Before diving into the world of NFT flipping, we should acknowledge the investing acumen of the average retail investor. We are not accredited investors, nor are we experts in any sense. In truth, we have a high-risk tolerance like gamblers, poker players, and casino enthusiasts. Unlike the heavily regulated gambling industry, the cNFT market operates on trust, and reputation alone. Promises made by creators of an NFT collection have no guarantees. People can, and do, deceive others for personal gain. If you entrust your funds to an untrustworthy individual and they disappear with your investment, you only have yourself to blame.
In the world of PFPs (Profile Picture NFTs) and 10K collections, scams are a real concern. On the other hand, there projects that have good intentions, but are poorly managed. Unfortunately, determining the overall management of a project as an outsider can be extremely challenging, if not impossible. However, there are two key factors to consider: roadmaps and progress updates. When reviewing the project’s roadmap, ask yourself: Are the stated objectives realistic and attainable? How does the team plan to accomplish them? Have other projects achieved similar milestones successfully? If you find it difficult to answer these questions after examining their whitepaper or other relevant documents, don’t hesitate to reach out to the team publicly through Discord, Twitter, or Telegram. Monitoring updates, and engaging in thoughtful discourse with the team should help you answer your questions, or identify potential deficiencies.
Trust is a delicate and fragile. It takes time and consistent actions to build, but can be shattered in an instant. To evaluate the trustworthiness of projects, we must review past actions and compare them to present outcomes. Transparency, community engagement, and a proven track record are key indicators of a project’s credibility. Liqwid Labs, a long-standing player in the space, developing and deploying the Liqwid protocol — a non-custodial liquidity market — as their primary product. Then introducing the Aquafarmers as a secondary product can be used to enhance their primary product — Liqwid protocol. Similarly, Clay Nation began as a collection and with the support of their community, they continue to expand the Clayverse. Please note these were not overnight successes, but years of community engagement and weekly updates. Liqwid Labs has been diligently building since 2020, and Clay Nation embarked on their journey in early 2021.
When it comes to investments, achieving an annual return of over 15% is considered exceptional. Quick flips, on the other hand, are indicative of the immaturity of the sector as a whole. When NFTs are selling for astronomical prices it’s driven by demand and creates a sense of euphoria. In such situations, the market becomes clouded with a phenomenon known as FOMO (Fear of Missing Out). If a friend were to ask me whether they should buy an NFT from a collection at this moment, I would question whether they would have made a profit a year later if they had bought Bitcoin at $64,000 back in November 2021. This information does not constitute investment advice or a recommendation and should not be interpreted as such. Remember to conduct your own research, assess your risk tolerance, and make informed decisions based on your circumstances.
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