Preface

In this article, I will discuss a rarely mentioned method of analyzing NFT collectibles: analysis based on the core values ​​of the project. You can also apply this method to cryptocurrency projects.

If you’ve been through the NFT season, you know how crazy it is to have a JPEG that anyone can download. As of April 2022, the reserve price for a monkey JPEG called Bored Ape Yacht Club (BAYC) was as high as 139 ETH, which was equivalent to more than $400,000 at the time.

Here, I will discuss how to evaluate NFT projects from the beginning, hoping to help you avoid mistakes on your journey into the NFT market.

You must be familiar with the analysis based on factors like art, team, community, investment funds, etc. This is absolutely correct. But if you go one level deeper, you will find that all the above factors are just the surface of the project. This approach also analyzes the above factors, but the difference is that it analyzes the performance factors to find out the core values ​​of the project.

Core values ​​include:

  • Ability

  • Resources

  • Morality

After summarizing the core values ​​of the project, before taking any action, you need to incorporate the fourth element, which is:

  • Position

I put these four elements on the four wings of a four-leaf clover and temporarily called it: the Four-Leaf Clover Model - RAMP (composed of the first letters of the four core values).

NFT Classification

Before I get into the main content, I will talk about the classification of NFTs. Through the last GameFi season, you may be most familiar with the two lines of PFP (NFT used as avatars) and in-game items (NFT used as in-game items). However, NFTs are broader than that. Here are the categories of NFTs that the author has observed:

Profile Picture (PFP ​​- Profile Picture)

Is an NFT group that is primarily used to make avatars. That's what it's called, but in addition to being an avatar, it can do many other things, such as a pass, a metaverse character, perhaps an in-game item, etc. But overall, it's an NFT that collectors want to use. Represent an image. Among them are Bored Ape Yacht Club (BAYC), Azuki, y00ts.

In-Game Items/Metaverse

NFT-ized in-game items will fall into this category, such as land, weapons, characters, etc.

Passes/Memberships

When you hold this type, you will have certain privileges, such as the right to purchase, cast, or attend concerts.

Identification

This line emerged to identify entities in the blockchain space. Prominent projects in this space are Ethereum Name Service (ENS), SpaceID, Unstoppable Domains, Lens Protocol.

Regarding this line, it is very personalized, and if you buy it in a "lucky" way, there will be no liquidity. If you want to join this array, you should choose a domain name similar to 999Club, 10K Club, or a meaningful name. Soulbound Token is also included in this category, which is also a form of NFT for identity recognition, but the difference is that it cannot be transferred. Take Binance's BABT as an example.

Digital Content

Refers to NFT-ized content, such as music, videos, articles, etc. Some platforms support NFT-ization of content, such as CosTV, Mirror.xyz, etc.

Art

As pictures, not PFP, game props or other types of content, belong to this category.

RWA (Real World Assets)

These are real-life assets that are tokenized and put on the blockchain. It can be a house or a car. Currently unpopular due to legal corridors and trust barriers.

Blockchain Objects

This array is quite new, and currently only Sui Network exists. Sui Network’s structure is in the form of asset centralization, where objects on the blockchain are identified by fixed IDs and supported by SuiNS, which are also a form of NFT.

Analytical method

In the following analysis, I will dive deeper into the PFP space, as this is an array of artistic colors that have received attention from the community. Other areas, such as gaming assets, will be more inclined to assess the value of crypto projects, which I will mention from time to time.

Art

Art consists of two main parts:

  • Visual: What you can see on the screen.

  • Spirit: It is the spirit or feeling that the collector has towards the collection.

Evaluating viewing angle (vision)

In order to evaluate art, you need to consider the classification of NFT to see which category it belongs to. If it is the PFP line, the visual part is very important, which is a big factor that influences collectors to buy. For other categories, it is less important. For example, when buying a membership card, you don’t care much whether it is good or bad, but you need to pay attention to its use value.

Visually, it can be divided into six categories:

D_umb: These pictures are crazy drawn, doodled, and kind of "silly" looking.

Pixel: Using simple pixels to represent images reminds us of the dawn of computer science.

Simple: These are NFTs whose image designs use simple lines, a few colors, and little detail. This is also the favorite style of many famous collectibles: BAYC, Azuki, Doodles, Pudgy Penguins.

Detailed: These collectibles are highly detailed, using many lines and colors to create them. You can check out the art of Otherdeeds or Nanopass to get a better idea of ​​this style.

3D: These are artworks drawn with depth, simulating 3D images, and may include 3D animations, for example: CloneX, A KID NAMED BEAST, MekaVerse.

Content: is the visual representation of other content, such as videos, articles, etc.

Simple and pixelated are the two most popular styles right now, which is understandable as it is easy to pick up and accepted by the majority of the community. The more detailed the art, the higher the evaluation, and the more love-hate situations there are.

Spirit

Furthermore, it is true that not all collectibles that are shiny in appearance have great value. This is where the spirit of the collectible part comes into play. The spirit is quite abstract and is a combination of many factors. It is the feeling that each collector has in front of the work. The spirit is not fixed and changes as the collector touches it.

For example, with Azuki, from the moment you touch the collection, you can feel the atmosphere of a pure, shiny anime world, with very "cool" but equally romantic characters. And this spirit is always maintained in every communication concept of the project and is reflected in every story told by the project, every media poster.

All collections have their own spirit, whether faint or prominent, chaotic or consistent, which will show the capabilities of the project team.

other factors

Ideas

First, you need to check whether the idea of ​​the collection is new or plagiarized. If it is plagiarized, is there any creativity in it? I appreciate those creative sets with a "blue ocean" style. Usually such sets, if accepted by the community, will become trend-setting sets.

theme

You shouldn't be too heavy-handed when evaluating the originality of a theme, just don't copy art from another project. Typically, aspirational themed sets are more appealing, such as gods, warriors, gangsters, captains, monkeys, owls. It can also be fun themes, such as frogs, cats, penguins, terriers. Overall, it shouldn't be judged too strictly, as long as the theme fits the spirit the collection wants to convey.

Quantity and Pricing

The number of PFP sets depends on the purpose and resources of the project, usually 10,000 NFTs, some PFP sets can reach 20,000 for the general public. Setting a standard for the number of NFTs for a collection is quite one-sided, but if there is no special reason to make it so small, it may be because the team is limited in resources. Ask the founder of the project directly why the number of collections was chosen.

For in-game asset NFTs, the quantity can reach up to 100,000 NFTs per set, such as Otherdeeds of Otherside.

The problem with pricing collectibles, to know if an item is over or under priced, is to compare it to similar items, with the same idea, with the same theme. This requires you to have past experience with similar sets, then combined with what the item has done, is doing and promises to do, you will have your own assessment, is it being priced fairly or not?

Features

There are two ways to create collectible art.

The first method is to draw 1/1, that is, the artist draws each picture individually.

The second approach is generative art, where artists paint parts in different styles called features, and then combine the features into a complete artistic picture.

Drawing 1/1 takes a lot of time and effort, so usually projects draw only a small number of 1/1 panels for communication purposes, and the rest are drawn in generative form. The more features a collection has, the more effort the artist puts into it. You can easily find the feature count for each property in the project information column of the NFT Marketplace. For a standard collection of 10,000 NFTs with about 400-500 features or more, it is an investment.

trend

When a collection multiplies by hundreds of times, it will trigger a series of similar collections. Whether you can find gold in the sand, find the "next killer" or not.

The key to being the “next killer” in an ongoing trend is speed and discipline. When a leading collection just starts trending, but there is already another collection with the same idea, the same theme, beautiful art that has not been copied, and not only that, but creativity in it, there are two things to consider.

  • One is a very strong project team that researches quickly, catches trends quickly, and has many resources to quickly build projects.

  • Second, they are prepared in advance, either from previous trend forecasting research or their familiarity with the Leading Trends Project.

When you add the ethical element, it is very likely that you will find "hidden gems". The ethical factor can be quickly assessed by many factors that I will gradually talk about in the article, the smallest example is if the trend just happened yesterday, and the Twitter of the project has been created 1-2 years ago, then you know if they are trying to scam you, otherwise the project's website directs you to the Twitter of a famous KOL, but there is no information related to the project - that is a sign of fraud.

Note: Trend following should not be too focused on evaluating ideas, topics, or holding on to trend sets for too long.

consistency

Regardless of the category the collection belongs to, consistency is very important. The visual style and theme should be consistent. For example, if a collection is themed around monkeys, it would not make sense to mix in a few cats. But if a collection is themed around animals, it would make sense to include cats, but adding humans would be inconsistent. In this part, you need to understand the theme of the collection you want to present and check it. Actually, I think a decent collector would not make such a mistake.

Also, note that the recent good 1/1 artwork collections are made up of individual hand-painted artworks that are a little cooler than others, but still basically fit the theme.

Historical calculations

Just like collecting paintings, paintings that are associated with a long history or a specific historical milestone usually become more and more valuable. This part is rarely noticed, but sometimes adds a lot of value to the collection. CryptoPunk is a collection related to NFT historical milestones and is considered to be a collection that paved the way for NFT arrays, similar to BitcoinPunk.

Imagine decades from now, in a world where NFTs are mass-adopted. If you own an NFT that was minted 50 years ago, with a clear date and time on the blockchain, I believe its value will be very different from an NFT minted yesterday.

To wrap up the art section, what do we have?

You will learn about the ideas, themes, design style and spirit that the collection wants to convey. The ability of the project team will be assessed by the meticulousness of each artwork and the consistency of the message it conveys. The ethical judgment by how they deploy the communication channels. Regarding the PFP line, it is necessary to understand that there are at least 2 members in the team, the artist and the founder.

The artist is the one who draws the soul of the collectibles. Whether the art can express the spirit that the project wants to convey depends on the talent of the artist. Therefore, it is very important to conduct in-depth research on the artist. The second most important member of the team is the founder. If the artist has created perfect works of art, then the founder is the one who brings them to the world. Both people, each of them is important, and a good product without communication is like "wearing brocade clothes at night."

First, let’s start with social media channels: Twitter, Linkedin.

Check the account creation time, the first content release time is different from the account creation time, because many people will buy old accounts and delete all information to gain credibility. This is also the ethical standard of the project.

Continue to review the content posted on the individual's page to see if it is related to the area they are responsible for.

Find out about the members’ experience, companies they’ve worked for, their positions, how many years of experience they have in blockchain or art. Click on each company on their Linkedin page to see if it’s the right one, as many people create their own large organization Linkedin pages to add themselves for a good background. Another criterion for evaluating the ethics of a project.

For artists, usually they have other pages dedicated to showcasing their work, such as Instagram, Dribbble, Behance. There you can see the products created by the artist. Right-click and choose to search the image with Google to see if the image has been posted anywhere, whether it is "original" or copied, and thus assess the ethics of the project.

Next is their reputation. Go to the "Followers" section and check if there are any celebrities following them, the more celebrities they follow, the more authoritative they are. I don't appreciate more followers than number of followers.

How to access community channels of current and previous projects and search for keywords like "scam", "rug"?

Carefully check the projects they have been involved in before (if any), the role they played in each project, how successful these projects were, what the price trend was, whether they are active or dead. In addition to social networking sites, you also need to check the GitHub page to see the recent activity. If it is an NFT project, you need to check the market to see if there is any trading and bidding activity.

Finally, check the community. Observe how the project communicates with the community, whether it is flexible, how it responds. You can also ask questions to see how responsive the project is, so as to assess their understanding of the NFT and crypto space? Also know that maybe the project employs moderators, so the quality of the responses may not be what you want, but in any case, you can evaluate from the team's perspective.

After checking the channels, you can get a feel for each team member's capabilities and ethics.

So what if the team doesn’t disclose their identity or even has information?

If the founders believe in the success of the project and see it as the fruit of their wisdom, there is no reason for them not to let the world know who they are. If the team does not disclose their identity, there are only a few reasons:

1. The team does not believe in the success of the project and is worried that the public will not have the opportunity to participate again.

2. The team believes in the project they are working on, but they have no experience, so they dare not make it public for fear of affecting the reputation of the project.

3. Finally, the project does not want to be a long-term project and wants to defraud money.

There are other reasons too, like legal risk concerns, introverted members or just plain dislike, but regardless, I appreciate those who take responsibility for what they do. Transparency adds a lot of points, but I would ignore unidentified teams for no other reason than this - there are other factors to consider.

Community

The community or supporters or potential customers depends on what you call them, but without them, the project dies. Resources are also needed to realize the ideal. A strong community will be the foundation of a successful project.

So, what is a strong community?

Still the old standard, quality over quantity. Don't just look at the number of followers on the project page or Discord, check the enthusiasm of the members. Read what they communicate with each other, you don't want to stand in a jungle of bots and still think you are joining the community. In addition, we should also thank Elon Musk for creating the "Views" section, which helps us quickly evaluate the quality of a post and take advantage of it before tool enthusiasts interfere.

There are several tools that can help you check your account’s virtual follower ratio (remember to connect with your secondary Twitter account):

Twitter Audit: https://twitteraudit.com/

Follower Audit：https://www.followeraudit.com/

As analyzed in the first part, the spirit or soul of the project is the connection between collectors and collectors, and between collectors. The more enthusiastic and "enthusiastic" the community is, the more it proves that the spirit of collection is excellent. Strangers may come for profit, but may stay because of the spirit of collection.

Fanaticism is reflected in every buzzword that members use to greet each other. Maybe you have seen these words somewhere: "W", "hoot", "!ooh", "ahoy", "33.3%". If you are not a member, it will be difficult to understand. Fanaticism is also reflected in the way members support the project. They volunteer to make memes, volunteer to shoot short videos, put up avatars, etc. They sacrifice themselves to support the project.

The fanaticism of the community is a measure of the ability of the project team.

In the community, there will be a group of influential supporters, who can be volunteers or hired, and it is difficult for you to distinguish, but basically, the more KOLs who support the project, the better the judgment. This team will help the project attract more users.

How to see which KOLs support the project

I will guide you on how to view the KOL of your project.

Please use Twitter's advanced search tool, enter the username of the project, and in the participation section enter the minimum number of replies, minimum number of likes, minimum number of retweets, depending on your difficulty. You can also customize other parameters and click Search. Here you can check each post to see how many large KOLs support the project and what the quality of these KOLs is.

The number of KOLs who “really” support the project also reflects two aspects:

  • The first is the visibility of the project, or the capabilities of the project team.

  • The second is the resources of the project. Usually, large KOLs will not support it for free unless the project is very prominent, they like it and want to be part of the community.

Note that you have to be flexible when researching the community part of a project. You have to know what stage the project is in. If it’s just starting out, it can’t claim to have thousands of followers or a bunch of big-name KOLs backing it. Also, is what you’re researching still a “hidden gem” when project information is already flooding Twitter?

NFT Distribution

This is how the project distributes NFTs to each target group, which can be listed below:

  • Reserve/Treasury

  • Team

  • Partner

  • AND, Whitelist

  • Allowlist

  • Public

Not every project will have enough of these groups, but looking at how they are distributed to each group gives a sense of the strategy.

For example, how do they distribute the whitelist (WL), who has a whitelist to help the project grow, and whether they contribute to the project. If the project keeps spreading the whitelist to the community, but the community only wants to hype and sell quickly after the release without helping the project, then the success of the collectible will be difficult. Doing so shows that the project only wants to push all WL to the minting community to get funds and has no long-term plan with the project.

Also pay attention to what stage the project is in. If the project is very new, still insist on choosing someone who really supports broadcasting WL, which shows that the project is very confident and strong, but usually the first part is always easier.

Just like token distribution, capturing NFT distribution helps you understand where you stand relative to others.

Utilities

For in-game items or pass categories, people buy them for usability and pay little attention to the artistic beauty. The following only deals with the practicality of the PFP set.

For the PFP series, if communication is poor, the project can easily be misunderstood by the community as "artistic value" to "practical value". If you still focus on viral marketing when you own NFT, you will get this benefit and the community will think it is a practical NFT for the project. Thereby reducing the artistic and spiritual weight of the collection. It also depends on the purpose of the project's release of NFT, but if it is very convenient, it should be classified into a different category from PFP.

For the PFP Blue Chip Collection, the biggest benefit is becoming one of the elite in this community, and NFTs are your ticket to enter this world, like Azuki’s The Garden.

Other useful features include:

  • Join a private group and get privileges like "alpha" news, whitelisting for other projects, and more.

  • Airdrops or early minted, airdropped tokens of a sub-series released by a project.

  • Access special project tools.

  • Become a practical NFT for future projects.

  • Share the profits.

  • More recently has been lending, which allows you to pledge your NFTs to get tokens to do other things.

  • Practical tools related to real life: participating in events, airdropping goods.

  • Finally, express your personality on the web3 social network.

There may be more useful functions, but we must always remember:

If you convince collectors to come for your utility, they will leave when they encounter a project with better utility. If collectors come for the spirit, they will stay as long as the spirit remains the same. And the utility is easier to copy than the spirit.

A utility strength assessment can give you an understanding of your team’s capabilities and resources.

route map

Check the roadmap to see if the project is actually being developed.

resource

A website and a clear white paper are a good sign of a quality project.

Other parameters

If the item has been minted, you can check the following information:

FDV = Floor Price x Total Supply, look at the current valuation of the collectible, is it high or low compared to the competition.

Price Action: See if the price line is supported by market makers, if there is a support area, or if it is just falling from the minting price. If the project has no market makers, then the minting will most likely only happen once and then be gone forever.

Blue chip holder: Collections with more blue chip shareholders are more attractive.

In the market, check if there is a buy wall. The closer the buy wall is to the floor price and the thicker it is, the more it indicates that the project is actively supported.

Other Factors in Evaluating Project Resources

Other factors in evaluating project resources include:

  • Does the project have VC investment: VC will help the project move faster, but it will also reduce the beauty of your long-term holdings.

  • Project communication materials: The cost of a 3D video trailer can range from tens of thousands of dollars to hundreds of thousands of dollars, and you can also judge the project resources if it invests in such high-quality materials.

  • KOLs share project information: As analyzed in the community section, you can also observe the quantity and quality of KOLs disseminating projects to evaluate the project's resources.

  • Media advertising rewards: How much will be rewarded through whitelisting, NFT or cash?

  • The quality, quantity and characteristics of artworks.

  • How are the website and project files created? Do you design a new website or just use an existing website template?

  • Finally, I must reiterate the issue of flexibility. Apply flexibility to each NFT category and don't force a silly style project to have the same standards as a born blue chip project.

Trading straregy

OG/Whitelist hunt

If you have found a "hidden gem", do not hesitate to support the project from the beginning. You can participate in events, make memes, write reviews and much more. The project is always watching its supporters and most likely you will get a whitelist to optimize your holdings compared to others.

If you choose correctly, your efforts will not be wasted at all, and blue-chip varieties can increase tens or hundreds of times more than the cost of minting.

Floor flip

That is to say, don't worry about art, buy the lowest-priced NFT, and wait for the price to rise before flipping. This strategy has abundant liquidity and no need to worry about inventory.

Rare hunt

This strategy requires you to "live" in your collection, seek out rare NFTs, or buy and flip NFTs that are about to have good utility when the price rises. This approach is more risky and more art-loving, but less liquid.

Summarize

After doing all the research above, the ultimate goal is to help you come up with four unique things:

  • Ability

  • Resources

  • Morality

  • Position

All you have to do next is evaluate the risk and profit levels based on your own conclusions. You will have to choose whether to expand or shrink your comfort zone for each project. And always remember:

Finally, I named this method Four-Leaf Clover because there is one final hidden factor that can help you succeed, and that is the meaning of Four-Leaf Clover - luck.

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