Flippin 101 Part Uno
Summary; A short and quick overview of how the NFT flipping works.
Buy low, sell high.
Artwork alone isn’t enough to warrant a success for NFT projects.
Credit to Zey who made me look at the NFTs in a realistic way or in my own term, FlipperVision™
As always, a disclaimer : this article is NOT a financial advice.
Without further ado, here’s my take on it.
First thing first, we must agree upon one thing : everyone, or at the least MOST people that are into cryptospace are in it for financial benefits. Profits. Stonks. Monies.
That is of course, translate into NFTSpace too. Because like it or not NFTs are TOKENs after all, part of the crypto. Non Fungible TOKEN.
One thing I like about NFT projects are (as an “investor”; at least an aspiring one that is), they have very limited supply, compared to the conventional cryptos that have millions, if not billions or even trillions of supply.
Currently most NFT projects goes with 10,000 supply of NFTs, that’s the standard. Some can even go lower, like 5,000 or even 2,500 or even 100. The lower the supply, the higher value it will have. Or “scarcity” if you may.
But there’re lots of collection that is lower than 100 even, and they don’t sell well? That’s where the DEMAND count comes in.
So how to analyze the demand for the NFT? That’s quite easy, look at the social accounts they have; specifically Twitter and Discord, the primary survival tools in the crypto and NFT space.
Say a project have 10,000 supply, but their Twitter only have 200 followers and very low engagement, or their Discord have 1,000 members in it and the chat is pretty much dead, then you’re looking at a project that won’t sell out in the long run. Would definitely bad option for a quick flip.
However, using examples of the projects I mentioned in the previous article, Mekaverse. The project have around 10,000 supply, their Discord have 250,000 members and their Twitter account have 230,000 followers, if 1/20 (12,500 or 5%) of those Discord member will ACTUALLY buy the NFT, they will most likely still performing VERY WELL.
So the demand have exceeded the supply, that’s econ 101. What will happen next? Go figure.
The rest of the demand that don’t get the supply early will look at the lowest price (floor price) at the secondary market (OpenSea).
Project owner can hyped out the sales; bragging about “SOLD OUT IN MINUTES/HOUR/DAY”, and that would resulting the demand go wilder, making the demand of the current circulating supply even higher; thus raising the floor price even more.
So in summary, all you need to do is buy at the lowest price (usually mint), getting earlier than everyone (getting into presale/whitelist; will get into these later on).
It’s that simple? Theoritically it is.
But Wait! There’s More!
There’re marketplaces and services that offers bots/members for Discord and Twitter followers. That’s one of the biggest problem in analyzing these projects.
A Discord can have even 200k members but can also be dead empty without any activity. A wasteland. And I seen such Discords, like the people there just replied to one another “good morning, how are you” but they don’t talk about the thing they should be passionate about : the project itself. At all.
Twitter account can have millions of followers. But as I said and kept in my mind when I do my social medias :
- Impressions (visibility)
Followers count don’t mean much if they don’t engage to the account posts, either by commenting, liking or even retweeting the account’s posts.
Same thing with the Discord. Are the members genuinely passionate about the project? Are they good, non toxic community overall?
So if it were THAT easy to analyze, what’s next? Getting your hands on the project early. That’s where presale/whitelist comes into play. What is a “presale”? And tf is “whitelist”?
Presale is a sale done before the public sale (everyone can buy the thing). Whitelist is the process of getting access into the presale. Or even get to mint at all if the demand was over exceeding the supply.
In short, whitelist is the VIP access where you can buy the thing (for this matter; mint the NFT) earlier than everyone else.
Each project have their own specific requirements to get into the whitelist or presale. Some require 10 invites to get into the whitelist, some require activity within their Discord and so on.
And if their Discord growth were organic and exceeding the supply number, it wont be easy to get into the whitelist. It would feel like unpaid full time job and you do stuffs for the project with the reward of possibility of getting the whitelist, and not knowing how the project will perform when minting is live.
So yes. It’s a gamble. But really rewarding gamble. Some people even willing to be a full time flippers, attempting to get into whitelist on every projects they stumbled upon. And they actually make jaw dropping amount of return.
Mekaverse, for example, was priced at 0.2 ETH. At mint before reveal there’re a LOT of offers up to 5 ETH. That’s 25x return already. The demand was so insane they’re not even doing any whitelist, they actually raffling on who get to mint the Meka.
I’m not sure how will it perform in the long term run tho as I didn’t read their whitepaper and roadmap. Floor is now dropping to around 2 eth. But that’s still 10x from the mint price.
Roadmap, Utilities & Art
Do anyone read the roadmaps, whitepapers or even look at the art of these NFTs? I doubt most people do. That is including me. Even if some people read the whitepaper, I’m not sure they will understand most of the technobabbles in them.
Roadmaps and whitepapers will definitely kickstart the early talk about the project. But without the proper marketing and nobody heard about it at all then what’s the point?
The collection probably can do your taxes or even wash your dishes but if nobody heard about it, nobody would want it.
Art however, can tell about the project so much. If it’s low effort, be very vigilant. They might be investing low efforts on the other aspects of the project as well. Or even a rugpull/scam.
Because it’s very easy to generate 10k projects nowadays, as much as easy to create a scam coin that gets rugged after it mooned.
Thus, my rank on points of what makes 10k project successful still stands :
So Let’s Ape in Then?
I wish it were THAT easy. I would’ve been a billionaire right now.
Pretty much as in the conventional coins (tokens) scene there’re scam projects everywhere.
Even if everything described in this article checks out, there is still a possibility of rugpull.
The recent example of this is MaskByte.
Their Discord is at almost 150k member and the chat is VERY alive. And it was rugpulled. One of the partner of the project went away with all the money. Their staffs left unpaid.
One of the creator tried to redeem himself in the Discord, posting his chat screenshots with the alleged partner who ran away with the money.
It was really painful to watch.
“It’s unregulated bro so it’s not a crime”
That’s one of the reply from the alleged scammer within the screenshot. Which he deleted afterwards.
I’m not sure whether MaskByte refunded their investors or not. But in very rare occasions things like this occurred ; rugpulled or unplugged, sometimes they do.
IF the owner have tegridy.
As been said in my previous article. Genuine projects can fail too. And creators often unplugged their project if the sale number didn’t meet their expectations.
I prefer the term “unplugged” for these cases rather than “rugpull”. They probably have genuine intention when they start, but things don’t always favors them.
Example? Degenerate Tigers Country Club. Was planned to be 10k collection but now their OpenSea description changed into “275”.
However, like I said I don’t exactly know what’s the story after the mint. Whether it’s rugpulled or simply unplugged. And whether the investors are refunded or not.
Rugpull is like Maskbyte. Where the owner just ran with the money and left everyone who excited with it bamboozled.
My boss once told me, in business if you don’t get at least breakeven in 3 months, the business isn’t worth to continue. But business is art, there’s no surefire way of how to run one. It’s not an exact science like 1=1 in business. There’re guidelines you can follow, sure. But still, how you want to run it it’s very up to you.
In the end whether it’s “unplugged” or “rug”, really doesn’t matter. Because what matters now is that the NFT collection is now went to 0. It have no more value.
And that is also why most people who just starting their NFT collection projects usually chose to be anonymous. If devs have the decency to refund the minters, then it’s not rugged IMO. If they just suddenly dissapeared, whether they have good intention at start or not, then it’s a rug.
Nevertheless, rug or not the most important thing you should know when purchasing NFTs, is that you should always assume the value will go to 0. Because I seen a collection on which was actively maintained and developed the floor price still go to zero. That’s just the way it is. Nobody can predict the market. Not the devs or even some kind of NFT/market expert with years of experiences.
So how to avoid being rugged? More coming soon in next parts of the Flippin 101 articles.