How to Evaluate NFT Projects? Is There Any Reference Standard?

 When you step into the world of NFT, you may be attracted by thousands of NFT projects and feel lost. It is different from the FT projects and much more complicated. In this case, it is necessary to do some research and try to evaluate the NFT projects before investing. This article will list some issues about NFT projects you should consider before investing, though there is no unified approach on evaluate or assessing the value of certain NFT projects.

What Is the NFT Team?

It is extremely easy to mint an NFT and the threshold for an NFT project is extremely low. Moreover, the NFT projects can be imitated and copied easily. In this case, the founding team will influence the development of the NFT project and the value of NFTs. If you want to invest in an NFT project, you should try to make a research about the founders:

  • Is the founder famous and has a lot of followers?
  • Can we find the information ( work experience, country, name, etc.) about the team members?
  • Do the team members have a good reputation?

The founder who has a large group of followers and the team members who are experienced in the crypto industry are important elements to the success of the NFT projects.

What Is the Info of the NFT Project?

It is vital to know the details of the NFT project that you wish to invest in. You should find out the category of the NFT project. There are different kinds of NFT projects, some are simple art NFT, some are music NFT, and some are more advanced with the applications on blockchain games. You need to verify them and go deep into research on how they work. When you are evaluating an NFT project, creativity and originality are other issues that should be considered. For NFT projects, if one project is succeeded, there will be hundreds or even thousands of imitators going live. It is not wise to invest in those imitators since the value always goes zero.

How's the NFT Community?

The development of the NFT project is always pegged to the activity of the community. So sneaking into an NFT project's Discord and observing the discussion of the community is one of the evaluations to indirectly measure NFT projects. Only evaluating the number of community members is not enough, because the number of community members is easy to be faked. You should also focus on the engagement of the community. That's to say, if the NFT project's Discord group with real members and high engagement, the NFT project may have potential value in the future.

What Are the NFT Prices and Liquidity?

When we mention NFT prices, they include the mint price, floor price, and trading fee (Royalty percentages). You need to know the mint price and the gas fee while minting, it will determine the floor price in the early stage. Also, the platform commission, royalty percentages, and blockchain gas fees will affect the value of an NFT. NFTs with high liquidity carry a higher value. People are likely to invest their money in NFT categories with a high trading volume because more liquidity helps them take their profits with ease. A highly liquid NFT is will help to retain its value.

How Rare an NFT Is?

The NFT made by a well-known creator will add value to the NFT items. Also, the limited supply of an NFT project will make it more valuable than those with an unlimited supply. For example, the total amount of CryptoPunk is fixed at 10,000. The scarcity of CryptoPunks will make them more valuable, the fact is true, the CryptoPunks sales have reached tens of millions of dollars.

As for a single item of NFT, you can use some tools( such as rarity.tools) to evaluate the rarity.

Closing Thought

The five questions above are the ways to evaluate or assess the value of an NFT. However, they are not the only ways. People always have their own ways to evaluate. The key is you should spend time doing the research and learn from mistakes and others' successful experiences. While investing, you should alway be calm and don't be impulsive.

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