Nansen NFT
Nansen NFT
In this article, we break down the key factors and metrics to look for when conducting due diligence on NFT projects, as well as how to use Nansen to spot signs and discover new projects.
Nansen NFT Introduction
The growing popularity of NFT has attracted a large number of developers, artists, investors and enthusiasts to the field. The idea of owning digital assets has generated a lot of excitement, but it has also generated a lot of skepticism. Some believe NFTs have solved the digital property rights problem once and for all, while others are certain it's just one big scam. Those interested in getting their first NFT are finding it difficult to sift through the noise to find quality projects. In this article, we aim to provide some insight into investing in NFTs and using Nansen effectively.
Things to keep in mind when investing in NFT projects
Runaways and scams are becoming increasingly common in the NFT space. Even if a project is not a scam, there is still a great deal of execution risk and uncertainty about its lifespan. So what are the methods for evaluating NFT projects? What are the key metrics to look for?
The following are key things to consider before rushing in.
The team behind the project
Like all artworks, the people behind NFTs play an important role in influencing the future value of these artworks. beeple NFTs are undoubtedly more valuable than the average Joe's NFT. Therefore, it is important to consider the background, popularity and reputation of the person who created the NFT. To this end, NFT connoisseurs often check the number and type of followers on social media platforms such as Twitter, Discord and Instagram.
Practicality
This year, a large number of "useless" NFTs were sold at coveted prices. People are paying seven figures for NFT stone pieces that have no use other than to be bought and sold. Given this insanity, many believe that utility-centric NFT is the future.
The practicality of NFT is what sets it apart from other purely speculative NFTs. From owning and trading game assets, exclusive club memberships, to owning real-world tangible assets. These are just some of the benefits that NFTs offer to investors. Therefore, it is these features that bring added value to these NFTs.
Nansen NFT Rarity
This is the most basic metric that most people use. Basically, the rarer the NFT, the more valuable it is. NFTs usually have characteristics or features associated with NFTs that can be used to determine how rare they are.
Take this BAYC NFT on Opensea as an example. Under the Properties tab, investors can identify the different characteristics of an NFT and assess its rarity in the overall BAYC set.
Investors can also evaluate the rarity of their NFTs using Nansen's NFT God model, which provides rarity information and allows users to view details such as feature type, rarity level, sales history and last traded price for individual NFTs in a collection (e.g., BAYC below).
Feature type and rarity level dashboard
The Top 1000 Rarity Rank is a useful metric to check the top sales in the collection. It also breaks down rarity score percentage, total sales #, features #, latest price and days since last sold.
Information about the number of NFTs with a particular feature and the occurrence of the feature relative to the entire set can also be obtained.
Overview of the distribution of NFT God model characteristics
However, not all NFTs belong to a collection. Sometimes a single NFT can be created by a famous artist/celebrity, making NFTs rare. For example. Back in May 2021, Beeple's First 5000 Days collection sold for $69 million. One in ten of the rare NFTs listed on platforms like SuperRare. So investors looking for one-of-a-kind NFT pieces can shop there.
Diamond Hand Balance
Diamond Hands Balance is the total balance of NFTs belonging to addresses that have never sold any NFTs from a given collection. In short, Diamond Hands Balance is the number of holders with a foresighted plan to hold NFT (this is in contrast to Paper Hands, which are the norm for collections and are obviously used for short-term resale).
The CryptoPunks diamond hand shown in NFT God mode.
Seniority distribution
Nansen's seniority distribution shows the distribution of NFT ownership over time. As we can clearly see in the chart, most CryptoPunks NFT owners hold their NFT for 90-365 days, which is a healthy sign that the pool is not a pull-up-and-sell program and is a good indicator of diamond hands and confidence in the program's continued growth.
Another sign of healthy growth is a moderate upward slope in the number of unique addresses over time. This is a useful indicator for identifying projects with long-standing communities of interest that have broad and growing communities, rather than concentrating on a handful of whales that may sell off their assets and unexpectedly move on.
Seniority distribution of CryptoPunks in NFT God mode
On the other hand, looking at the seniority distribution of the Dopey Ducklings NFT series (below), we can clearly see that its ownership turnover rate is much higher than that of CryptoPunks. this higher turnover rate could indicate a lack of confidence in the potential of the series and could be a potential red flag. But on the other hand, it may also indicate higher liquidity for that particular NFT set.
Seniority Distribution of Dopey Ducklings in NFT God Mode
Mobility
The lack of liquidity is one of the biggest problems facing the NFT market, and it poses a huge risk to NFT investors. What's the point of owning NFT if you can't sell it later? We often notice sellers demanding excessive prices while checking the prices of several NFT pools. However, in reality, when will these NFTs be sold at such ridiculous prices? As a result, many NFTs may be priced with an illiquidity premium.
Therefore, NFT investors can analyze the liquidity of different NFTs and their collections as part of their investment strategy. Using the Nansen NFT god model, we can easily perform this analysis. Let's take the BAYC NFT collection as an example.
BAYC's NFT God Mode Dashboard
With the Nansen NFT God model, we can track the number of trades that occur over a specific time period and determine if any smart money is invested in a specific NFT set. As the volume of trades increases, this means that investors are more likely to sell their NFTs more easily in the future.
Investors can also use the NFT section of the wallet analyzer to evaluate liquidity metrics. For example, in the far right column, we see Liquidity Velocity and Liquidity Risk.
Wallet Profiler NFT Portfolio Profile
Liquidity risk is based on the recent sales volume of that particular NFT set. The higher the number of sales, the lower the liquidity risk. And liquidity velocity depends on the recent change in liquidity risk. A positive liquidity velocity means that more transactions are taking place, thus reducing risk. It is important to note that there is no correlation between liquidity risk and liquidity velocity.
Smart Money Events
Looking at recent transactions made by top holders and smart money can provide insight into their current views on the collection. If top holders and smart money are actively adding to their wallets or buying above floor price items, it may indicate they are optimistic about the future of the collection, and vice versa. Under the Transactions section of NFT God Mode, users can view the latest purchases by the top 5 holders of a particular collection, smart money purchases, and the last 1,000 transactions in the last 30 days.
Nansen's NFT God mode for CryptoPunks transactions
Nansen's NFT God model also allows users to analyze the number of smart money owners per NFT collection. In general, if the number of smart money owners and the percentage of addresses holding 1 NFT increases, this is a bullish indicator. When the percentage of addresses holding 1 NFT increases, this reduces the likelihood of whales selling their assets in the open market, thus creating a huge chain reaction common in the public crypto market.
Looking at the chart below (holder breakdown), we see that the number of smart money holders (blue line) has been gradually increasing recently, while the number of CryptoPunks' smart NFT traders (green line) has been decreasing slightly recently Collection. This may indicate that CryptoPunks NFT is falling out of favor as a short-term trade.
NFT Price Estimator
The Price Estimator looks at sales history and characteristics to estimate the most accurate price for any given NFT. When buying or selling NFTs, it may help identify new opportunities and get the best possible value. Due to the depth of ML involved, we currently cover only three series (BAYC, MAYC, and Doodles), but we will be expanding to others soon!
In addition to price estimates, users can now see.
Estimated price distribution of all NFTs in the historical set of segmented machine learning price estimates for the feature with the largest impact of the current price premium (percentage above the floor price) for any NFT on a given price
Use Nansen to display alpha
There is a lot of noise in the NFT field. With thousands of projects starting up every day, it is becoming increasingly difficult to keep up with what is happening. nansen helps to remove the noise and show the signal to help you discover NFT projects that are worth looking into.
Here are some tips on how to perform this operation.
Follow the smart money
Smart Money on NFT is very important. This is because by the nature of NFT trading, the community often follows the leader in making decisions. For example, a prominent figure in the NFT world is Pranksy, who can significantly influence the NFT market once he buys or emulates certain items. there are 4 NFT Smart Money labels on Nansen, each with their own definition that matches their strengths.
NFT Smart Money (NFT Smart Money)
Nansen's NFT Smart Money section allows investors to stay up to date with the latest moves made by their smart counterparties. Smart Money Tracker displays the latest trades made by NFT Smart Money's wallets.
NFT Paradise Smart Money Tracker
Investors can view in-depth analysis of buy/sell/cast activity on the Smart Money tab wallet. Again, this useful data creates the opportunity for investors to identify high-potential investment opportunities from others.
NFTParadise Smart Money Campaign
While smart money activity is a key way to find interesting collections, it's not prudent to utilize smart money data blindly. nansen provides a clear and seamless way to track the performance of these smart wallets over the past 3 months.
Profit and minting charts
The Profit Leaderboard and Mint Leaderboard under the NFT paradise dashboard provide users with a consolidated view of the top performing wallets in the NFT space. The Profit Leaderboard shows the most profitable NFT traders, while the Mint Leaderboard shows the wallets that have made the most profit from minting and selling NFT in the last 60 days.
One way to keep a close eye on these wallets is to mark them as SMART alerts to receive notifications when these profitable traders mint or buy any NFT. The profit chart below is sorted by total profit and shows net income minus ETH expenses. However, if you are looking for active traders or resellers of NFT who are actively buying and selling many different NFT sets, you can filter by the set bought and sold.
Wallet analyzer
One of Nansen's core features is the Wallet Analyzer - a great way to see which collections the big players are focusing on. The wallet analyzer includes estimated portfolio value (ETH), recent NFT purchases and sales based on date, realized gains and losses. This is the comprehensive tool used when analyzing the portfolio and performance of a user's NFT wallet.
Wallet Profiler dashboard for Pranksy wallets
Keep up with the hottest trends
Since NFT action is highly profit-oriented (unless we're talking about consistent top performers and blue chips), it's important to know what's "hot" right now. Being able to enter early is critical to maximize upside and minimize downside consequences.
NFT Market Overview
A simple dashboard to use here is Nansen's 24-hour NFT market overview under "NFT Paradise", which summarizes what's happening in the market today. In the chart above, we see that "SuperNormalbyZipcy" is leading the way in terms of volume. This highlights the huge demand and supply of trades that are currently being traded, which could increase liquidity in this illiquid NFT market. We can also sort by other characteristics, such as 24-hour variation in the floor price or 3D variation in the floor price.
Mint Master (casting master)
Nansen's latest casting dashboard displays the latest NFT projects, which are sorted based on FOMO (fear of missing out) levels. During peak NFT season, this is a very useful tool for identifying NFT casting opportunities that are attracting significant casting activity.
Latest Casting Dashboard
The FOMO level is based on the number of minters in the last 15 minutes. Please note that this only includes items minted in the last 14 days.
The dashboard above lists the top NFT sets minted in the last 24 hours, as well as the NFT sets minted by the smart money. As mentioned earlier, it is important to determine where the smart money is flowing, and this dashboard provides investors with a way to identify lucrative NFT investment opportunities.
*This dashboard is only available for projects that have started casting in the last 24 hours.
Nansen Blue Chip Index
The Nansen Blue Chip Index contains a quarterly selection of the 20 largest NFT projects by liquidity and market capitalization. Examples of these projects included in the index include CryptoPunks, Cyberkongz, Meebits, BAYC, etc.
NFT Paradise Blue Chip Index
Using the dashboard above, users can analyze the index over time in terms of trading volume and market capitalization, including the last 3 months and intra-day statistics. Since the beginning of the year, the charts show a significant increase in NFT activity on Ether. Likewise, users can also identify the biggest winners and losers over the last 24 hours compared to the previous 24 hours.
7-Day Blue Chip Market Overview
Investors can observe significant changes in the index portfolio, such as market capitalization, average trading price, number of wallets holding the NFT set, and percentage of unique ownership.
Conclusion
Overall, the NFT market is not a simple market. As mentioned above, there are many factors that affect the value of NFT and many new forms of utilities are being introduced in relation to it. This is especially true in a downward trend, as many describe it as a "wealth reserve". But it is always important to keep in mind the liquidity issues in this space and the risks associated with NFTs (e.g., runaways, zeroing out of value, etc.).
In order to keep up with such a dynamic market, one must always be up to date and informed about various projects via twitter and discord. nansen helps you keep up to date with what is actually happening behind the scenes by providing you with transaction data.
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