We read and hear “do your own research” (DYOR) frequently in the crypto and NFT world. It’s offered as advice before buying into an NFT project, cryptocurrency, or DeFi scheme.
What exactly does it mean, how do you DYOR? What’s important to research?
This article will focus on NFT research. While the important issues discussed will apply to existing collections available on the secondary markets, they apply to new projects that haven’t yet been minted. Note, though, that a project can tick all the boxes and still end up being a rug pull, there’s no guarantee.
How can I stop picking loser NFTs?
Project art
Is the art good? Does it speak to you? Does the art feature any copyrighted material, trademarked logos, or imagery that can be considered something protected under Intellectual Property (IP) rights?
As an example, some NFT projects release profile pictures with characters that wear Tesla-branded sweatshirts. This is a very big red flag.
If the project does become mainstream, the IP infringements will stand out like a sore thumb. It risks legal action by the IP owners. An otherwise 10X value NFT could become worthless overnight due to pending “cease and desist” orders. This is an indication that either the designers/developers don’t care about IP infringement, or they don’t know. Either answer is bad news, and this project should be avoided.
Determine your ownership rights
When purchasing, are fully personal and commercial rights granted to owners to do with NFT as they wish? Will the project allow owners to use the artwork they own on a t-shirt, or any other kind of merchandise? While there’s no right or wrong answer to this question, it is something to be considered.
Analyze the project’s roadmap
What’s the project’s roadmap? A roadmap is a broad outline describing what the project team wants to accomplish and when it wants to accomplish it. For example, if a project is minting in the second quarter of the year, where does it want to be by the fourth quarter of the year?
The roadmap should not only be judged by what the project wishes to accomplish, but also by when it plans to achieve it.
Roadmaps can be considered as wish lists by the project founders. Projects shouldn’t be judged by not hitting all of their roadmap targets; if they can hit some early ones, that’s a great start that inspires confidence in the community.
Online presence
Does the project have a website, and does it look original? Is it made with love and care, or is it just slapped up fast? Does it look like it came from a WordPress template, or is it lifted from a popular NFT project?
Twitter is an excellent communication and marketing tool in the NFT world. Click the project’s Twitter link (it does have one, doesn’t it?) and investigate the volume, source, and engagement of the project’s tweets.
Audience-building is a constant task that needs daily devotion and work. Does the project have a decent, sizable audience in sheer number? More importantly, are its posts liked and/or retweeted?
At a bare minimum, an NFT project should have a Discord server account where holders/buyers/interested parties can gather, discuss, and question the project.
Learn about the founders of the project
Doxing (proving identity) is becoming standard practice in the crypto world. While it’s not expected that NFT developers advertise their addresses, you should have an idea as to who they are outside of this particular project.
The reasoning against self-doxing is simply becoming overtaken by reasoning for it. A Twitter handle is a start. A LinkedIn profile is better, a personal or professional website, list of publications, or Facebook profile is best.
Discord is also a great place to do research. Ask other members there, or the admins themselves, what other projects the team has led before.
Research the success of devs’ previous projects using secondary market sites like Magic Eden, OpenSea, Solanart, and social media platforms like Twitter and the Discords of those other projects.
Discord: where it all happens
Ideally, the project’s Discord server and Twitter account have a sizable membership.
However, there’s a better metric: an engaged, interested membership is more valuable than pure numbers.
Twitter followers and Discord server members can be bought, whose interest in the project is fleeting at best and are there solely to show numbers.
Does the project have accounts on Twitter, Facebook, Instagram, Telegraph, etc.? It’s a good sign when a project covers all the social media outlets and provides the content to all of the channels it’s present.
Always read a project’s Announcements Discord channel. This is where the admins of the project announce important milestones to the holders. There’s always work in progress to be announced, new developments, new partnerships, and new features.
Don’t forget that like in all things in life, hiccups and slow-downs will exist. Less-than-positive news should also be announced and made transparent to the community. Just as much trust in the project can be earned by being fully transparent with the community. Announcements should be made frequently, once a week at least.
Scan through the General Chat channel: Is there much interaction there? How many members chime in and what they’re chiming in about? It’s unrealistic to expect 100% membership participation. It’s not uncommon for a project to have 5% of its members provide 90% of the conversation.
NFT collection growth
How many NFTs make up the collection? Some projects go big by minting up to 10,000 units. Others aim for just a few hundred. Perhaps a smaller project is something you’d prefer, a tighter ownership group to talk with, and maybe more direct interaction with the project leads.
Is the project planning more NFTs later? Will they be in a similar theme? Will these new NFTs rely on owning the first NFT in order to obtain subsequent NFTs? It’s important that the first collection is established before moving to the next project.
What are the advantages of owning the project’s NFTs?
This is referred to as “utility”: What do owners get out of owning one or more of this project’s NFTs? What benefits are realized? Do holders earn a portion of the future sales (royalties)? Will the project make worthwhile charitable contributions from its sales? Maybe bragging rights of owning an NFT that Snoop Dogg had a hand in developing?
Will the NFT provide a Play-To-Earn (P2E) game? Consider that it takes a lot of resources to produce a good game. If the project aims to create a P2E game, is the game going to be good? Is it a popular, interesting game type? Does it have a demo?
Some NFT projects produce a comic book series. One project even shares in profits from upcoming marijuana strains and coffee shops.
Will the project have frequent raffles, games, and giveaways for holders? Maybe the project has loftier goals, such as providing launchpad services for up-and-coming projects or even launch services for artists to take part in NFTs who live in crypto-banned countries.
Or, is the NFT project desirable simply for its artistic beauty? Even with no stated utility, a project can become valuable. If an NFT is bought for a low price, it could become valuable in a few years’ time.
Final thoughts
Arguably, these are the three crucial components to research before buying into an NFT project. Assess if the candidate NFT project has:
- a well-structured roadmap,
- an active Twitter account, and
- active participation in their Discord.
It could be argued that getting in on the NFT’s initial mint isn’t necessarily something to strive for. If you miss the mint, chances are it will be possible to buy one or many NFTs on the secondary market within a day or two of minting. The NFT world is populated with very impatient buyers who, if they don’t realize a Lambo-level profit immediately, they will sell, even at a loss. Take advantage of these opportunities.
Moreover, new projects must make a good first impression so that it’s easy for you to judge them and consider adding them to your portfolio. Are any of these items considered deal-breakers? That’s up to you to decide.
Bonus Tip: Grinding for a Whitelist position is rarely, if ever, a rewarding chore. The project leadership offers this benefit to help spread the word about the project. A noble tactic, but what hoops do you need to jump through in order to mint at a lower price?
Can an NFT project tick all these boxes and still be a loser? Yes! Can the best NFTs in history do none of these things and have a ridiculously high Floor Price? Yes! Those are outliers, but by and large, every solid NFT project addresses all of these issues.
Author: Donald Garber
