ON–086: NFTs (Part 2)
Coverage on Art Blocks, Crypto Punks, Parallel, Pudgy Penguins, and Deafbeef.
Aug 27, 2021
- Pudgy Penguins were the fastest 1000x project ( 0.003 ETH -> 3 ETH ) so far in the history of NFTs. There is currently limited native tools for NFT market analysis. To validate the authenticity of the movement, confirm my trading thesis, and better manage the risk while still capturing the fast moving opportunity, I created a Dune Analytics dashboard to track the most essential metrics. My key metrics were unique wallets/distribution, hourly floor price, moving average, and volume.
- Participants are influenced by viral memes and fear of missing out (FOMO), thus vulnerable to social influence and direct price manipulation. One key metric proving broad market appeal and resistance to dumping was the largest wallet size (less than 1%) and high ratio of unique address 4400:8888.
- Illiquidity risk (to the point of no buyers) and thin floor price points (1-2 trades) can result in parabolic price movement, or inability to exit. I managed this by wrapping the unique non-fungible ERC-721 into fractional ERC-20 tokens with NFTx tools and staking a liquidity pool on SushiSwap.
- Deafbeef, a groundbreaking generative audio-visual art project consisting of 221 pieces, has seen a rise in floor price to over 100 ETH over the past month. After a first sale of 5 ETH shortly after the project's inception in March, the floor price steadily rose to ~12 ETH in late July. Over the past 30 days, the floor price skyrocketed with 11 sales of over 100 ETH.
- There are now 100 wallets holding a Deafbeef piece, and that number has mostly increased over time with few owners selling all Deafbeef pieces. Ownership of the collection is well-distributed, with the largest holding owning ~8% of the collection.
- Collectors of this project also hold NFTs from projects like Cryptopunks and ArtBlocks, as well as from the Foundation, SuperRare, and ArtBlocks. Overlap across quality projects suggests more savvy and experienced collectors than may be found in NFT projects made up of many new entrants.
