What makes a successful NFT project? Some thoughts…
The simple answer, TLDR: It is complicated!
The following is not an exhaustive list, nor is it the formula for what will succeed. Success itself is multi-dimensional, and can be measured in more ways than just a rising floor. With the boom of NFTs in late 2021 and early 2022, and the awareness of the NFT space, Decentralised Autonomous Organisations (DAOs), and crypto in general, we have seen the introduction of a variety of NFT projects — including those with unique and specific goals (think Links DAO and Midnite Movie Club), those with real-world utility where In Real Life (IRL) incentives are afforded to those able to secure an NFT (Adidas’ NFT drop, Coca Cola), those with amazing art/ design and those with street credibility / cultural acceptance, but not much else. (I have left out those that meet none of the above criteria for brevity).
This explosion of the NFT space and success of certain high-profile projects such as the Bored Ape Yacht Club, Doodles, etc. has led to an increase in NFT offerings (as well as derivatives e.g. flipped, caked, angry variants, 3D and dog variants of Doodles). The growth of the NFT space has made it tricky for those just entering the NFT ecosystem (and more so those entering the crypto realm more broadly) to know what to look for and to spot something that meets their particular goals and needs. As anyone who has been exposed to cryptocurrencies and NFTs will know, there are genuine, well-intentioned actors out there, but also a fair share of scams or less well-thought out projects. It is difficult to predict.
Having been around NFTs for only three or four months, there is obviously a lot that I am unaware of and yes, I also am one of those who has not figured out how to keep track of all the NFT projects that are being created, but I have come to learn a few things that make a project ‘successful,’ however you choose to measure that (and this topic may be one for another day).
Without further ado, here are my thoughts on the main ingredients to a successful NFT project…
1) A Strong Community
What can the community do for a project? In everything I have seen thus far, it can be one of the most important drivers in establishing a project with good fundamentals. Ideas are important, execution is as well. A lot of projects have these characteristics, but all too often, entering a discord, or Twitter space it is easy to feel like a burden, an outsider looking in. Some are environments that may seem out of control, where trolling, negativity, and Fear, Uncertainty and Doubt (FUD) reign supreme.
A community that is built on fundamentals and shared vision with the project creators may have a stronger chance of success. One such space that I fumbled into purely for the art has become a lot more to me. Whether it is reading through the comments in discord, or listening to Twitter spaces, the people invested in this project are more than random people on a screen. To each other, they seem to be genuine friends, supportive, celebrating each others’ good times and lending a hand or ear in the not so great moments. Witnessing the interactions in these communities is a breath of fresh air and far easier to support in the long run.
It can be hard to pinpoint what might bring a vibrant community together. This has crossed my mind many times while trying to synthesise my thoughts on the subject. In some respect, the values of a project initially have to be set from the top down. Having a great team behind an NFT project with a vision or goal that involves more than just pumping bags might have something to do with long term success. Having an idea that does not promise immediate increases in wealth that everyone apes into may be another reason. Not to say that those projects are inferior- but merely to point out that the traditional “financial” measure of success may be imperfect.
Those that scale up quickly and gain a cult following may attract a crowd that is different to those that scale slowly, gaining followers gradually over time. Hype can sometimes be a good thing, but at other times, can be something that immediately excludes people, not to mention trying to get a look in can be difficult for potential community members interested for the project’s utility and not for FOMO. Again — none of this is a negative per se, just that a greater number of people wanting to get into a project all at once may bring in flippers, speculators, and less engaged community members, which then has the potential to displace/ suppress the views of those who are genuinely interested in a project’s utility and mission in place of talk about floor prices and space missions.
Community also has a role in driving the project forward. Everyone invested (financially or otherwise) in a project has a vested interest in seeing it succeed. Building a community of people who can help grow a project is going to set a founding team up for opportunities that otherwise may not have existed. The beauty in this is an inclusive community- one that feels in control of its future.
In all — community is important. When you have the right people involved, you are already ahead of the curve.
2) Real Utility
Having joined a few discords and read a lot of whitepapers, the projects that have appealed the most to me are those where there was an added utility to the NFT. Whether it be IRL entitlements, opportunities in the metaverse, fundraising for a cause, future investment returns or more importantly, things that can help in the day to day (such as mental health support, community virtual hangouts, cooking classes, and in some cases, the community of like-minded individuals themselves). Utility can be anything- as long as it holds value to the holder of the NFT.
3) Artwork / Design / Previous Track Record
This one is subjective. You like what you like. However, without sticking my neck out too far, I would guess that the more aesthetically pleasing designs tend to have the greater engagement in MOST cases. Not all. But most. There have been a few examples recently where this has not necessarily been true, but hey — I’m no fine art critic. Each to their own. Additionally, a good track record and other known works will support future projects gaining traction.
4) Project Leadership / Marketing
I feel that leadership and marketing often go hand in hand. Having a strong leadership base sets the tone for the project, and often it is their vision and communication of mission for the project that draws people into a project. Some questions I think of when trying to understand this include:
- How well are the project creators able to communicate what they are trying to achieve? Do you understand what it means?
- How well do the founders of the project you are supporting connect with people outside the project?
- Do they have a vision of how they will attract a community?
- Are they a good representative of the brand they are trying to create?
- Is the founding team committed to the project? How do you know?
Having people who have lived experiences and a deep connection that is able to explain their involvement with the project, whether that be in the NFT space or otherwise, is a crucial ingredient to success. People who are connected are also an asset as are those who are able to express themselves in an authentic, but knowledgeable way. People who are good at hype can also be an asset, but from observation, that can only get you so far. It may be difficult to quickly ascertain the types of people involved in creating the project- in which case it may be a matter of interacting with them in their Discord, or listening in on or joining a space they are in. At the end of the day, you are likely to be better off doing your research than jumping into something under false pretences.
5) Influencers
At some point, either early or once a project is established, and has minted out or made the necessary connections to build a vibrant community of supporters, the introduction of well known crypto persons as a holder or supporter can go a long way in providing social acceptance and clout. Having someone who is well respected vouching for a project may bring in others who have the means and tools to grow a project’s outreach. This may also provide a test of the type of community a project has built. Obviously everyone is in a different financial situation and selling an NFT is not taboo, but buying pressure and upward trending floor prices may weed out some of those who are in it for the short game. And of course, bringing in new holders means that you could be bringing in flippers who are looking to imitate investment moves of influencers with the belief that they will be able to time pumps and avoid dumps. The consequence may be an erosion in the established community values or ideals trying to be fostered. On the flip side, it may actually bring in those more committed to a project.
Influencers and hype has a role to play, however the consequences could be felt in a myriad of ways.
All in all, NFTs can be and are lifechanging to so many people. As such, I hope the above helps in bringing some clarity to those selecting a project to support, however, as with anything in crypto, please do your own due diligence. Good luck on your NFT journey!
Do you agree / disagree with the above? Do you have comments? What are your key success indicators? I would love to hear from you. I can be reached on Twitter @cryptobear55 or via the comments below. Thank you.
