NFTs have recently attracted a lot of attention and developed into a Web3 phenomenon that has drawn global interest. While NFT collections, like the Bored Ape Yacht Club and Moonbirds, are highly valued, countless others have fallen by the roadside and are no longer relevant. If you have been pondering the reason why some NFTs fail as soon as they launch while others make a lot of money, keep reading.
What is A Failed NFT Project?
An NFT project is considered to have failed if its initial floor price has dropped by more than sixty percent and its trade volume has decreased over time. Within the first six months following launch, an unsuccessful NFT project’s floor price can decrease by as much as 90 percent or more. Also, if an NFT project is unsuccessful, the number of holders will likewise fall; however, there is also the possibility that the number of holders will increase due to a low floor price. Nevertheless, the project is still a failed one.
How To Avoid Failed NFT Projects
There are a few factors to look out for when considering investing in an NFT project:
NFTs like CryptoPunk and Crossroads by Beeple have shown that exclusivity sells. There is a lot of plagiarism in the NFT space. Copy-paste jobs that use other people’s concepts, art styles, utilities, marketing plans, and merchandise. If the NFT wholly or partially plagiarizes other efforts, this should raise a red flag. While not entirely a bad thing, copying almost always indicates a lack of creativity and market direction.
The result is that in the case of a bearish market, the creators will be at a loss for solutions, due to a pre-existing lack of vision. The lack of rarity and uniqueness in a project that has thousands of competing NFT projects operating similarly will cause it to fade into the shadows of the NFT trash market. Supportive movements rarely stand out and do not make for a profitable project.
A project’s community is the most important factor in determining whether or not it will be successful after it launches. The maintenance of an active and active community of supporters is one of the most significant things that contribute to the success of a project. A project can’t be successful without engagement. NFT projects develop communities on a variety of platforms, including Discord and Telegram, among others.
Be sure to have a look at the number of people using the NFT collection’s Discord channel. It is either about to fail or has already failed if it has a very small community size. Or if the community is average and the project is not interesting enough to keep the audience’s attention, the NFT project will likely be unsuccessful.
-Investigate For Rug Pull
Rug Pulls are arguably the worst way for an NFT to fail because there is almost no way to prepare against it. A rug pull occurs when the proprietor of an NFT project liquidates the NFT project to siphon funds. The major reason it happens is when NFT creators and artists decide to cease producing new content causing the NFTs to lose their value. The result is that investors lose all of their money in a very short period.
Carrying out a rug pull bears great risk to the owner’s reputation because of the devastation it brings to the collector’s investments. A good example is the almost rug pull of Pixlemon. The best way to avoid this is to carefully investigate the team members of a project for previous shady dealings before investing. Also, avoid projects with anonymous creators.
-Team and Competence
A poorly managed and inept team is one of the primary reasons why the majority of NFT projects are unsuccessful. If the NFT project does not have a group of highly trained specialists working on it, don’t invest. When the correct team of highly trained experts is assembled for a project, that project has a much better chance of being successful.
NFT projects also fail because insufficient attention is paid to the marketing aspect. There are so many prospective buyers and collectors in the market, so the marketing has to be intensive. Check how many different marketing platforms they are employing, as well as the number of customers they already have gained.
Before you put money into NFT ventures, you should investigate thoroughly from every critical angle first. Before you get involved in any NFT enterprise, you should make sure you have a way out and know how much of a loss you can readily stomach. This way you can be more confident and better prepared.