About the author: William M. Peaster is a professional writer and founder of Metaversal , Bankless' new curated newsletter focused on the emergence of NFTs in the crypto economy. He's also been contributing to Bankless, JPG, and other sites lately!
Source: Bankless
There are many categories of NFT: art, PFP, collectibles, metaverse assets, games, historical relics, practical, music, digital land. More varieties will continue to emerge in the future.
When analyzing a particular NFT, it is important to pay attention to its category.
For example, the way you approach and evaluate PFP is different from the way you buy digital land in the Metaverse. Each category has unique questions that you must answer to succeed.
Art
To analyze an artistic NFT, we must first explore the following six basic questions:
Who is the artist?
Do some research by exploring the artist's other work, website, social media influence, and background. Understanding the artist's story allows us to understand the people behind the work, as well as the "how" and "why" of their NFT-related creative practices.
what type?
Consider the genre of NFT artwork. Concept art, generative art, pixel art, music, and photography are recent examples of media gaining major traction in the NFT ecosystem. Therefore, focusing on the genre of a piece will help you better understand its context and place in the NFT art landscape.
What are the technical characteristics of the artwork?
Pay attention to the design of NFT. Is the artist an NFT minted using the ERC721 standard on Ethereum? Or Polygon-based ERC1155? Is the metadata of the work stored via a decentralized storage solution such as Arweave, or is it maintained entirely on-chain? Answering these questions will help you understand the technical infrastructure of an artistic NFT.
What are the aesthetic characteristics of the artwork?
The aesthetic value of a work of art boils down to how the work brings pleasure (such as pleasure from beauty) or displeasure (such as that from horror) to the viewer. Therefore, when we look for the aesthetic characteristics of a work, we consider its content, its form, its visual harmony or its lack thereof. In your opinion, how does NFT successfully handle these factors? How does it look to other people?
What is the scope of the work?
Did the artist mint a 1/1 NFT piece? A version made of 1000? Or is the work part of a larger interconnected series of works being created? It is important to understand how the scope of the work fits into the artist's personal principles and conditions of supply.
How is the market for this work?
Pay attention to the initial sales data of the work (the ETH price and USD value at that time, etc.) and the subsequent secondary sales data. Richard Chen's cryptoart.io is a useful resource for searching for this type of information.
After learning about artistic NFTs, you'll have a better idea of what you want to think about in other categories of NFTs. There will be some overlap between the different categories, but each field has some unique issues to consider.
Collectibles/PFP
The basic questions you can use to analyze a digital collectible or profile picture (PFP) item are as follows:
Who is the creator?
Consider the talent and track record of the team in the ecosystem, such as whether they have launched any projects before that can be viewed. Also consider whether the team is public, semi-public (i.e. some members are anonymous or anonymous), or completely anonymous. It's not that anonymous teams are bad per se, it's just that anonymous teams are more likely to leave after making a promise to the world - but then doing nothing after that.
What are the technical characteristics of the series?
Note which chain the NFT is minted on, what token standard they use, how they are deployed (e.g. ERC721A), how they handle metadata storage, etc.
How about the art?
A collection that showcases memorable, visually stunning, captivating art is always a good sign! This is the most subjective factor in the process.
What is the availability?
Take a look at the total supply of the series. 10,000 pieces? Or 20,000 pieces? Also, we should see if the team has kept most of the supply. For example, the creator of goblintown.wtf has reserved 1,000 of the total 10,000 NFTs in the series.
How is the community?
Consider the reputation of the community where the project is located, and observe some of its members. Are you satisfied with what you see? This will serve you well.
How is the market for this series?
You need to check the floor price, trading volume, market capitalization, number of holders and other information. Studying this data will help you check the pulse of the project's marketing activity.
What does the roadmap include?
Pay attention to the project's public plans. Is the roadmap intentionally private for the series, or does the roadmap include various cross-media projects?
What are the use cases?
It’s also worth noting whether collectibles or PFPs confer any additional utility, such as being able to stake them for ERC20 tokens, DAO governance, real-world access, etc.
game
When analyzing NFTs in NFT games, we need to consider the following key questions:
Who is the creator?
A team with good game designers and game veterans is a good sign. In other words, people who play games for a living are capable of making great games.
What type of game?
MMO (massively multiplayer online games), role-playing games, sports games, and trading games are some of the more common types of games in the contemporary NFT game field. Where does the project you are analyzing fit in the field? Types of games like MMOs will have more difficulty, while others will have less difficulty.
What are the technical characteristics of this NFT?
Note which chain the NFT is minted on (Ethereum, Polygon, Ronin, Arbitrum, etc.), their token standard, deployment style, etc. Today, the vast majority of web3 games are built on low-cost sidechains or second-layer (L2) scaling solutions, so it is expected that current and future games will mainly research and use NFTs on non-Ethereum.
How does NFT fit into the overall design of the game?
You need to consider how NFTs are used in games and how creators use NFTs as a business model. Are they selling NFTs directly to users? If yes, how much was sold and what is the progress? Do they rely on income from royalties and in-game economics? Does their approach to NFT adoption seem thoughtful and sustainable, or cumbersome and short-sighted? If a gaming project seems to be more focused on NFTs than creating a truly reasonable game, then that's a red flag. In contrast, Axie Infinity is a team that focuses on gameplay first, and their Axie NFT supports gameplay first.
Is the game playable?
Many NFT game projects release NFTs before their games are built or playable. Projects that already have a playable game that people can use are less risky.
What does the roadmap include?
Finally, be sure to pay attention to the game's reveal schedule. What is the next step of the project? Has their roadmap made timely progress so far?
NFTs with historical value
I do my best to follow the discussion of historic NFTs, but I'm far from an expert on the subject.
However, data scientist and NFT historian Chainleft is an authority on the subject, having recently published an insightful article on Mirror titled “Defining ‘NFTs’ in Historical Context.”
I recommend reading the entire article as it is a very in-depth article, but note that towards the end of the article, Chainleft highlights five fundamental factors that people tend to consider when analyzing the collectability of historic NFTs. They are:
Timestamp: Immutable objective data on the blockchain
Scarcity: the number of assets in a series or version
Creativity: Artistic and Conceptual Intention
Technical achievements: technical efforts to break through the boundaries of the NFT field
Which chain to mint on: For NFTs that require interoperability and composability (like gaming NFTs), the chain on which the NFT is minted can be critical. This is less relevant to historic NFTs, but decentralization still matters, as long as supremacists don't blind us. It is worth noting that we have seen several important NFTs make the chain more mainstream, and perhaps the NFT itself may be more important than the chain it is based on.
Metaverse/Digital Land
If you want to analyze the virtual land NFTs in the Metaverse project, you can start by answering these basic questions:
Who is the creator?
Consider the project's experience and track record with Web3, and its overall reach in virtual worlds.
What are the technical characteristics of this NFT?
Is Digital Land issued on Ethereum, Polygon, or some emerging metaverse chain?
How are NFT supply dynamics being handled?
The key is to research whether the land supply for a project is fixed (eg 5k plots) or unlimited. Also, how fast is the land release? Was there a timeline published, or was the publication process ad hoc?
Is the virtual world easy to build?
When it comes to land "building", you want to see items that are very easy to use. There's no point in buying land if you can't do something to add value to it.
Is this virtual world accessible?
Is the virtual world open and free to use, or a closed digital garden? Will people still be able to create and enjoy social spaces in virtual worlds without owning an NFT of the project's land? The more convenient the better.
What is the geographic location within this virtual world?
Location, location, location. For example, the Origin City area of the Ethereum-based virtual world Voxels is the oldest and most desirable land in the project. Study the context of geographic locations within the world to better understand them and their desirability.
How many active users are there?
Are NFTs from some project that is now a virtual ghost town, or from a world with hundreds or thousands of hardcore users? The ideal situation is a lot of activity.
What is the market for this item?
View data such as floor price, trading volume, market capitalization, number of shareholders, etc.
Practical NFT
Practical NFTs refer to NFTs with specific uses, not just as artworks, collectibles, virtual title deeds, etc. Within this category, two popular NFT categories are Domain NFTs and Membership NFTs, for example, Ethereum Name Service .eth and Kevin Rose’s PROOF Collective Passes.
When analyzing such practical NFTs, some questions to explore include:
Who is the creator?
Reading this article you already know that experience and reputation are good signs.
What effect is conferred?
You can use the ENS domain name to manage wallets and decentralized websites, or use NFT members to gain access to future issued NFTs, such as how PROOF NFT holders get free Moonbirds. Researching what an NFT actually does and how it works is key to understanding its value.
How long does the practical performance last?
A utility NFT could provide benefits indefinitely to whoever holds it, or it might require periodic updates and re-registrations like ENS domains. Understanding the maintenance of utility NFTs is key to exploiting their value.
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