Report 'Building Sustainable And Performing NFT Projects' by Altal at 05 Apr 2022
Building Sustainable And Performing NFT Projects Source
Building Sustainable And Performing NFT Projects
The ICO era of 2018 was a booming period for cryptocurrency with 2,430 projects were launched  with an average of 482 tokens sales per day . With high expectations, many invested in these projects. While some reaped profits majority were in the red as over 70% of these tokens lost their values. Following this, regulations were enforced and ended this era. A few years later a similar trend is in a new class of on-chain asset referred as NFT.
NFT In Brief
NFTs are on-chain digital representations of any physical asset ranging from images, arts, books, music, real estate with one proven ownership per time. It has come a long way from being a little to not known asset to been globally recognized. The adoption rate is on the rise with over 1million users in early 2022  on Opensea, the largest marketplace hosting 80million NFTs. NFTs are available on several networks including Ethereum, Solana, Binance Smart Chain with Ethereum hosting 80% of these assets.
The first NFT minting was Quantum in 2014 and now has several thousand minted. Among the popular ones Bored Apes, CryptoPunks and Cryptokitties as some of the popular names. The attention for NFTs has been on the increase following insanely high auction prices of NFT sales, it has grown from $40.96million in 2018 to $338million in 2020 and further into a $25billion market in 2021 with larger valuations projected in the coming years. Despite these staggering achievements, there are areas not full developed, specifically building sustainable and performing NFT projects and that will form the scope of this report.
What Indices Separate Performing From Non-Performing NFTS Tokens/Projects
NFTs have come a long way from 100 weekly sales to an average of 15,000 to 50,000 per week, it has become paramount to sift and identify viable projects. Below are few tips to be considered when opting for a project. Note these are not guarantees for the success of a project.
a. Team: the team behind a project plays pivotal role in the success of a project. Their expertise and capacity to deliver on such project should be scrutinized. It is important to note that when choosing or investing in a project, one actually invests in the team.
b. Whitepaper: The Whitepaper is the document that outlines the vision, problem statement of the project. It also provides the roadmaps goals and strategies of the NFT project It needs a clear vision and mission.
c. Community: NFTs are more than just owning a piece of art, its being part of a community. Most successful NFTs have the most engagement are usually the projects which will be the, where a culture has been created, and culture creates a following 
d. Utility/use case: When buying an NFT it is important to look into the value it offers. it could be special access to an event, exclusive in-person memberships, or future use in the digital world .
NFTs And The Bear Market
The continual decline in the global crypto market from November 17 2021 sent shudders into every crypto based project. To see what effect this has on the NFT space, a comparative analysis of the global Crypto market  with NFT market performance  brought interesting findings. While the crypto market saw a 54.6% decline in capitalization from $3 trillion in November 2021 to $1.64 trillion in late February then recovered to $1.99 trillion, the NFT market responded in weakly. The NFT market appears to be independent. The steady decline in transaction volume and sales from mid-January to March 2022 reflected in a 30% drop in total sales on Opensea which can be attributed to inflation concerns the war as investors are looking for safe haven, in Ukraine war situation and regulatory concerns, transaction volumes have really slowed down.
Building Sustainable and Performing NFT Projects
A fundamental challenge with NFTs is the value they offer holders. The average holding period for NFTs in 2021 was averagely 48 days compared with 156 days in 2020  meaning just owning a piece of jpeg on chain isn’t enough satisfaction, some form of value must be woven into these collectibles. These may be the growth pains but can be addressed by building a brand out of these NFTs which creates demand and supply. Introducing DAOs governance model gives boosts NFT holders confidence and loyalty. Bored Ape, Flamingo DAO, Friends with Benefits (FWB), Cryptopunks are amongst the top ranking NFT projects and have one thing in common- DAOs, strong communal followership and off-chain membership privileges (access to club, games, exclusive conferences, etc).
Challenges In Building Internet-Based Working Communities
The coming of web3 brings the prospect of building decentralised autonomous organisations (DAOs). Being emerging trends gaining traction in the crypto world, with 111 DAOs currently in existence  DAOs promises inclusivity, governance and engaging internet-based communities but this is yet to be achieved. The current model of DAOs is heavily centered on resource allocation and voting while it fails at incentivizing members contributions, managing and motivating members and determining the right people. To become effective, DAO must transition beyond its current state and draw lessons from thriving traditional companies.
The future of NFTs looks promising and competitive. While the fall in prices is not the end for NFTs but a time to check the fundamentals and makes the bustling creators’ space will build worthy projects with strong intrinsic values and branding into their NFT projects. internet based organisations will become better as DAOs have the inherent capacity for that to happen the moment it looks beyond resource allocation and voting to considering other aspects that drives members participation.
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3. Yahoo- More than a million users have now bought an NFT on OpenSea
4. NFT market cap worldwide 2020 | Statista
5. Medium- What to look for in a good NFT project
6. The 20 Best NFT Projects to Follow in 2022
7. Crypto market cap 2010-2022 | Statista
9. NFT sales exceeded $17B in 2021: report