What I look for in NFT projects 🧐

gm everyone,

and Happy Lunar New Year to everyone who celebrates! 🎊🐯

The Year of the Tiger is seen as an exciting year as the tiger stands for courage, braveness and adventures in the Chinese zodiac. After the Year of the (slow and steady moving) Ox, we could do with a bit more action, don’t we?

And there is a lot of action in the market. Traditional stock markets and cryptocurrencies have been tumbling in the past few weeks, but the NFT market is hotter than ever. 🔥

Many experts predict that 2022 will be the year where NFTs will cross the chasm to becoming mainstream.

I hope you enjoyed getting to know the NFT projects that I shared in my last newsletter. If you are considering buying your first NFT(s), I would recommend you to start thinking about an investment thesis because it is so easy to get swayed by the hype that you might see on social media.

FOMO is real in the NFT world and people forget that there are plenty of opportunities. If you have missed the boat on something, so be it. There are hundreds of collections being launched every day.

Personally, I am starting to see a pattern of what my investment thesis looks like.

The NFTs that I’m most bullish on all have these things in common:

In other words, my NFT investment thesis is: thoughtfulness combined with anti-hype and a strong community.

If I discover a new project now, I will check if it fits my thesis and if the 3 criteria are not all met, then it’s rather unlikely that I will buy the NFT.

Of course, your thesis might be pretty broad in the beginning and could just be ‘profile picture NFTs’ or ‘gaming NFTs’. Over time, you will learn what projects you gravitate towards and what type of projects tend to do well.

Another topic that is important to think about are investment strategies.

This is what I’m covering in today’s ‘Learning about web3’ section. I hope they can be helpful for you on your NFT journey.

Until next week, keep blooming!

Lu

Founder of Blooming Founders

If you got intrigued by the success of Bored Apes Yacht Club, here is an in-depth article on how everything came about: How the Bored Ape Yacht Club Became The Most Successful NFT Brand

If you are thinking that your business might be able to jump onto the NFT bandwagon, here is an article to see if it could make sense: 5 Ways To Know If Your Brand Should Start Creating Its Own NFTs

This framework used by top tech companies is perfect for content creators looking to to grow their audience: How to Grow Your Audience With the Growth Loop Framework

Compensation is always a touchy subject for founders. Here a guide on how to think about things: The Quick and Dirty Startup Founder’s Compensation Guide

An interesting article about how professionals / experienced executives often struggle with building online businesses: Unprofessionals Dominate at Making Money Online. Professionals Suck at It and Make $0.

Let’s assume you have looked at a few NFT collections and determined one that you would like to buy an NFT from.

You could click on ‘Buy Now’, accept the transaction in your MetaMask and be done with it, but having a strategy behind your actions is always a good idea.

Here are a couple of strategies that I have seen in the space:

1) Buy & Hold:

You buy an NFT with the intention to hold long term (in the NFT space, ‘long term’ means at least 1 year). Your money is tied up with the JPEG and you hope that the floor price rises over time.

This is the least stressful and time consuming option. You decide whatever amount of profit you take (if there is profit to be taken), but it could mean that you sell too early because you only have one NFT.

If you can afford it, always mint or buy 3 NFTs from the same collection. This way you can sell one NFT to re-coup your initial investment (and essentially hold the other two for free).

Then, you can sell the second one when you have reached the next level of profit where you think: “Okay, this is meaningful profit to take”, while still keeping the last one for a potential moon shot.

If you execute this strategy, you will be successful. Of course, the NFT has to play ball and actually rise in value. 😊

Another strategy is to try to join whitelists to be able to take part in the pre-sale of an NFT. For any good project, the mint price will be the lowest price you will get (for bad projects, the price can go to zero after a while of course).

Being part of a pre-sale guarantees you the low mint price and most good projects will sell for 1.5-3x of the mint price on secondary markets once it’s sold out. So by ‘simply’ joining a whitelist, you could achieve a 50-300% return on your investment.

Said this, it is actually not always easy to join a whitelist. A lot of projects use it as engagement farming tool now and have ridiculously high barriers to entry (like inviting 10-20 people into the Discord, for example).

Personally, there is a limit of what I’m willing to do for a whitelist. If it doesn’t happen, it doesn’t happen. There are plenty of other opportunities.

But it is an effective way to ‘stack your ETH’ and build up capital to buy into blue chip projects. A lot of people have made their NFT wealth this way.

That’s all for this week. If you liked this newsletter, please vote with a ‘Yes’ 👍 below!