NFTeasers #12 | A guide to the single biggest predictor of success for NFT projects
Scoreboard | Shadow Quest | Riot Racers | NFT Playbook
Welcome back to NFTeasers from the Sunday:Drip Society crew. Each week, we explore the wild world of NFTs, from high conviction buys to hypothetical scenarios/predictions for your favorite projects.
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On today’s episode, we’ll break down:
Analysis of our past performance
A peek into the macro picture
Max minted Shadow Quest
Minted 2 Riot Racers Apollo Cars
A guide to the single biggest predictor of success for NFT projects…team
Current DripVault value is estimated at 12.59ETH (12.48ETH in NFT assets + .11ETH liquid) on cost basis of 2.41ETH. Yes I made this graph in Excel.
A peek into the macro picture
All markets have taken a schlacking this week, particularly in the past few days as Russia invaded Ukraine.
I’m no Nostradamus, but I did predict that we would see a big pullback in the NFT market in my NFTeasers post published on Jan 13.
I expected the pullback to happen within 2-3 weeks. It took 6 🤷🏻
Now I’ll admit, my thesis for why I expected a pullback was because I thought ETH would rip and NFTs would offset by trading lower.
I did not expect a global conflict and the potential for WWIII to send all markets (equities, crypto and NFTs) into a free fall.
So I won’t take credit for this prediction, but alas, here we are.
I tend to not mind bear markets, especially in highly speculative assets that I believe in long-term.
It helps flush out the fudders (fear, uncertainty and doubters), rerates the most ludicrously speculative positions, typically reconfirms the value of top quality assets and eliminates most of the shiny objects so builders can focus on building.
I’d be lying if I said it felt good, but this is the market we signed up for when we pulled the lever on the NFT slot machine.
As always, I’d expect the market to rebound. If anything, this was a fantastic buying opportunity.
The cream will keep rising to the top and the trash will continue to get burned.
I mentioned last week that I was rushed on my post because I spent the majority of the night before producing my cypher for the Wolf Game contest.
Here’s the final product if you’re a rap fan 👇
Minted Shadow Quest (10 warriors for .075ETH)
Last week, I wrote a detailed post about why I was bullish on Shadow Quest. Feel free to check that out here.
For being a Floor holder, the DripVault had the opportunity to mint up to 10 Shadow Quest warriors for .075ETH each. We spent .75ETH total and the position is currently worth 2.3ETH.
Additionally, Floor minters got a special deal and also received 10k $HONR or 2k $HONR*number that you mint, whichever was greater! That means the DripVault will start the game with 20k $HONR.
Minted Riot Racers Apollo cars (one Group A + one Group B for .25ETH total)
The Sunday:Drip team is incredibly bullish on Riot Racers.
In a space with P2E games popping up left and right, few will be able to truly build a sustainable economy that can survive beyond the first pump and dump.
We think Riot Racers is uniquely positioned for success given their team, funding, approach and track record 😉
I could try to rehash my argument for why Riot Racers is going be successful, but I can do you one better.
Roman and I recently spent an hour with Premium Carrots, Head of Data Science at Riot and one of the earliest team members.
We covered a ton of different topics and Carrots dropped some “never before heard” alpha on the episode. You can listen to it here 👇
The original founder of Riot, Meta Khan, also endorsed the episode and hinted that the alpha was worth paying attention to 👀
Kallaway @kallawavyLatest episode of Cryptoland is out now! We interviewed @PremiumCarrots, Head of Data Science at @RiotRacers. Episode was jam packed with alpha 👀 https://t.co/hq4iqPL7J5
Their latest drop was for their second wave of cars, the Apollo collection.
In the racing game, there are 7 classes of cars which unlock different tracks you’re able to race on. The higher the class, the bigger the pots will be for race winners.
For this drop, you could either buy a car in Group 1 (a randomized pull for the lowest 3 classes) or Group 2 (a randomized pull of the highest 4 classes).
We bought one of each.
A guide to the single biggest predictor of success for NFT projects…team
Lately, I’ve been trying to simplify things as much as possible.
Less mints. Less projects. Less distractions. Simpler frameworks. Simpler playbooks. Simpler strategies.
Part of it is that the NFT space is so so noisy. Noise prevents signal from getting through causing me to make bad decisions more often.
When things get noisy, I try to reset and go back to basics.
I often publicize my latest thinking on frameworks for best evaluating if NFT projects are going to be successful. I try to update these as often as my frame evolves.
I’ve talked about things like the art, the concept, the roadmap, the projected relative performance to ETH, etc. And while those things seem like they are important, they’re really not.
There’s one thing that matters significantly more than anything else…team.
If the team is right, but everything else is wrong, the project will always have the potential to reset, right the ship and build something that people want.
If everything else is right, but the team is wrong, the project will likely die, either in the starting blocks or a slow, painful decline after an optimistic launch.
And this makes a lot of sense when you zoom all the way out.
When VCs and angel investors back early stage startups, they’re looking mostly at the jockey over the horse.
Can the jockey figure this out? Does the jockey have a unique insight or edge at solving the big hairy problem in the space?
Does the jockey have the cajones to navigate the company through turbulent times?
Rarely does a great VC back a great horse with a shitty jockey.
Should the same framework be applied to vetting NFT projects?
I could see why someone could say no.
“Kallaway, NFT projects are designed to be speculative. There are no sustainable sources of revenue/profit, most are ponzis and projects live/die by generating hype, not on the team’s executional ability.”
As cringy as it was for me to write that sentence, it’s true that this is a legitimate argument for most of the NFT projects working right now.
But I think this is just a phase.
We’re still early enough where big players would rather sit on the sidelines than experiment with something new and make a critical brand mistake.
Because of that, most of the copy/paste, “ponzi” projects are getting airtime. People tend to frame their thinking around the market they see, so they are using a playbook to “win” with the projects that are in front of them.
Over the next 6-12 months, I think the majority of these types of get rich quick projects will begin to quietly die off.
Project teams will get bored of having low floors, airdrops that go unclaimed and 80% moon bois in their discords.
Because these teams weren’t building communities with authentic intentions and have already extracted hundreds of thousands of dollars out of the project, there will be nothing left to keep them motivated.
A few projects (e.g., BAYC, RTFKT, Floor, etc.) will remain, emerging as golden pillars in a colosseum full of rubble.
So the question is, what separates the long-term “real” winners from the short-term “head fake” winners?
To me, it’s team.
So here’s a few questions that I’ve started to ask myself about teams, before I buy-in:
Does this team need to succeed? Are the people building this project going to suffer a major financial or brand hit if their project falls apart? Typically a good way to assess this is to see if the team is doxxed. I don’t always write-off anon teams, but it’s clear that most can walk away from a project at any time almost completely unscathed. If the team is doxxed, that doesn’t necessarily mean the project will work either. With doxxed teams, I like finding projects where people have to make it work. This is one of the reasons why I like something like VeeFriends or BFF. Gary Vee has to continually generate value for VeeFriends or the rest of his endorsements/partnerships in the NFT space will not be as effective. He doesn’t want that to happen so he will continually work to overdeliver.
Is this team all in? If teams are working on several projects at once, chances are they won’t have the focus needed to make something work consistently over time. Again, there can always be exceptions, but I like backing teams that have absolute focus on one thing.
Does this team have a track record of shipping fast and consistently? This one is hard to assess before minting, but try and evaluate the consistency and speed with which the team is attacking the opportunity. You can often notice this in their communication cadence with their community. If it’s thorough, early/often and consistent, that’s typically a good sign. If sparse and not well thought through, that isn’t a good sign. This question can apply to their backgrounds as well.
Is this team personally an active part of the community? This is a big one. Lots of celebrities are launching projects but have little to no personal involvement with the community. This screams cash grab and something that will slowly fizzle out overtime. You want to find projects where the team is active. It’s one of the reasons why I love Shiny and Floor so much. Ozzy and Chris are extremely active in their own communities. They are eating their own dog food. This is where the projects that are around a decade from now will emerge from.
Are the team’s typical interactions genuine/deep or surface level for optics? This question goes hand in hand with #4. If the founding team is active in the community but often extremely short, not present and typically not a key contributor, chances are the project is trading or rallying around a different mission than the team is building for. When you have this type of disconnect, the project will fail.
Is this team authentically interested in the topic/theme they’re building or are they just looking to take advantage of a hot space? This is a really difficult question to judge unless you personally know the founding team. If you ever get a sense that they are just looking to take advantage of a space (and not authentically interested in the topic they are pursuing), run. The project may work initially but will never survive turbulence.
If the answers to these questions are mostly no’s, I’ll pass.
There’s too much opportunity in this space to bet on teams that aren’t A-players or mission aligned.
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