Original article by William M. Peaster
As NFT moves into the mainstream, more and more artists and project owners are getting into the NFT space. Since the start of 2021, the largest NFT trading platform, OpenSea, has seen an explosion in monthly trading volume, with the explosion of new projects such as Meebits, Bored Ape Yacht Club, and Ghxsts being one of the main reasons for the significant increase.
However, it is important to note that while NFT projects are proliferating, not every project has seen success, with the vast majority ending up unattended after the primary market offering and lacking long-term viability. Therefore, we need to DYOR and do our own research when buying NFTs.
This article by Bankless author William M. Peaster on how to DYOR NFTs is designed to help everyone find better NFTs and avoid the pitfalls.
The full article is translated below.
Do your own research” is also often called “DYOR”.
This four-letter acronym is often used in the DeFi space, where the crypto economy is like the Wild West, and ultimately you have to do your own research on the projects in the crypto space, understand their ins and outs, and then put your money into them.
I recently swiped a tweet from trader Alex Krüge in which he listed a process for how to DYOR when it comes to DeFi tokens, as follows.
Recently, I’ve been researching the DeFi space and the NFT ecosystem, and these steps can help me delve into the DeFi project in a big way. Also, my interest was piqued because I thought we could also use Alex Krüge’s suggestions for researching those NFT projects. So I’ve made some changes to the list of suggestions above to make it easier for you to study NFT projects.
I would like to add that these steps can help you understand new NFT projects, which is more productive and necessary, and that you can also use this model to study projects that have been around for a long time.
(1) Check the project’s Twitter and website.
For projects in the crypto space, Twitter is the place to be. Almost all quality projects, regardless of old or new, will run their Twitter accounts with care, and by taking care of their Twitter accounts, they will be more likely to connect to some higher quality resources. In addition, you need to look at their official website, in most cases, your interaction with DApp is on the official website, so you need to check it carefully.
(2) Analyze the project team.
Some NFT projects will disclose their team members, but some will remain anonymous, and even some project parties will disclose part of them and anonymous part. There is no reference standard for the analysis of the team, it depends mainly on whether you are familiar with these people, how reputable they are, what projects they have done before, etc.
(3) Determine the extent of NFT uplink.
You need to understand how the project’s NFTs are stored. Is it stored completely on-chain, or decentralized via IPFS, Arweave, etc., or is its metadata stored completely off-chain. This is related to the security of your NFT, if a project is completely off-chain storage, you want to collect it will have to trust that the project will not do evil, which is very dangerous.
(4) Look through the project Discord and Telegram chat logs.
Generally speaking, NFT projects will create a Discord or Telegram group, and when you want to understand the project, joining these groups is a wonderful way to feel the pulse, emotions and energy of the entire project community in the group. Also, these communities are a great place to negotiate secondary market deals later.
(5) Pay attention to what other NFT holders are saying.
While you should know that one person’s opinion may be one-sided and you do not have to rely too much on one person’s opinion or be overly mythical, it is essential to communicate briefly with these NFT holders or follow their opinions in order to get a more complete picture of the project. You can search through Twitter hashtags or Reddit.
(6) Analyze on-chain activity.
You can use tools such as OpenSea’s ranking page and NonFungible’s Market History Center to track the trading activity of NFT projects, and you can use this data to understand how these projects have performed in the recent and historical past.
Additionally, if the NFT project you are researching has its own native token, you can better understand the basics of NFT-centric assets by following these steps.
(1) Search for tokens in CoinGecko.
CoinGecko is a great cryptocurrency market data dashboard that makes it easy to find various basic metrics about tokens. It also has a strong focus on new project tokens, so you can basically find all the tokens you want to know about on this site.
(2) Research market cap, fully liquid market cap and trading volume.
Market cap refers to the value of a project’s tokens in circulation, fully liquid market cap is the total value of all the project’s tokens once they are fully circulated, and trading volume is the amount of money traded through these assets in any given day, week, month, etc. These are some of the core metrics you need to look at when understanding any crypto asset.
(3) Research information such as token economics and pre-sales.
What can the native tokens of an NFT project do in the NFT ecosystem? Pledge, governance or something else? How many investors have invested in tokens and what are their costs? These questions can help you better gauge whether you should invest your money in the project.
You need to do your own research to find the best path in these waters of unknown treasures and dangers. The good news is that all of the above information is largely freely searchable on the web, and everyone can become a top-notch NFT researcher by exploring deeply and sharing their knowledge.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/nft-pit-avoidance-guide-dont-forget-to-do-your-own-research-before-you-buy/
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