7 Steps to Evaluating the NFT Projects: A Comprehensive Checklist for New Investors

At the beginning of my first steps on NFT, It was the main pain point for me on how to evaluate NFT projects and protect myself from FOMO (fear of missing out) buy.
There are dozens of projects, and when we’re just beginning, it feels like we missed the train. I aim to simplify the process by using a checklist and showing actionable steps. I’ll also share my NFT Project checklist google sheet file, where I assign points and make notes for each step.
The prerequisite is that you have a basic understanding of what is nft, crypto wallets and how to buy and sell.

These requirements are mainly for PFP (profile picture) NFT projects, and the weight of each changes depending on the NFT collector type (HODLers, Flipper, Early Supporters and etc).

Founders

Investing in the right people is crucial for success, so it’s important to do your due diligence and choose projects with strong, transparent teams. In the NFT world, you’ll come across “Doxxed” and “Undoxxed” projects. Doxxed NFTs are ones whose founder’s identity is revealed publicly, while Undoxxed prefers to remain anonymous.

I prefer Doxxed projects because they allow me to quickly research the team’s background and experience with NFTs. In addition, I can see how they've engaged with the project and the community by checking out their social media profiles on platforms like Twitter, LinkedIn and Discord.

Checklist and Max points:

• Doxxed — 5
• NFT Experience — 5
• Engagement with Project — 10

Artwork

Art is an effective way to attract attention and a great marketing tool, and this is especially true when it comes to NFT collections. In order to stand out in the crowded NFT art market, designs need to be creative and visually appealing.

When selecting NFT projects to join in, consider those that are unique and have creative traits. It is also advisable to avoid derivative NFT projects that closely resemble popular ones.

Checklist and Max points:

• Artwork and Trait Uniqueness — 10

Roadmap and Utility

Regardless of which phase NFT projects are, it is essential to have clear information on the website or discord channel. Is there anything unique about the project? What are their accomplishments?

I want to join self-funded projects which provide value to holders from the beginning and stay away from percentage-based roadmaps like “new merch drops when 50% are minted”.

The utility of NFTs varies greatly depending on their specific use case and the context in which they are being used. They can be used in both physical and/or digital worlds, such as tickets&passes, in-game assets, membership, staking, project tokens, whitelist allowances and more.

Be skeptical of project promises like: “Holding a … in your wallet gives you exclusive access to join our community, merch drops, and much more”.

Checklist and Max points:

• Project Uniqueness — 10
• Holder Benefits — 5

Community

We want to see a diverse group of individuals who are passionate about the project and need to verify whether the community really exists and it’s not fake. So firstly, jump into the Discord server, check when the server was created, check the channel, read past conversations and ask several questions. Do a similar for the project’s Twitter profile.

Also, verify mutual holders and ratio with top blue chip collections (higher is better). There’re several tools for that; I’m using NFTinit, which this feature is free.

Checklist and Max points:

• Community Engagement — 10
• Mutual Blue Chip Holders — 10

Marketing Strategy and Team

An effective NFT marketing strategy relies on a solid and cohesive team. The founders and team members should be active on social media, such as Twitter, and engage with the community through Discord and other online spaces.

It’s also a positive sign when a project is willing to collaborate with other reputable collections and participate in events or podcasts with influencers. As a holder, the best marketing strategy I want to see from a project is consistent development and accomplishments, guiding the community to learn more rather than just temporary hype.

Checklist and Max points:

• Twitter and Discord Activities — 5
• Collaboration — 5

Supply

We aim to invest in NFT projects where there is a high demand and a low supply, as this typically drives up the floor price due to the competition for the scarce supply. On the other hand, a collection with a large supply may be less appealing due to its decreased scarcity.

Additionally, the distribution of the NFT supply is also important to consider. If the NFT project has a small number of NFTs that are owned by a few select individuals, it might be open for price manipulation.

On the Collection page on Opensea’s we can see unique owners percentage, and on the analytic tab, we can check owner distribution and top 100 owners.

Checklist and Max points:

• Supply — 10
• Owner distribution — 5

Volume

Volume is more important than price. When there is high volume, many buyers and sellers participate in the market, which helps balance out the supply and demand. This can also lead to a rising floor price and prevent extreme price fluctuations, which can be detrimental to both buyers and sellers. Additionally, high volume means more opportunities for traders to buy and sell, which can lead to a more active and efficient market.

On the Collection page on Opensea’s analytic tab we can see historical daily volume and sales. Consistent higher daily sales (generally 30+) is a good sign.

Checklist and Max points:

• Last 90, 30, 7 days volume — 10

I hope that following these steps and using an NFT Project Checklist will help simplify the process and allow you to make informed investment decisions.

Feel free to reach out to me on Twitter. I’m always happy to connect with other NFT enthusiasts and share knowledge and experience.

PS — It’s important to note that the steps outlined in this post and included in the NFT Project checklist may vary depending on the collector type and the specific project. For example, the weight of each step may change for HODLers versus Flippers, or for early supporters versus late adopters. Additionally, the utility and use case of the NFTs will also affect the importance of certain steps. That being said, these are general guidelines that can be applied to most NFT projects and can help you make informed decisions no matter what your collector type or project preferences may be. Always be sure to do your own research and use your best judgment when evaluating NFT projects.