What gives a trade item value?
. We talked about provenance in the last part of the lesson. Provenance is the factor or factors that give art or other item its decided value. So how is provenance decided?
When you boil it down, every asset gains provenance from people. People (others and yourself) decide what something is worth collectively by how much time, effort, and liquidity they decide to spend on something.
Because crypto is so community oriented, it offers one or the oldest and highest sought values (community) in the form of a financial asset; which hasnt been done too often in history.
Consider the Bored Ape Yacht Club. Are people paying for the art? No, the art is free, and as Ryder Ripps showed us, the same art can be displayed for a different price. At times, some collectors hardly care about the art or the tech stack- it’s the value they get from other people!
It’s the community, the celebrity club, or even the vibrant twitter/ discord community- think of what an impact communities like this had especially given the pandemic lockdown.
NFT Tools
1. Gem.xyz Twitter Bot-
Gem has a smart oracle bot that tweets out notable sweeps of over 5 ETH (or 15 items) on projects. Gem.xyz is an NFT marketplace aggregator, so whales can sweep the floors of multiple market places at once, and save gas. This means that NFT whales are behooved to use Gem, and their Twitter bot prints valueable whale data it collects.
This is a great tool that shows top NFT projects and allows you to peep into live analytics regarding volume and sales of the projects.
Whatsminting provides activity spike notifications ( like what many CEXs do for top coins), as well as a discord and whale community insight board. This is a free to use project, but they do have an option to connect wallet and donate to their smart contract.
3. Moby.gg
Moby is another whale/ sale data source that tracks large boosts of sales or volume all across the NFT ecosystem. One has to be careful, as Moby can pick up large purchases of crap NFTs, or even wash trading.
A pro version of Moby is available for .1 ETH per 6 months; pro version offers real time data as opposed to recent movements in the freemium version.
Traitsniper is an API plugin built for serious NFT traders or creators. Traitsniper features listed as on the extension store:
- Easily keep track of all collections floor prices. - Access to ranking of all collections. - Easy snipe rare listing right at activity page. - Quick buy with customizable gas to make sure you are the first. - Quickly calculate your OpenSea portfolio. - Quickly sharing profit from flipping. And many more features to come!
What is rarity?
Rarity is essentially how often a trait occurs. Obviously rarity becomes one of the dictators of provenance amongst the holders of a given NFT project. NFT holders will more often than not be considered with rarity in regards to buying or selling an NFT project (obviously, the more rare, the more desirable).
Gem.xyz has a great feature of being able to sort the NFTs from most rare to least rare.
Some projects nix rarity traits, in favor of all of their work being rare works of art. That’s fine, and can still be a great project, but it does take away a factor that decentralized communities use to determine provenance.
You’ll have to explore these tools as well as the marketplaces and collections and find a routine and system for buying/ selling NFTs. You may be a trader, a collector, a holder and patron, or an artist/ creator. This is really a multifaceted ecosystem.
What is a scam?
Scams come in all shapes and sizes. They aren’t always seed phrase scams and they’re not always rugpulled liquidity robbery. Sometimes scams are put on by honest business people…
At the point we’re at in web3, we should be investing in builders so that they can build even better applications, and hopefully everyone comes up on their investments over time and with the of development of the ecosystem.
Many entrepreneurs coming from web2 and centralization are used to doing business by selling disposable junk and extracting hard earned liquidity from buyers, never to be returned. Essentially, founders are creating art and selling it to buyers, then doing nothing besides collect ETH from the mint, giving little thought to how their community can use the art after minting it, or if they’re providing enough value to for their initial investors to be able to sell on secondary. This can be considered a scam, even when nothing illegal or malicious has occurred.
Types of Sales and Appraisals
Auctions-
- Reserve Auction- the seller has the right to not accept the highest bid.
- English Auction- a sale method in which an asset is sold by inviting bids that are ascending in value. A base price is set and the bidders start bidding above base price. The item is sold to the highest bidder.
-Dutch Auction- Starts with the highest asking price and then bids are received for a continuously lower price until all items are sold.
, NFT Staking
-Pool Staking-
Essentially, you can put your NFT in a pool (if a pool exists for it), and receive a token that’s worth the floor price of the collection. With this token, you can sell it for native currency, or swap it for any other NFT in the pool.
If you are really into your NFT, you might not want to risk putting it into the pool. A benefit of the pool is being able to switch for another, or more importantly, having at least the liquidity of the floor price of the collection on demand instead of having to wait for the sale on OS to happen. Great news for degens.
-Utility Staking- This form of NFT staking has great utility in Gamefi- essentially, some protocols have made it possible to lend or borrow your NFT asset for a specified period of time for around 10% of the floor price. You can see how this could come in handy for token gated games and projects.
How to find and create Alpha
- Follow Artists and Devs on Twitter and other platforms
- Talk to other people in the communities for projects that you like.
- Think about things you would like to have and find someone who is making it and support them, or figure out how to make it yourself (with friends) to bring to market
- Expand your worldview and practice humility.
- Contribute value to the ecosystem rather than only hoping to extract value from it
- Honestly ask yourself if you are fundamentally fulfilled in your life and if you actually care enough about NFTs to do the research.
- Follow around teams and communities that you think are cool ( like I do with Omakasea :)); at least until you don’t think they’re cool anymore, which can happen in this space often.
When to HODL when to FODL?
If a community is not delivering, if you’ve lost interest so much that you won’t keep up with a community, it may be more lucrative for you to sell at a loss! Much like DeFi, rather than ride a failing token into the ground, get out and put your ETH to better work, or at least something that will make you happier. Don’t stay in a project that makes you miserable, or broke. ;)
This has gone long enough. Let’s go over the Omakasea NFT lab infrastructure in pt.4
