Learn how to conduct a data-driven evaluation to decode NFT worth.
The concept of blue-chip NFTs is constantly in flux, evolving over time. While numerous collections may have gained early recognition, not all have withstood the test of time. Through DappRadar’s data tools, we delve into comprehensive insights often missed by those driven by FOMO impulses. Let’s take a deep dive into the true essence of blue-chip NFTs.
Table of Contents
- How are formerly esteemed NFTs performing today?
- The checklist for blue-chip NFTs
- Continue navigating blue-chip metrics with DappRadar
- Useful links
How are formerly esteemed NFTs performing today?
The latter half of 2021 witnessed the meteoric rise of Non-Fungible Tokens (NFTs), with their growth extending well into 2022. According to DappRadar’s 2022 Industry Report, that year recorded a staggering trading volume of $24.8 billion, underscoring the transformative power of NFTs.
However, the narrative for NFTs in 2023 has taken an intriguing turn. The combined trading volume for the first two quarters of this year has amounted to a mere $7.6 billion, not even a third of the previous year’s annual record. This apparent decline prompts us to reevaluate the categorization of certain projects as “blue-chip NFTs.”
By December 2022, prestigious NFT collections like Azuki, CloneX, Moonbirds, VeeFriends, and World of Women were in high demand, commanding floor prices of 10.53 ETH (~$12,636), 10.33 ETH (~$12,396), 14.85 ETH (~$17,820), 8.7 ETH (~$10,440), and 4.49 ETH (~$5,388) respectively. However, a shift has occurred. With the help of DappRadar’s NFT tracking tools, we can now see a clear change in their market values, as reflected in their current floor prices on 16 Aug:
- Azuki – 4.9 ETH / $8,913
- CloneX – 1.4 ETH / $2,546
- Moonbirds – 1.6 ETH / $2,910
- VeeFriends – 1.8 ETH / $3,274
- World of Women – 0.68 ETH / $1,236
Over the past two years, NFTs have established their enduring precense, with some assets demonstrating resilience and successfully weathering market volatility. But the industry’s rapid changes show how important it is to keep improving how we measure their value. This ongoing enhancement is essential as users continually seek out collections that hold significant value.
The checklist for blue-chip NFTs
When evaluating whether an NFT collection could be considered a “blue-chip”, it’s important to consider both the financial aspects and the cultural or artistic value.
Below are some factors to consider when evaluating an NFT collection for its potential as a blue-chip project:
Creator reputation
Consider the reputation and track record of the artists, creators, or project teams behind the collection. Established and respected creators are more likely to produce NFTs that hold cultural and economic significance.
For instance, Yuga Labs has become a hub for high-value collections. Even the most recent addition to its ecosystem, HV-MTL, boasts a market cap of $58.58 million and an average trading price of over $1,200.
Similarly, while Azuki’s new collection Elementals may have faced challenges, its undeniable accomplishment is the $56.38 million market valuation it achieved in such a short period of time. Notable achievements like these are typically rare without the support of an established ecosystem.
Also, origin matters. Whether it’s created by well-known generative artists or nurtured on platforms like Art Blocks, the origin greatly influences how an NFT collection grows.
Collector base
Evaluate the diversity and size of the collector base. Collections with a broad and dedicated collector base may have greater potential for long-term value.
Here are some straightforward ways to conduct this evaluation:
- Holders distribution analysis: utilize OpenSea’s analytical feature to understand how holders are distributed across the collection. Look for a healthy mix of individual collectors rather than a concentration in a few wallets.
- Wallet portfolio study: dive into specific wallets using DappRadar’s Portfolio Tracker. Examine the composition of their NFT holdings and trading patterns to determine if they have a history of diverse and meaningful engagement.
- For instance, let’s look at the top holder of Azuki, wallet 0x29…a20b. This person seems to be a professional NFT trader since the wallet holds many famous NFTs and is involved in activities like wash trading.
- Another case is Last Knight.eth, a successful Hong Kong businessman named Adrian Cheng. He holds 101 Azuki NFTs in his wallet, but what’s interesting is that he creates projects related to these tokens, adding value to them.
- Long-term holding assessment: study the average holding time of wallets within the collection. Longer average holding times indicate stronger commitment and loyalty among collectors.
Conducting an in-depth wallet analysis can be intricate and may require coding expertise. That’s why DappRadar provides a more user-friendly alternative through DappRadar’s Wallet Interaction Breakdown feature.
This tool enables a straightforward approach to identifying different user categories, including Opportunistic Traders. These traders focus on short-term opportunities, flipping assets to capitalize on trends and attain quick profits.
Financial health
The status of an NFT collection as a blue-chip is not only determined by its reputation but also hinges on its financial standing. When assessing the financial health of an NFT collection, several key indicators come into play:
- Fundings: to gather information on external funding, you can leverage reliable media sources, such as DappRadar’s industry reports, which reveal funding rounds and investment news related to the NFT project.
- Primary market revenue: calculate the primary market revenue by multiplying the NFT mint price by the total supply. This provides a snapshot of the revenue generated from initial sales.
- For example, BAYC was initially minted at 0.08 ETH, which was valued at approximately $192 at the time. With a total of 10,000 units, this amounted to a collective sum of 800 ETH and an impressive $1.92 million.
- For example, BAYC was initially minted at 0.08 ETH, which was valued at approximately $192 at the time. With a total of 10,000 units, this amounted to a collective sum of 800 ETH and an impressive $1.92 million.
- Royalty revenue: royalty fees collected from secondary market transactions are another crucial financial aspect. Multiply the trading volume by the royalty percentage set by the project owner to determine the royalties collected.
For DappRadar PRO members, a wealth of data becomes available.
Historical trading volumes can be downloaded to calculate the ongoing revenue generated through secondary market trades.
So let’s use BAYC as an example again. During the first half of 2023, BAYC saw more than $662 million in NFT trading volume. From this amount, Yuga Labs takes a small fee of 2.5%, which adds up to around $16.5 million in earnings.
However, it’s important to note that while these strategies provide valuable insights into a project’s financial standing, there might be minor issues to consider.
For instance, whitelist minters might have acquired NFTs at a lower cost, and marketplace enforcement of royalty calculations might not be consistent. Nonetheless, these approaches offer a foundational understanding of the project’s overall financial health.
Secondary market activity
Examine the trading volume, liquidity, and pricing trends of the NFTs in the secondary market. Collections maintaining consistent trading activity and value over time could indicate blue-chip potential.
As mentioned, DappRadar PRO users gain access to a broader range of data, enabling more intricate research. Alternatively, for those proficient in API utilization, tapping into the DappRadar API also allows users to carry out data-driven analysis.
Consider the following illustration as a practical example of utilizing data to compare metrics across multiple collections.
The chart below highlights the relative floor price stability of DeGods when compared to The Captainz, Azuki, and MAYC during the period spanning from 9 April to 7 August, 2023.
Utility and use cases
NFT collections that offer utility beyond speculation, such as access to exclusive content or membership benefits, may have stronger long-term value.
A notable example is Yuga Labs, which has introduced a series of games for its holders. Moreover, it recently launched Made by Apes, a licensing service allowing BAYC and MAYC holders to commercialize their apes for various products and services.
Memeland is poised to unveil a platform akin to TripAdvisor, but tailored for cryptocurrency industry knowledge. Additionally, there are hints suggesting an upcoming animation by Azuki.
Here at DappRadar, we diligently track the latest developments within these prominent NFT collections. Here is a list of projects that are currently in motion to innovate:
Institutional interest and media attention
The interest of museums, galleries, and institutions in acquiring or featuring NFTs from the collection can signal cultural importance and potential blue-chip status.
A notable case is the sale of the “Covid Punk” (CryptoPunk #7523) at Sotheby’s for an impressive $11.7 million in June 2021. More recently, Dmitri Cherniak’s Ringers #879, famously known as “the Goose,” achieved a remarkable sale at Sotheby’s in June 2023, fetching a staggering $6.2 million.
Moreover, media coverage and public attention strongly shape how people perceive the value and significance of an NFT collection.
Scarcity and Rarity
Rarity and scarcity are also crucial for an NFT to build enduring value. Limited availability and distinctive attributes create an inherent sense of worth, appealing to collectors, investors, and enthusiasts alike. Notably, both auctioned NFTs mentioned earlier exemplify the concept of extreme rarity within their respective collections.
Regarding tools to uncover this information, OpenSea provides insight into an NFT’s traits and their respective degrees of rarity.
Alternatively, Rarity.tools is helpful for assessing an NFT’s uniqueness. This tool not only allows users to analyze an NFT’s traits but also provides a ranking that shows the individual NFT’s rarity within the broader collection.
Cultural, artistic, and historical significance
NFTs have ushered in a revolution that extends far beyond monetary gains. Therefore, it’s important to recognize their cultural impact. Take, for instance, Chromie Squiggle, Fidenza, and Autoglyphs, early generative art pieces that harnessed NFTs as a creative medium.
CryptoPunk, the pioneer of PFP collections, and CryptoKitties, the trailblazer of breeding games, prove that historical milestones lend a unique significance to these collections.
In short, collections that have been pivotal in shaping trends, setting standards, or defining genres are more likely to be deemed blue-chip.
Furthermore, consider the element of longevity. Reflect upon the collection’s duration in the market and whether it has demonstrated resilience and relevance over time. It’s worth noting that newer projects often experience volatility as they navigate their market and pricing dynamics.
Continue navigating blue-chip NFTs with DappRadar
In this rapidly shifting NFT realm, the concept of blue-chip is an ever-moving target. With DappRadar’s data tools, we explore uncharted territories, decoding trends, recalibrating metrics, and embracing shifts.
We will constantly update this guide to ensure you’re armed with the latest strategies.
Ultimately, blue-chip NFTs hold more than financial value – they embody ethos and culture. And most importantly, DYOR (Do Your Own Research) always trumps FOMO (Fear of Missing Out).
Useful links
- The Updated List for Blue-chip NFTs
- DappRadar in-depth NFT reports
- What are Non-Fungible Tokens, or NFTs?
- Top 25 Best NFT Marketplaces to Buy & Sell NFTs
- What Is Generative Art and Why You Should Care
- All About Music NFTs: How It Works & Pioneering Artists
- Celebrity Crypto & NFT Wallets Rich List
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