NFT Alpha Strategy

As crazy as it may seem, the NFT market has a tendency that could be overlooked. NFT as we may know is already a niche asset class, being under the blockchain industry, but the marketplace itself is even more ‘nicher’ – deeper level of subsectors. This article is going to deep dive into the NFT market and tries to deduce its trends. All opinions are my own.

The subset data (see appendix) is taken from 300 collections that have the highest volume and 62 of those that have the day 1 price increase of more than 300% than the mint price. Remarkably, of these 62 collections only 22 (roughly 35%) are profitable until this day when compared with its day 1 launch price.

Taking a broad overview of the market, NFTs could fall into several categories: Primitives, Historical ‘Legend’, Art, Functionality, Ecosystem, DLC, Avatar, Marketing, Social Movement, Limited, and Meme. Furthermore, most of these NFTs have two things in common: Roadmap and Goal in mind. Be it as lucrative a roadmap it could be or a far-fetched goal, these NFT founders create the mindset ‘You’re still early. No FOMO.’

Distribution of top NFT collections

Historical collections are those early projects before the NFT boom. MoonCats is the only example of the OG NFT, launched in 2017. Functionality NFTs are those that have a built-in or external use case, i.e. staking, governance, rewards accruing mechanism, upgradeable, exclusive community, etc.

Ecosystem NFTs have the sole purpose of trying to draw customers into its environment. From enticing lores to added NFT ‘DLCs’ or collections derived from existing collections. A strong example for these types of NFT is the collection curated by FVCKRENDER, in which customers must buy FVCK_CRYSTAL// initially to mint ESSENCE// which will be used to breed FVCK_AVATAR//. Most NFTs that are ‘breed-able’ from multiple components or have functionalities that require their platform fall into these categories.

Avatar NFTs, as the name implies, are basically customizable arts that are “good looking” enough to be a PFP. Usually, these categories have a rarity mechanism that may drive market demand and indirectly people who own the most scarce flaunts the NFT in social media. The ideal example is tubby cats which was a phenomenon last month.

Social Movements NFTs are those with an exclusive aspiration to support on-going campaigns. Several examples include You by BFF and Boss Beauties supporting women rights and role in the cryptospace, Antonym: Genesis the firm believer that digital and physical goods could be intertwined – Phygital, Haki and Shinsei Galverse for the anime community by the anime community.

Meme NFTs, on the other hand, are usually anti-mainstream arts. These pieces are one-of-a-kind and they’re always unique. Examples of these categories include Tweet DAO Eggs, JPEG Cards, and mfers.

Primitives is the new breed of NFTs – collections with new innovative ideas. ASM is best in tweaking the reward mechanism that NFTs could output, using machine learning generated from the Brains NFT to let the AI decide reward. Ghxsts Comics is another strong example of NFT primitives in which buyers must verify the purchase of NFT to read the comic itself. Bobu, the Bean Farmer experiments with tokenizable NFT with exclusive governance, community, and further implementations. Finally, Tweet DAO Eggs is technically a meme, but the idea is primitive – community holders are able to control @TheTweetDao twitter account.

Another factor to look into is the people behind the collection itself, 14 of the 62 collections are backed by prominent personalities. Grails is backed by the PROOF Collective, notBanksyEchoes is inspired by Banksy, Karafuru by Museum of Toys and Indonesian influencers, You by BFF, VOX by famous TV series, FVCKRENDER, VaynerSports, Gary Vee, and the list goes on.

Clearly, the team behind an NFT holds a crucial role in shaping the collection’s outcome. Taking an average of the twitter account followers from each core member and size of core team, totals to 29.98k followers per team and 4.2 in terms of core team size.

Trend scrapers (discord + twitter)

TODO IMPLEMENT

Appendix