August 12, 2021 - 6 min read
How to evaluate NFT projects, a case study.
It’s important to remember that every NFT project carries risk and I constantly advise practical optimism. Never spend more than you can afford to lose. Research projects yourself. Don’t rush into anything, and don’t buy projects just because I did.
With that said, I’d like to share some insight into the AlphaBetty Doodles NFT project that was released on August 6th, 2021.
Typically, new projects scare me because of how many are being released each week.
While new projects like Bored Ape Yacht Club have gone viral (it’s already ranked 3rd in overall sales volume of all time), the majority of other projects won’t experience this growth.
However, I decided to purchase two AlphaBetty Doodles for .52 ETH:
I’ll walk you through my framework for investing in NFTs and how I applied it to this project so that it can help you make more informed decisions. Plus, I highlight a mistake I made when purchasing my NFTs, so that you can avoid it and make smarter decisions.
I am a big fan of projects that are historically relevant and significant. The blockchain is immutable, meaning it can’t be changed. When a project is created, it’s etched into history.
New projects are a gamble in this aspect, but AlphaBetty Doodles is the first project I’ve seen directly related to educating children using the blockchain.
The project creators published a book in June of 2021 called AlphaBetty Doodles: & her world of A to Z and the featured character is the inspiration for the art used in the project.
Token holders will also govern a 30 ETH wallet dedicated to charities aiming to help children. The founding team also hired a successful social impact consultant to help see their mission through execution.
The AlphaBetty Doodles creating team comprises 9 members, including a social impact consultant and 4 community support members.
The founders are publicly known, which brings a level of transparency to the project.
They also provided detailed bio’s in the Discord group like the one below:
“Cheryl_AlphaBetty, Artist Before developing starting AlphaBettyNFT, AlphaBetty came to life in the form of Cheryl’s self-published children’s story of the same name. Cheryl and AlphaBetty have been brought to the NFT space to share AB’s story with a wider digital audience and to provide philanthropic benefit to educational endeavors that Cheryl is passionate about.”
As I evaluate NFT projects, founder transparency is important to me. There have been multiple cases of anonymous project founders using the NFT excitement to make money from their buyers without providing anything in return.
The founders of a project are like the leadership team of a business — without a strong and committed team, the project likely won’t succeed.
At the time of this writing, 823 out of 2,320 members are active in the Discord Group. Many other Discord groups share that same level of engagement, but what struck me the most is that participants are sharing the project with their children.
There are numerous group members sharing stories about letting their son or daughter pick out an AlphaBetty and others sharing how this NFT will stay in their wallet to be passed on to their children.
Many NFT projects offer similar utility and it’s up to how well that utility is executed (donations, metaverse, commercial rights, meet-ups).
AlphaBetty Doodles has the chance to offer the utility of introducing the next generation of collectors to NFT projects. Kids.
If it does become recognized as the NFT project that does this the best, you could predict that major NFT investors with children would buy in to support it.
Remember: Utility is dependent upon execution. Two projects can promise the exact same set of utility features, but if one doesn’t execute properly and the other does, there will be a discrepancy in value.
It’s not just execution that impacts utility. Cultural relevance is also an important factor for future success. It’s easy to get attention, engagement, and hype when a project first launches or someone well-known buys into it. What happens afterward is more critical.
AlphaBetty Doodles is a bet on the AlphaBetty character. While there is a book on Amazon, it is not an established IP. The book has just 3 reviews.
You’re betting on the chance that the character can become popularized through its deployment as an NFT project.
If your argument as to why you value a project is “I get commercial rights!” and you don’t think through (a) how those commercial rights play out (b) how competitive it is to build impactful IP, you may find yourself in a vulnerable position.
It’s a risky bet and there are no guarantees.
Other utility typically comes in the form of donations, events, and some projects even pay for users to use an NFT as their profile picture. Without revenue, this utility isn’t worth anything.
The initial cost to mint an AlphaBetty Doodle was .03 ETH (~$90 USD) and the floor (lowest price available for sale) of the project is has floated around .1 ETH ($300). This project has 10,000 characters with unique variations.
Minting projects is risky, but it can be profitable for those that do it. It’s important to remember — at a certain price, short-term holders will likely cash out of their position and it can hurt the floor price of a project (this is happening to AlphaBetty Doodles as I write this).
The key is whether or not there is enough demand to buy from the short-term holders. While many projects experience that initial bump in price, just as many experience an immediate contraction afterward.
If you didn’t mint but want to buy a project, I highly recommend you use https://rarity.tools/ to help you buy the rarest NFT at a price you can afford.
I did not use this tool and overpaid for my first Alpha Betty Doodle based on its rarity.
I put money into this project that I could afford to lose. There’s a lot that I like about this project, but there are also a few things that are cause for concern. This analysis is meant to help you learn how I think through projects so you can take what you like, throw out what you don’t like, and be more prepared to buy into projects.
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