How to Value an NFT Project
OpenSea is the largest marketplace for NFT’s, and at the time of this writing, they have over 4 million assets for sale, and this number continues to grow exponentially every day.
The value will certainly decline with each new piece of artwork or project that launches in the NFT space. An overwhelming number of art and artists will lead to further confusion on what will or should hold value.
To understand if NFT’s will hold future value, you must first look for the following:
- Rarity/Celebrity: Is the project highly desirable, limited supply, and or created by a celebrity?
- Utility: Does the NFT project have use outside of just being a piece of art?
- Uniqueness: Is the art/project unique, or does it follow the same 8-bit formula as those in the past?
Famous NFT Projects
Let’s start with the most obvious, a project that has an influential creator or backer which may also have a very limited supply.
If you look at any project tied to a prominent figure or company, they have typically sold out in minutes, and secondary transaction values have increased steadily. A steady increase in value all comes down to brand or fan loyalty, and the marketplace for these types of offerings is much more comprehensive than your standard NFT.
Twitter launched its first NFT project in June and saw tens of thousands of bids on the first day. Those who were fortunate enough to purchase any of the initial NFT’s huge gain even within the first week.
Twitter minted 20 pieces of their Fury Twitter logo, several of which they gave away, but initial purchasers were paying upward $56k for one.
- Fury Twitter NFT video saw its first purchase on 6/30/2021 for $56,900
- A recent purchase of one of the Fury Twitter videos came in at $124,927 on 8/12/21. This secondary purchase equates to a 121% gain in less than two months.
Utility: Does your project have use outside of just being an art piece?
Utility-driven NFT’s are the future of the space as your average consumer can better correlate real-world value to these assets. The biggest argument you see online with NFT’s is that it is just a JPG file that can be quickly screen grabbed. While you can undoubtedly screen grab anything online, it, unfortunately, does not define ownership. To go one step further toward creating value outside of owning the rights to a digital piece of artwork is to create a Utility NFT.
Utility NFT: An NFT assigns a use to the digital asset outside of owning just a piece of art. A utility NFT can be one in which you receive a physical piece of art that matches the NFT you purchased; it could be special access to an event, exclusive in-person memberships, or future use in the digital world (think gaming).
Projects that define themselves as Utility range in scope from real-world items (buy the NFT and get the hand-painted artwork), events, use in a digital world (think gaming), exclusive in-person memberships, or investment and ownership toward a physical space.
Many projects fit the above mold from Gary Vaynerchuck’s VeeFriends, MetaKey, MekaVerse, and Nouns. We implore our readers to dive into these projects to see what utility-driven projects are out there.
One fun project currently in motion (and yes, literally) is called Claylings.
Claylings is a rare example of the diversity of utility-driven NFT’s where their goal is to create a short film using the clay-created characters. The short film will include currently minted/available Clayling NFT’s, giving the owners a chance to see their NFT’s in the movie.
“Claylings is a 4,040 edition generative art project, which draws its aesthetic from the likes of Chicken Run, Wallace & Grommit or Neverhood, calling back to ’90s nostalgia.”
The World’s First NFT Funded Café hits the Blockchain on 11/2/21
Coffee Bros. announced a new NFT project that puts a twist on crowdfunding to help support their first café in NYC. Crypto Barista’s Season 1 will launch with 60 caffeine-loving characters on the Blockchain whose ownership helps open the World’s First NFT funded café while giving caffeinated perks, roadmap, and project fund governance back to the NFT owners.Learn More
The Crypto Baristas is another such project where utility is at the forefront of the offering. We are slightly biased on this project as it is our own!
Crypto Barista’s Season 1 will launch with 60 caffeine-loving characters whose ownership helps conceptualize and open the World’s First NFT funded Café.
“The goal of Crypto Barista’s is to build a community of like-minded individuals that appreciate art, caffeine, entrepreneurship, and innovation. The project’s ambition is to initially open a physical space in NYC where art and innovation are at the forefront. The future of Crypto Baristas beyond that will be up to the holders and followers of our campaign.”– Dan Hunnewell (Owner, Coffee Bros.)
Owners of a Crypto Barista enjoy caffeinated perks for life at all future cafe spaces and websites. Owners also control the “Barista Bank,” a 15% fund set aside from the project’s revenue for future use in the coffee space. Some potential uses for the Barista Bank can support charitable organizations in the coffee space, advance the Crypto Barista project, or start something new.
One thing to look out for is the uniqueness of the project and art. You will find NFT art with slight spinoffs from previously popular projects, and for the most part, these should be avoided.
Always look to see who the artist is, is the project hand-drawn or generative, is their utility involved, and is the project owner verified on the marketplace of sale (though this at times does not mean much).
NFT’s will undoubtedly exist in the future as the value of holding digital assets continues to gain traction. As seen in 2021, record sales for popular projects like Cyber Punks, advance the overall worth of NFT’s.
NFT’s that have a creator with notoriety will undoubtedly hold value longer term than those without. Further, projects that are utility-driven will be the next wave of NFT’s that are considered valuable. NFT owners can benefit from their digital assets outside of simple ownership; those projects will hold more value to the purchaser and the secondary market.