Key Takeaways:
- Blue-chip NFTs self-perpetuate. Because NFT value is inherently subjective, other investors see established brands as an investment anchor.
- Blue-chip NFTs are much like penny stock: most are ordinary, but few will rise to blue-chip status.
- Actively avoiding rug-pullers is the best way to stumble upon blue-chip potential.
Blue-chip stocks are big companies that have a market capitalization in the billions of dollars. But companies like Ford, Apple, and AMD that everyone knows, did not always have a strong reputation and a lot of money.
At one point in their evolution, they were penny stocks. This means that investors who partook in their early penny-stock stage made life-changing gains down the road.
The same is true for blue-chip NFT projects as well. The million-dollar question then is, how to spot the blue-chip potential among NFTs?
Problem With Blue-Chip NFT Investing
Among cryptocurrencies, Bitcoin and Ethereum are the blue-chip assets. Out of the total crypto market cap consisting of thousands of coins, at $1.2 trillion, just BTC and ETH make 65% of the share.
For the NFT market, Ethereum is of special importance as a smart contract platform that facilitates the bulk of NFT trade.
In fact, one could invest in NFTs indirectly by investing in ETH itself because NFT transfers require ETH gas fees. Direct investing in blue-chip stocks is rather problematic at this point.
Yuga Labs with its Bored Apes Yacht Club is the clear blue-chip winner here, having become a $4 billion company in a year.
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Conversely, the BAYC floor-price of ~$166k has become prohibitive, reserved for whales and celebrities. The same is true for CryptoPunks, Art Blocks, CloneX, Azuki, Otherdeed, MAYC, BAKC, and others.
These blue-chip projects all have substantial hype behind them, making the market entry for large gains difficult.
Without resorting to fractional NFT investing, in which people collectively own pieces of the same NFT, the only way to get ahead is to get ahead of the hype.
How To Spot Hype-Worthy NFT Projects?
All NFT investors have to keep one thing in mind — how easy it is to create NFT collections. This is especially true for generative ones, in which an algorithm puts together composites based on different attributes.
In turn, as thousands of NFT collections are created on a monthly basis, many of them will be scams.
Otherwise called rug pulls, these collections don’t have a future. They are designed to entice people for the initial public mint, only to be promptly abandoned. For this reason, spotting potential blue-chip NFTs is equivalent to avoiding rug pulls.
There are several ways to accomplish this.
Pseudonymous vs. Anonymous
What do rug-pullers count on? Anonymity, so they can’t be held accountable. Furthermore, so they are free to execute future rug-pulls. That’s why it is very important to distrust anonymous NFT offerings. However, this is more complicated to do in practice.
For example, the Yuga Labs team hid who they were until BuzzFeed decloaked them in February. At first glance, one may think their cover was blown.
But, Yuga Labs was always been transparent, in that it is a registered company in Delaware.
The reason why so many NFT companies use pseudonyms and in-lore identities is for marketing purposes.
After all, this is how virtual narrative is crafted — drawing in potential buyers with its creativity. This is the difference between benign pseudonymity and malicious anonymity.
Yet, even anonymity can be a temporary marketing stunt. This is best illustrated with last week’s top performer — goblintown.
While the creators are still unknown, goblintown achieved tremendous success in a very short time frame. Does that mean that one should dismiss the “don’t trust anonymous teams” rule? Not quite. That rule has to be combined with the next one.
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Excellence That Pops Out
It is difficult to define excellence. It is one of those phenomena that you know when you see it. This turned out to be the case with goblintown as well.
From the technical website design to the NFT art and story-building itself, goblintown exudes professionalism in all aspects.
So much so that it is suspiciously similar to Yuga Lab’s MO (modus operandi), according to analytics firm Nansen.
When encountering such a project, despite being anonymous, one should lean on the side of legitimacy. At the same time, it would be prudent to be on guard and remember these are exceptions.
How Does the Dev Interaction With the Public Feel?
If anything, rug-pullers are hungry for a quick buck. In this race, they are often less self-aware in terms of how they appear to the public. In practice, that translates to a lot of talk about pricing schemes. Likewise, you will see them aggressively marketed, especially on Instagram.
Take notice that goblintown adopted a completely different approach, counting on the work to speak for itself.
CopyPasta Trap
When something becomes successful, it is set upon by copycats. At this point, it’s hard to keep track of how many Ape-like games have come out since BAYC, all hoping to follow in the success of the original. NFT investors should avoid them with a wide berth.
Not only do they bring nothing to the NFT table, but their method shows artistic bankruptcy. That is, even if we are generous and assume they are not outright rug-pullers.
Brand Rollout
If a new NFT launch is worthy of becoming the next blue-chip project, this will be visible in several ways:
- Not only do they have a detailed roadmap, but they overdeliver on some milestones.
- The entire package is competently done: social media presence, website, unique artistic take. Animated and minimalistic Verb is a great example of the latter.
- Team’s reputation, if already revealed
- Community footprint: an explosive rise in Twitter/Discord followers even before the first public mint
- Collabs, or verified announced collabs, with more established brands.
All of these factors need to be taken as a holistic snapshot to even consider investing.
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What Is the Future of Blue-Chip NFTs?
At the current rate, it appears that the NFT market will experience what has already happened to the internet at large. Few big companies will accrue enough resources to get ahead of everyone else.
For instance, Yuga Labs will churn out future projects, and all of them are likely to become blue-chip by the function of the company’s legacy.
However, it will be a while before we see this consolidation in full force. In the meantime, many upstarts are gaining ground, some of which we’ve mentioned here.
Just like fundamental analysis for stocks can spot future excellence, the same can be done with NFTs. If anything, it is a much easier job as the artwork and technical competence (both web and NFTs) are on full display.
Potential Blue-Chip NFTs:
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