- The growth of the NFT market has presented many opportunities for market participants, but it has also attracted many garbage projects.
- Tracking the communities, social activity and roadmap of a project can often give a strong indication of its quality.
- Extreme advertising, high mining prices, and uninspiring derivative-based artwork should also set off alarm bells.
There are many lucrative opportunities in the NFT market, but there are also many unoriginal projects and scams to be aware of. Here are ways to spot junk projects in the NFT market..
Identifying the worst NFT collections
Over the past year, the NFT space has seen explosive growth. But despite all the positive developments we have seen, there is another dark side to the NFT market.
Countless copies of avatar-based NFTs have sprung up, with varying degrees of success. Those who got into Cool Cats, Crypto Coven or CloneX early are now laughing, but there are plenty of projects that haven't had as much of an impact.
NFT influencers will never tell you this, but the truth is, for every blue chip, there are 10 other avatar projects that fail once the rumor mill dies. As more and more projects emerge and the overall supply of non-fungible tokenized assets increases, the proportion of high-quality projects will decrease. This means that if you want to make a profit in this market, it is more important than ever to know how to identify junk.
While there are no certificates to determine which projects will fly and which will fail, there are some red flags to watch out for..
Warning signs of junk projects in the NFT market
1. Beware of super-hyped things with a huge following on social media .
These projects tend to attract new entrants, and teams know this very well. They often disappoint at launch, either because the art is great or there's a big trailer followed by an explosion shortly after the minute.
Note: minting is minting the NFT with all its information on the blockchain.
2. Avoid anything that runs whitelist giveaways to get retweets or social engagement.
These projects use people for free promotion because they can't grow organically. Think about why this is the case: Usually, it's because there isn't enough substance to get people excited without offering an incentive.
3. You should be careful about anything that NFT influencers start endorsing.
Today, the worst NFT influencers support projects without disclosing that they were paid for their promotion. They often take a cut of the supply of any project they pretend to be excited about, then go out on a limb with their audience and hope no one notices..
4. Try to find art that seems to have made some effort.
If you have time, be sure to dive into communities and take a full look at the project website. Try to identify your roadmap and the team's vision for the future (and remember that projects can often speak of a great game, but few measure up to it). If the team is legit and has real plans ahead, it might be worth emulating. If not, or if you have dreamy vibes, consider firing him.
5. Beware of high mining prices.
If a collection has 10,000 editions and mintages at 0.1 ETH, that's about $3 million in revenue, assuming sellouts. And that doesn't take into account secondary sales, which, if the project has legs, should be where the team makes most of its profits. Any project that isn't content with a few million dollars at launch should set off alarm bells; don't be surprised if they annoy you and disappear once you've given them your ETH.
6. Almost anything related to Coinbase NFT is worth avoiding.
While the market was associated with some credible projects like Cool Cats, it also formed ties with the MekaVerse, HAPE, and Pudgy Penguins, all of which failed in one way or another.
Conclution
If all of this sounds like too much work for you and you are still not sure about getting rid of your hard-earned cryptocurrencies, take a slow look at all things once a project is launched. It can still be extremely profitable to have passed such an exaggerated rumor.
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