.
If you like discovering new artists and wish to purchase an NFT directly from their website, you may not be able to evaluate an artist's credibility. Still, be on the lookout for fake NFT collections.
While art appreciation is subjective, it’s good to find out if the NFT uses copyrighted or trademarked material. Infringement of Intellectual Property (IP) rights is not just unethical but would be a sign of future copyright trouble, which might affect future prices of that NFT art or collection.
A large, active community is one sign that the project is not fake. A word of caution, though – some scams artificially inflate follower numbers to appear more legitimate. There have been many instances where bots have been bought to boost community numbers on Twitter, Instagram, and even Discord.
Check out the comments and likes left by followers. If there is low engagement or if comments are suspiciously similar or repetitive, there’s a chance that the followers are bots. You can also try to check if the follower accounts are real by looking at their profiles and recent activity.
If you’re following a project’s Discord, Twitter, Facebook, LinkedIn, Instagram, or other social media accounts, monitor how the project interacts with the community. It’s a good sign if they post regularly to inform NFT holders of updates. Good customer service and prompt replies to investors are other signs of a credible project.
Rights and Utility
What rights, if any, do you receive when you purchase the NFT you’re looking at? Will you get to use the artwork you purchased and print it on T-shirts or mugs? If you have an entrepreneurial mind, you could leverage your ownership rights to make some side income by selling merchandise featuring your NFT.
It’s also important to evaluate the NFT’s utility, such as whether it can be used as an in-game asset, exclusive membership to certain platforms or communities, or upcoming airdrops for NFT holders.
There’s no single solution for DYOR on NFT projects – some prefer analyzing the fundamentals of a project, while others research by performing background checks on the artist and followers. No matter what your approach is, remember to practice responsible trading habits and research well before taking financial risks.
Ready to explore the world of NFTs? Create a Binance account today! And remember, DYOR.