Taking CryptoPunks as an example, teach you how to explore the development potential of NFTs using NFTGO

Author: NFTGO

Original Title: NFTGO: Interpreting the Development Potential of NFTs through the "ETH-CRM" Six-Step Data Method

The current NFT market is in its early stages of explosion, with a large number of new projects emerging one after another. According to incomplete statistics from NFTGO, since May 2021, at least one NFT project has been announced every day across various chains. At the same time, it is worth noting that, like DeFi, the quality of projects on the market varies greatly, and investors may inadvertently fall into the "liquidity trap" of the NFT world, pouring large amounts of funds into a bubble.

In fact, in the world of blockchain, both investors and NFT beginners can rely on sufficient data to aid their decision-making process.

This article will take the classic NFT project CryptoPunks (project link: https://nftgo.io/collection/cryptopunks/overview) as an example to analyze the investment potential of an NFT project from the "six-step" data perspective (also known as the "ETH-CRM" rule).

1. Elements: Basic Information of the Project

· Basic introduction, category

· Market capitalization, total issuance

Before investing in a project, it is crucial to understand the basic situation and positioning of these projects.

For example, CryptoPunks is a collectible project located on the Ethereum (ETH) chain, consisting of 10,000 unique NFTs featuring pixelated punk characters. It is also one of the earliest non-fungible token projects on Ethereum. Initially, anyone could claim these NFTs for free on the official website, but now they can only be obtained by purchasing from other users.

Image source: NFTGO

First, we can obtain more information about the "project development team" from the official website— the project development team will play a decisive role in the quality and future development of the project.

According to the official information, this project, created in 2017, belongs to Larva Labs, which is also behind another well-known NFT project, Meebits (a studio founded by developers Matt and John in New York, engaged in content beyond just blockchain), and has established extensive connections with the off-chain world (which can give an NFT project significant premium).

Image source: Larva Labs official website

As of the time of writing (and the same below), the total market capitalization of CryptoPunks has exceeded $424 million, with a total circulation of 9999 NFTs*, and the average price of a single NFT has reached $40,000. The identity of being a pioneer in NFT underlying technology and a four-year project operation history has given CryptoPunks a valuation of $400 million— we can get a preliminary concept of its enormous scale from the following chart.

Data source: NFTGO

*In May 2019, due to a transfer error, CryptoPunk #3493 was transferred to the address 0x00..01 (still considered in circulation as it does not meet the definition of destruction).

Data source: NFTGO

Subsequently, in February 2021, CryptoPunk #7755 was transferred to the address 0x00..00, considered destroyed.

Data source: NFTGO

2. Trade: NFT Trading Data

The second step is to analyze the trading situation of this project. We can analyze the trading situation of the project through the following aspects:

· Liquidity, 24h/7d volume------ Is the liquidity of these NFTs good? Will they be unsellable after purchase?

· Highest, average, and lowest transaction prices------ What are the upper and lower limits of the NFTs?

· Top Sales trading frequency and price trend------ Is the project overall on an upward trajectory?

· Total number of traders (including buyers and sellers), changes, and interrelationships------ Is the project attracting more traders?

· Liquidity, 24h/7d volume

Taking CryptoPunks as an example again. In the past thirty days, the liquidity of Punks (the proportion of the number of transactions in the past 30 days to the total number of NFTs) reached 20.98%, with a 24h trading volume of $5.67 million, a 7-day trading volume of $37.92 million, and a historical cumulative trading volume of $700 million. Overall liquidity is good.

Data source: NFTGO

From a longer time span, the daily trading volume of CryptoPunks fluctuates significantly, which may be related to the high prices of some Punks, but the overall trend is upward, indicating positive market expectations for Punks. The highest daily trading volume in the past year was $41.95 million, occurring just over ten days ago (2021.08.07). Additionally, August 1 was also a peak trading day in recent years, with a trading volume of $39 million.

Data source: NFTGO

We can observe that the trends in the number of traders and trading volume are similar, indicating that the fluctuations in Punks' trading volume during this period were mainly driven by changes in the number of transactions (rather than the average transaction price). This situation is often related to the occurrence of relevant events: events generate heat, bringing short-term traffic— we can search for related information from this perspective.

Data source: NFTGO

In the early hours of July 31, two high-value transactions related to CryptoPunks occurred on-chain within a short span of three hours, totaling 3850 ETH; two hours later, address 0x650d (a new address) quickly purchased almost all the cheap Punks, with a cumulative transaction volume exceeding 2700 ETH.

This series of transactions quickly sparked heated discussions across platforms, with CryptoPunks briefly trending on Twitter, and speculation about the identity of the trader developing fervently, further increasing the hype around CryptoPunks and leading to new trading records.

Data source: NFTGO

It is noteworthy that one of the "instigators," 0x650d, after "stirring up" the NFT world on July 30 and 31, quietly returned to calm. The only major NFT project under this address is an Ethereum domain name, and all 88 Punks had been transferred out by August 7.

Data source: Etherscan

Data source: Etherscan

The emergence of new trading records on August 7 can be seen as a continuation of the heat from the 1st, with the average transaction price significantly increasing compared to the 1st (as the cheap Punks had already been swept up by 0x650d). Additionally, on August 6, Christie's officially announced a list of several NFT auction items, including CryptoPunks, which boosted the trading volume of Punks. On that day, there was also a high-value transaction of 1500 ETH.

Data source: NFTGO

After experiencing this week, the overall heat and trading volume of Punks have significantly increased compared to before, which has also driven up the floor price across the entire NFT space. However, we can see that the heat of Punks has gradually spread to non-NFT users, which will be a long-term positive signal for the project.

· Highest, average, and lowest transaction prices

Looking at the next set of indicators: the current highest transaction price for Punks is $7,560,180.43, the lowest price is $0, and the average transaction price is $70,439.4. The price range is quite large, indicating certain risks. However, considering the project's high visibility, there may be instances of non-profit transactions. Overall, the prices of NFTs within the CryptoPunks project are relatively high, but the latest overall transaction prices are at their peak, suggesting there may still be some appreciation potential.

Data source: NFTGO

· Top Sales trading frequency and price trend

Currently, the highest-priced Punks are #3100 ($7,560,180.43, 4200 ETH) and #7804 ($7,551,742.54, 4200 ETH), purchased by 0x7b89 and 0xf4b4 respectively 157 and 158 days ago. Both have only had two transactions, with the last transaction occurring in July 2017 and January 2018 (during the project's early days), with a transaction price of $3.78 million— in the NFT circle, as long as you pick a good project, you can be a "friend of time."

Data source: NFTGO

Data source: NFTGO

· Total number of traders (including buyers and sellers), changes, and interrelationships

Currently, there are 9999 NFTs in circulation for CryptoPunks, owned by 2829 addresses. Historically, 4173 addresses have participated in Punks trading, with the number of buyers exceeding the number of sellers, at 3706 and 2207 respectively, showing an overall tendency for the market to hold Punks; at least 1740 addresses have conducted at least one buy and sell transaction, accounting for approximately 41.70% of the total addresses.

In addition, in the past 7 days, there were 229 addresses participating in Punks trading, including 136 buyers and 134 sellers, with the trading proportion ranking among the top in all NFT projects.

Data source: NFTGO

In summary, from the trading perspective, CryptoPunks has good overall liquidity, and the project is still on an upward trend. However, due to the high prices of individual NFTs, there may be issues such as low returns, so careful consideration is needed before entering the market.

3. HODL: NFT Holding Data

The third step, after confirming the underlying logic of the project, existing development scale, liquidity, and return range, is to further examine the holders of the project's NFTs.

We will analyze the holding situation of NFTs within the project from the following aspects:

· Total number of holders------ How many people in the market choose to trade these NFTs?

· Top Sales current and longest holding time------ Are they short-term speculators looking to make "quick money," or long-term investors who believe in the project's value?

· Number of Whales, holding situation, and trading dynamics------ Who are they, what categories of NFTs have they invested in? Can we follow in their footsteps to discover other "wealth codes"?

· Total number of holders

The holders of CryptoPunks number 2829, accounting for 67.79% of the historical total holders (4173), indicating that speculation in the Punks market is not severe.

Data source: NFTGO

The current Top Sales mostly occurred recently, reflecting the current market heat and potential.

Data source: NFTGO

· Top Sales current and longest holding time

Further analyzing the holders of Punks: for example, the current second highest-priced Punk #7804 is held by 0xf4b4, a seasoned Punk player. His account's total value exceeds $8.81 million, holding 6 Punks and 1 Meme. He entered the Punk market about 150 days ago and has continued trading Punks since then.

Data source: NFTGO

His last transaction occurred on August 4, 2021, where he sold a Punk.

Data source: NFTGO

· Number of Whales, holding situation, and trading dynamics

Tracking the movements of whales within the project can better assist trading decisions. Currently, there are 57 whales (holding over $1 million worth of NFTs from the project) in CryptoPunks, a leading number among many NFT projects.

Data source: NFTGO

Among them, the address holding the most Punks is 0xc352b, which holds 430 Punks. Its account also includes 230 Meebits (indicating it is a "loyal fan" of Larva Labs), 4 Art Blocks, and 1 Crypto Kitties.

The address with the highest total value of Punks is 0xe3016, which, in addition to holding a large number of Punks and Meebits, has also purchased NFTs from Art Blocks, Known Origin, and SuperRare. Notably, he participated in the initial issuance of Stoner Cats (a new collectible project) on July 28 this year and has held them since.

Data source: NFTGO

Compared to the Holding Value (total value ranking), the Whales in the Holding Amount (quantity ranking) seem more like the "winners" in the current Punks market: they are often early players of Punks, and most of their Punks have appreciated over tenfold or even a hundredfold. We can glimpse this from their historical trading records. Considering that their wallets often contain a large number of Punks that have not been traded, the potential trading value of their accounts should not be underestimated.

On the other hand, the Whales in the Holding Value ranking are mostly new entrants who quickly became whales by purchasing a large number of high-priced Punks. The trading volume they create as buyers often far exceeds that created as sellers— they have great hopes for the future of Punks and are likely to create higher profit records in the future.

The address holding the most Punks has realized nearly a thousand times return, while the address with the highest value of Punks has realized a negative return.

Additionally, we can discover more information by observing the historical trading volume of their addresses: for instance, the address ranked sixth in the Holding Amount list, 0x6902, is a "Diamond Hands" in the NFT world, continuously accumulating Punks and holding them regardless of price fluctuations, never selling. He currently has 147 Punks in his account. We eagerly await the moment he chooses to start selling Punks.

Data source: NFTGO

In summary, the CryptoPunks market has gathered a group of investors with high loyalty to the project, and the number and scale of these investors continue to expand. They will become our "silent mentors" in investment.

4. Coin: Project Token Data

· Market capitalization, ranking

· Trading volume, issuance, circulation

· Price trend, trading situation

The fourth step is to examine the development situation of projects that have issued fungible tokens through the price trends of their fungible tokens. Since the liquidity of fungible tokens is far better than that of non-fungible tokens, there exists a group of more cautious investors in the market who enter through investing in fungible tokens. Since CryptoPunks has not issued its own token, we will analyze Decentraland as an example.

As of the time of writing, the price of Decentraland's token MANA is $0.9, with a circulation of 17.95 billion tokens and a total market capitalization of $1.61 billion, ranking 70th among fungible tokens.

Data source: NFTGO

In the past month, the price of MANA has shown an overall upward trend but remains below its historical peak.

Data source: CoinMarketCap

Many trading pairs of MANA maintain daily trading volumes above one million. Among them, the MANA-TOPBTC trading pair may present arbitrage opportunities.

Data source: NFTGO

5. Ranking: Project Comparison Data

The fifth step is to evaluate CryptoPunks' market positioning based on various rankings.

In the total market capitalization ranking, CryptoPunks ranks first, with a market cap far exceeding that of the second-ranked Art Blocks, holding a market share of 29.58%; in the Top NFTs ranking, Punks occupy 8 positions in the top ten and 14 positions in the top twenty; in the NFT whale list, 8 out of the top ten addresses choose to hold CryptoPunks. (Specific forms and ranking rules can be viewed on the NFTGO official website: https://nftgo.io)

Data source: NFTGO

From a shorter time frame, in the past 30 days, the trading volume of CryptoPunks has accounted for a higher proportion than the all-time level, reaching 33.67% (largely thanks to two trading surges at the beginning of August); in the past 7 days, the trading volume of CryptoPunks has gradually returned to the historical average level, at 18.15%, second only to Art Blocks (50.41%). (More time dimensions can be seen at: https://nftgo.io/overview)

Data source: NFTGO

Currently, all indicators of CryptoPunks are at the forefront of the market, making it a "blue-chip stock" among NFT projects, widely recognized for its value by the overall market.

6. Media: Project Media Heat Data

The sixth step is to delve into major media platforms of the project to observe its operational status and active user count— the operation of the project community can help us to some extent uncover the trader profile (investment preferences, project loyalty, etc.), thus assisting us in judging the future trend of the project.

Data source: NFTGO

Currently, Larva Labs, the company behind Punks, has 48,300 followers on Twitter, with each tweet receiving around three hundred likes and still showing an increasing trend; its official discussion area on Discord includes over 25,000 users, with online users maintaining in the thousands and daily discussion volume exceeding one hundred.

Traders mainly consist of seasoned NFT investors and new high-net-worth investors from outside the industry. This type of trader (especially the former) is highly active and well-funded, providing strong momentum for the project's development.

Image source: Larva Labs Twitter

Image source: Larva Labs Discord

The success of CryptoPunks is unique: as one of the early NFT projects, it first utilized the ERC-20 format to transition from fungible tokens to NFTs, setting a precedent for the operation of many subsequent NFT projects. However, its success also has its inevitability: with the development of blockchain technology, there will eventually be those unwilling to trade "identical" fungible tokens on-chain, who will begin to make personalized attempts.

Looking at today's NFT collectibles market, besides CryptoPunks, there are also popular projects like Meebits, Bored Ape Yacht Club, Hashmasks, and VeeFriends.

They are a type of NFT that resembles fungible tokens the most: retaining the simple C2C model, focusing the project's emphasis on the specific content of NFTs rather than the project rule settings. Additionally, the operational model of collectible NFTs determines that they are scarce and will become increasingly scarce as the overall market grows.

However, at the same time, such a setup is very unfavorable for the emergence of new collectible NFTs: for a new collectible NFT, how can it find its unique positioning and uncover its unique value within such simple and homogenized project rules? How can they seek new breakthroughs?

And how can we discover valuable projects? With the "ETH-CRM" six-step data method, we hope everyone can form a systematic project analysis approach and enjoy the journey of NFT discovery.