Marketplace data showed sales of NFTs surged into the billions this summer with the number of projects dropping daily skyrocketing. An intuitive question emerges— how do I decipher between projects with legs and potential rug pulls?
The Dev Team
First and foremost, you are investing in the team behind the project. Art is subjective, what is visually appealing to one person can be a hard pass to the next person. However, the people behind the project have a history of industry wins or losses— or they may be anonymous (which should be a red flag). Inexperience doesn’t mean the project can't be a potential blue-chip, but more risk can be involved. Jump on their social media, discord, and website to learn more about the capabilities of the people behind the project.
Intellectual Property: Stoner Cats and DeadHeads
Do you actually have any ownership over the intellectual property (IP) of your NFT? In terms of IP, let’s compare two projects that have produced an animated series around their project— DeadHeads and Stoner Cats.
Stoner Cats — an adult animated series with some big-name celebrities behind it, dropped their NFTs with buyers having no IP rights.
Checking out the DeadHeads website statement on their IP plans:
“When you own a DeadHead, you own the NFT and the intellectual property of the underlying art itself. You own a character in the multi-media universe, with commercial and non-commercial rights.”
This may or may not be of importance to their communities, but it is worth being aware of as a consumer and community member.
Roadmaps and Utility
What are you actually purchasing when you buy an NFT? It could solely be the face value — the art. However, the concept of utility is essential to consider when researching NFTs.
Wicked Craniums is a strong example of creators striving to develop utility around their NFTs. In addition to airdrops and collaborations, this project is the first to provide staking opportunities to their community. Users can stake a Wicked Cranium and a Wicked Stallion to receive additional NFTs, comparable to the concept of a dividend. Staking wasn’t included in their original roadmap and suggests a dedicated and capable team.
The world of NFTs is new and quickly evolving. After you have your questions answered, actually going through the motions — converting your fiat to crypto, setting up a wallet like MetaMask, and connecting to a secondary market to purchase your first NFT, provides the best learning experience.