NFT Metrics: An Explorer's Handbook, On-Chain Outlook, Edition #35 (22/04/2022)
There's no need to complicate things 🙅♀️ Read on for a simple and effective tutorial on how to analyse NFT projects with fun visual infographics included 👇
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How to research Non-Fungible Tokens, NFTs metrics (and some tips on finding successful projects)
The Non-Fungible Token, or NFT for short, was created with the development and deployment of the ERC-721 token standard for the Ethereum decentralised application (DApp) platform.
This was a very big deal.
What happened next was one of the most significant innovations in blockchain technology. In a relatively short span of time, the community saw the ushering and rapid rise of the NFT era.
Fun Fact: One of the first NFT projects created on Ethereum is CryptoKitties.
Decoding NFTs: Understanding the essential research metrics
Let's break down the metrics into four key areas:
Holders (or hodlers)
Distribution of supply by holders
Availability of Supply
But, what does this mean?
Well, a rocket's velocity needs to increase to achieve liftoff.
Similarly, the NFT projects should see a rise in the number of holders over time.
The distribution of supply amongst NFT holders refers to the percentage of holders who hold a single token versus those who hold multiple.
Die-hard followers are few and far between, but it is still important to have a healthy balance with new followers joining too.
The third key area to note is the availability of the token’s supply.
Supply availability is simply the number of tokens that are listed for sale as a percentage of the total supply. In theory, an imbalance between supply and demand could result in an effect on prices—Down or Up!
And, don't forget to go Whale Watching! 👀
No, not these majestic sea giants.
We're talking about the BIG investors who have significant amounts of capital to invest in the project or those who currently hold large positions.
Money buys influence. In the markets, a hefty trading purse commands a lot of sway over capital flows.
Blockchain technology is cultivating a swathe of innovation that spans so many new and exciting applications. This is due in part to the technology’s unique core characteristics, which broadly speaking can be qualities such as:
Although there is no doubt that fierce debates take place amongst market participants across the spectrum, having complete transparency of network transactions may favourably balance the scales for ordinary traders and investors.
To dodgy brokers and bottom-of-the-barrel cowboys who manipulate their order books to the detriment of their clients, this might be perceived as a bad thing indeed.
Transparency can be a real benefit of the technology.
Being aware of your surroundings is crucial. For the first time, power looks to be shifting away from the bigwig institutions and making its way back to the common people.
This is the reason why it pays to take some time and learn how to analyse on-chain metrics. The resources are almost endless and this space is growing at an amazing pace.
Let’s kit up and explore the exciting digital asset space together!
Feel free to save this handy guide and fun visuals to save aside for later 🚀
See you again for the next update.
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