How to DYOR (Do Your Own Research) in NFT

One of the hottest high risk high reward trends for the last few months have been NFTs (Non-Fungible Tokens). Those who were the luckiest managed to sell their NFTs, which they had bought for few 10s to few 100s of dollars in literally millions in worth of Ethereum and Solana tokens.

Not surprisingly, now there are 100s, if not 1000s, of NFT projects that have flooded the market. Despite these last few months of a downturn in crypto markets, the NFT market has never been hotter, especially on the Solana blockchain. NFT markets primarily are driven by hype, with utility as a second. Ideally projects with hype what you have to be looking for.

So in this fast moving market, where there are numerous numbers of projects launching everyday, how do you pick the right one? And how do you avoid the scam projects (termed “Rugs” in the NFT community)? Because there are a LOT of rugs out there. Although, I do not have concrete data on what is the percentage of rugs amongst new projects… if someone came and said that the the number was as high as 50%, I would not be surprised!

When you begin your NFT journey and speak to others in the community, you would often hear the term DYOR or Do Your Own Research. Which is basically saying, don’t follow anyone blindly and make up your own mind if you should buy into an NFT project that someone recommended or Not.

So how do you DYOR? Well there no well written rules like stock market technical analysis like elliot waves in the NFT market. But I picked up the following tips and tricks when it comes to DYOR.

[Courtesy: Unknown. I was given this chart by a friend but do not know its source]

Key things to do when DYOR on an NFT project:

• Account Creation Date — If the team became active on twitter and/or discord a few days/weeks ago then don’t mint. This only applies to projects that are minting. I.e. they arrived out of nowhere and started to mint. SUSPICIOUS
• Twitter activity — Check out number of discord and twitter members. Are many bots/fakes? If more than a certain % botted (>10–15% as per the article), then just ignore. Use sites like twitteraudit and followeraudit. Also understand the growth rate, is it organic? Is it gaining trust amongst the community.
• Discord activity — Check number of members online vs total members at 2–3 different times of a day. If the number is below 10–15%, get out as it might be bots and/or just invite contest people.
• Official site — Was it professionally made, is it secure site, is all the info you need available or at least has placeholders for it?
• Spam — If the project spams you with DM then it is unlikely going to be a hyped project
• Market Cap — Always do the math of supply x mint price, and check the total market cap Then compare it to the current market cap of listed projects on SolanaFloor or solanalysis. It will give you an idea of the projected rank and if you believe the project can achieve it.
• Mint process — What is going to happen on mint. How much WL vs supply. Limit per whitelist? Things like this will give an idea if I stand a chance to mint or not,
• Use case and applications — As an investor understand what the NFT is giving you and try and make a judgement based on your preferences
• Whitepaper — Similar to above, if a whitepaper exists, then try and understand the purpose of the project. Is it practical to achieve it. Is there utility and will it provide value to holder?
• Roadmap delivery — Had the team delivered so far as per their announcements? This creates confidence int he delivery of the team or vice versa.
• Marketing — Understand their marketing strategy. Understand the target market, is the message easy to understand etc.
• Team — Is the team Doxxed. Teams can also do it through 3rd parties like civickey or RadRugsNFT if they don’t want to reveal themselves publicly. So really few good reason not to do it. Is the team good, background, other projects, connected to ecosystem etc. Do they have their own social networks? Any other successes in the past?
• Asthetics — Do you like the NFT artwork? If not, then possible no one else would neither, then you’re all about the hype. If you’re unsure for profile pic (PFP), you can check: How many traits exist ? are they unique and different ? Is the art appealing to a large audience ? Would you be proud showing it to your non-NFT friends? Most of the biggest projects have been built around design.
• Project community — How are the community and the owners interacting. You will understand if the project is pulling people or just first day flippers
• External perceptions — What is the buzz amongst the project in the wider community and influencer community? (Except paid shillers)

Bonus tip: Many good NFT projects choose to get audited by NFT auditing services like RadRugsNFT where you can search the project you’re interested in, and if they have been audited you can read the report and decide.

And there you have it, you can now take your first steps into DYOR for NFTs!

Please note that none of the information in here is any kind of financial advice but only sharing of an opinion.