How do successful NFT traders make incredible returns in just a short time? Is it possible to use strategies to maximize our returns from NFT investing, or is it just luck? This article will explore the steps to find the best NFT projects. This article will also explore things to watch out for in NFT scams.
NFT projects
Digital assets built on a blockchain network are NFTs or non-fungible tokens. Most NFT collections take the form of digital art. CryptoPunks and Bored Ape Yacht Club are some of the popular NFT projects.
NFT projects go beyond just simple art collections. Thriving communities are created around NFT projects. Users using social media platforms like Discord and Twitter have created an ecosystem of high engagement with NFT projects. There are more benefits to owning an NFT, giveaways, live events, and community spaces.
How to research NFT projects?
Users might be lucky to find a successful NFT project, but luck will not help every time. You need to perform your due diligence to find good projects early. NFT investors and traders suggest looking into all aspects of an NFT project before investing.
This due diligence has multiple steps, and the first step is looking into the roadmap or white paper of an NFT project. The objective of the creators for an NFT collection is reflected in the project’s roadmap or white paper. The white paper typically states the mission and vision for the NFT collection. This roadmap also includes a breakdown of how the NFT collection works from a technical standpoint and future growth plans.
The next step is NFT collections’ social media presence. It is hard to determine the value of NFT projects if they have no social media presence. Therefore, a project needs to have a decent following on social media. Not only followers, but user engagement is crucial too. An NFT project must engage with its users effectively and be on all prominent social platforms.
The last step is transparency. It is easy to look into the work history of a project’s creator if the information is readily available. By looking into their background, we can examine the potential of creators to ensure they are capable of fulfilling project goals. Users can also check the previous projects of the same creators. Users do not want to invest in a project if its creator has a past of abandoning projects midway.
Roadmap analysis of NFT projects
A long-term action plan for an NFT project can help users decide whether to invest in the project or not. It is vital to look for this plan in the roadmap as this is one of the first steps in researching an NFT project.
Some aspects of the project might be time-based while others are milestone-based. For example, it will take time to develop integration with the metaverse, so this item on the roadmap would have a date. On the other hand, merchandise sales depend on the number of members of the NFT project. Merchandise for a project can only be released when members hit a threshold number.
Items in the project roadmap:
- Technical advancements: The roadmap will highlight the expected dates for adding new functionalities and features as well as dates for revamping the tokens.
- Details on NFT drops: The roadmap will also include the date and time of an NFT drop. It will also include the number of tokens being distributed and the price.
- Merchandise release: Releasing NFT merchandise can help members feel at home in a community. The roadmap will show at what stage or number of members an NFT project intends to create its merchandise.
- Airdrops: You can expect a lot of rewards if you are a member of an NFT project. These rewards are in the form of additional NFTs, which are airdropped to their members.
- Upcoming events: There are always special events associated with successful projects. These events take place in real physical space or virtually.
Use of Social Media.
One of the best social media platforms for NFT projects is Twitter. Most NFT and crypto communities use Twitter to engage with new collections. Users can get the latest updates on a particular project or crypto in general. Twitter is used by creators of digital art and other projects for most of their marketing activities. The demand for and value of an NFT project increases when its community grows on a social media platform.
Things to look out for on Twitter are low engagement or inflated follower numbers. For example, take two NFT collections with 5,000 NFTs available for minting. One NFT project has about 25,000 followers but gets around 100 likes and retweets per post. On the other hand, the other NFT project has only 17,000 followers but gets over 2000 likes and retweets on average.
The second NFT project is the better investment, as the first project might have purchased followers to give the impression of a large NFT community.
The best platform to find NFT projects
A messaging app called Discord allows its users to create large communities of over 500,000 users. For an NFT community, Discord is an ideal app for invite-only participation. Discord is popular amongst NFT projects to create their members-only zones.
Some NFT projects can have a private and a public section to their discord. Users can engage with others interested in the project by joining the project’s channels. Community moderators post announcements about NFTs regularly, and users can get early access to information in Discord.
It is great to have high engagement between followers and creators, but engagement among the members of the NFT community can also boost interest in the collection.
Tools to identify the best NFT projects
Rarity. tools
One of the factors influencing the price of an NFT is its rarity. A rare NFT gives you greater profit potential.
You can find out the rarity of an NFT by using the rarity. tools platform. This platform assigns a rarity score to each NFT using the characteristics and traits of an NFT collection. This platform helps users find out how their NFTs compare to others.
OpenSea
OpenSea is the largest NFT marketplace today. It is an amazing platform to find out about the most popular NFT collections. OpenSea ranks NFT projects on the Polygon Klaytn, Ethereum, and Solana blockchains.
This platform allows users to see how a particular NFT project is performing by tracking sales of various NFTs. It also shows users the price histories of NFT projects, with their lowest and highest sales visible.
Icy. tools
Icy. tools is a subscription-based platform that provides real-time data on popular NFT collections. This platform shows metrics and market patterns like volumes traded and floor price.
Icy. tools give access to data that is otherwise hard to obtain. Data like token rarity, sales trends, and custom alerts are easily accessible to users.
How to avoid NFT scam projects?
Keep an eye on Gas Fees
High gas fees are not an NFT scam, but users can lose a lot of money if they are not paying attention to gas fees. You pay a processing fee every time you transact on a blockchain network. This processing fee is known as the gas fee.
Gas fees are determined based on the network traffic. Users gain priority on their transactions if they pay a high gas fee. There are instances when the gas fee is much higher than the NFT you want to buy. Either wait until gas fees are reduced or pre-mint your NFT to avoid paying high fees.
Pump and dump NFT
Promises are not fulfilled by some NFT creators. The creators abandon their project after initially earning money by minting the NFT. This abandonment can lead to a drastic reduction of the NFT value and cause huge losses.
Analyze the past projects of the creator to avoid such a scenario. It is best to avoid an NFT project if the creators have a history of abandoning NFT projects.
Perform your research
Users must first verify the claims of a project themselves. NFT trading is expensive, and there are some influencers you can trust. But it is much safer to evaluate an NFT project yourself instead of depending on someone else.
Avoid Impersonators
Many creators might imitate a collection if it becomes popular. For example, many creators were trying to copy the style of the popular Bored Ape NFT collection and pass it off as the original collection.
Always ensure that any NFTs you purchase are from their creators or the original collection. If not, you will be paying a large amount for lower-value NFTs.
Final Thoughts
NFT trading seems like a challenging task. While it is not guaranteed that you will strike gold, there are a few techniques to ensure you earn high returns on your NFT while staying safe. However, it is vital to do your due diligence and put in the work required to keep your crypto investments safe. The more research and time you put in, the greater the chances of you becoming a successful crypto trader.
