Why should you read on?

In this post I will set out my key learnings to provide a simple framework (a pyramid) for maximising your money and saving your time (and sanity).

Key learnings

1. The three most valuable resources in the NFT space are alpha, liquidity and time the focus of the post

2. You are subject to volatility in both the NFT asset and the underlying network a focus for another time

3. Demand is measured in volume and supply is measured in the percentage listed a focus for another time

Alpha, liquidity and time

These three things are the holy trinity of NFTs and make up the pyramid of gains. Gains refer to the returns made on your investments. Optimising these three things ensures astonishing returns without sacrificing one’s mental health.

Let’s start with some definitions…

• Alpha is the excess performance of an investment over the performance of that asset in the general market, which is attributed to the investor’s skill or acumen. In NFTs it can mean this but more commonly refers to insights and tips that an investor gets access to which aren’t shared by the general market.

• Liquidity is the amount of cryptocurrency that is ready to used for new investments and is not locked in another investment. The more liquidity available, the more free you are to bet big on a great opportunity or to make multiple bets in a short time span.

• Time refers to hours in the day, hours in the night and —most importantly— attention. How much attention can you give to Twitter to check notifications, in the off chance that one contains a link to a closed Discord or a stealth mint?

The core idea of the pyramid is that you can’t succeed without all three of these things. If you have alpha but no liquidity, you cannot leverage hot tips and buy into projects. If you have liquidity but no time, the best opportunities will pass you by. If you have alpha and liquidity, but no time, you will likely get burned by scams or through investing in projects you haven’t validated.

Alpha

Good alpha provides confidence in a project, while excellent alpha is both the confidence in the project and guaranteed access to the mint or a great entrance price. Weaker alpha is difficult to distinguish from noise.

Ultimately the trade-off with alpha is price versus trustworthiness. The more you spend, the more confident you can be. The less you spend, the more you’ll have to think, filter and rank the information you get.

The three rough categories of alpha are:

1. Free You find a core group of trusted influencers/investors on Twitter and you keep a close eye on what they follow and retweet. You spend a lot of time finding new projects and assessing whether your alpha group follows these projects too. Here’s an excellent list of influencers to follow:

   https://twitter.com/SkiddilyNFT/status/1497793442810044422

2. Paid information You buy membership to an alpha group. There are numerous options for this. Skiddily (his tweet is above) started the A-List or you can go with my tried and true, Project Whitelist.

3. Paid access You purchase access to new projects through existing projects. An extreme example of this is buying a blue chip NFT, such as a Doodle. Ownership of this token will be your ticket into many other projects. Alternatively you could purchase a pass (e.g. Coniun pass or Premint Collectors pass).

Liquidity

How much $ETH is sitting in your wallet, waiting to be invested? This affects the number and types of bets you’ll be taking. Less liquidity means that you can’t afford to be in many projects. It also means that you are less likely to take bets on secondary markets (OpenSea, LooksRare), where the entry prices will be higher.

1. Low You have less than 0.5 ETH, are a little more worried about gas and your liquidity can easily be drained by minting three tokens from a project you are whitelisted on. Ultimately, you want to be confident that what you are minting will help you grow your wallet size.

2. Medium You have somewhere between 1 and 3 ETH, you keep some of this in stable coins, ready to use. Gas isn’t so much of a worry, unless there’s a gas war going on. You mint the max when you’re confident in a project and you may even buy a couple more on secondary.

3. High You have more than 3 ETH and are happy to lose some of it in pursuit of large gains. What even is gas? You won’t shy away from making purchases where the floor price is in excess of 1 ETH if you are confident that it will go up.

Time

When thinking about time, evaluate when you are available and for how long. This dictates how you should investigate projects and act upon insights. Depending on your availability and attention, you’ll prioritise the kind of information to seek out.

Regardless of anything else, invest time in being safe. Learn how to take care of your wallet. In fact, buy a hardware wallet (directly from the manufacturer.)

Let’s use three categories for your time:

1. Spiky You probably work remotely some or all of the time and can keep track of notifications and act on them quite quickly

   1. Prioritise many sources of alpha

2. Sustained You will carve out time in the evenings or over the weekend because when you’re working, you’re working

   1. Prioritise research

3. Full-time NFT degen You are either a student and coasting through or you’re giving NFTs a full-time punt

   1. Prioritise grinding/vibing

   2. Then prioritise research and sources of alpha

Putting it all together

Low liquidity

Without much in the bank, you have to sacrifice time to build up your liquidity. Get as much alpha as you can. Spend whatever time you can grinding for the most promising projects. The alpha will often be noisy but spend time finding the signal in the noise and soon you’ll have the liquidity you need to pay for better alpha.

Medium liquidity

Time is money. You should spend a little more money in order to save time. You can afford to pay for good alpha so you should definitely consider it. You can also afford to buy on secondary markets so it is worth spending time doing research and generating your own insights.

High liquidity

You have to spend money to make money. You have the money so spend it on getting the best alpha and access to projects.

Ultimately, NFTs are incredibly time-consuming and can be fabulously lucrative. The dark side of the space is the toll it takes on one’s sleep schedule and mental health. If I am to pick one message from this piece is that —if you can afford it— spend the money to save your time and your sanity. It’s worth it.

airdrop Rewards sent to your wallet for investing in a project

alpha intel

bayc Bored Ape Yacht Club

dao Distributed organisation that runs it’s operations through Discords and smart contracts

dapp App built using Web 3 technologies e.g. LooksRare

diamond hands Investor that hodls

doxxed Identity is known. Means you know who started the project and it’s less likely they rug you

dyor Do your own research. You’ll get a lot of tips, few are sound financial advice

flip Sell shortly after buying for a quick profit

floor Lowest price for an item in a collection. It is frequently used to gauge how well a project is doing

fomo Fear of missing out. The irrational desire to get involved in a project. It’s the opposite of fud

fren Friend

fud Fear, uncertainty, doubt. This typically manifests as a bunch of people in a Discord warning of a rug

gains Profits

gas Transaction fees

gm Good morning

gn Good night

grind Being very active in the Discord server to accumulate experience points, level up and —hopefully— get on the whitelist

hodl Hold on for dear life. Don’t sell

lfg Let’s fucking go

metaverse Where we’ll live once we hit it big with NFTs

mint Committing an asset to the blockchain. It is the act of creating the NFT as ERC720 token. You either mint or you buy a previously minted NFT

mod Moderator, normally for a Discord

nfa Not financial advice

nft Get outta here

og Early to a project

paper hands Investor that sells quick for a rapid profit

pfp Profile picture. Used to refer to NFTs which can be used for your profile e.g. BAYC

raid Grab a bunch of people in a Discord and get them to jump on a Twitter post or another Discord to hype the projecte

rug or rug pull You got the rug pulled on you. The project is a rug pull if the creators cut and run after the mint

ser Sir

staking Giving up your funds temporarily for the receiver to run their business for instance. For instance, you may stoke with LooksRare to earn $LOOKs

sweep the floor Buy up the lowest priced NFTs in a collect and bring up the floor price

utility The value of an NFT after the mint. It is what being a part of the project should get you. It can be land in the metaverse or airdrops or nothing

wagmi We are gonna make it

wen When? Typically used to ask when you’re getting on the whitelist or the project will moon and you’ll get a lambo

wl Whitelist. List of the real ones who are getting to mint the presale

In this longish read, I’ll go through the steps to make healthy profits by buying and selling NFTs.

The steps are:

1. Create a fund

2. Source deals

3. Due diligence

4. Close the deal

5. Grow or sell

This guide is for beginners who want to get into NFT projects and purchase at the pre-sale. There are very different techniques if you want to trade in secondary markets (OpenSea and LooksRare, for instance).

0️⃣ Before you start

• Here’s a glossary of terms that you’ll need

• MetaMask → Set up a wallet

• Twitter → Trust me, you need this (set up a new account if you’d like to stay anonymous)

• Discord → It won’t take you long to find a Discord server from Twitter

• OpenSea, LooksRare → Look at some projects to get a feel

• Background → A beginner’s guide to NFTs by Linda Xie

• Bring a positive attitude → It really goes a long way in this space!

Got everything? Great, let’s go…

ethereum://0x3B3ee1931Dc30C1957379FAc9aba94D1C48a5405/44556

1️⃣ Create a fund

The first step is to create a fund. This is crucial because you will get a sense of what your hard-earned cash translates to in Ethereum can use this initial sum to set a target multiple against (e.g. 3 times or 3x). It is also very easy to bleed funds on transaction fees if you’re adding bit by bit so it’s much better to set out a lump sum straight away.

Things to think about

• Amount Balance the fund being affordable and meaningful. In other words, make sure that it’s an amount you can afford to lose that would also impact your life it increase 10 times in value.

• Time horizon Set a timeline for this after which you can assess and change your strategy if needed. I suggest three months.

• Return Set a target return at which you will take profit.

I started investing in NFTs in January of 2022, with this fund:

• Amount $5,000

• Time horizon 3 months

• Return 5x

✨ Tip

Investing in NFTs is very time-consuming. When budgeting cash, also budget time. Be realistic about this with everyone that has a vested interest in your time.

✨ Tip

If you’ve got loads of cash available, you should go and buy yourself a bored ape. Many have built a career and life off the back of one of these overpriced jpegs. You immediately get access to new and exciting projects, while all sorts of free stuff is airdropped to your wallet and you join a group of the most informed individuals in the space. There’s also special credibility reserved for those that can say BAYC owner.

https://twitter.com/apebayc/status/1483510535543209984?s=20

2️⃣ Source deals

You’ve got the fund so let’s go window shopping.

🥇 Twitter is the best

Finding NFT projects is actually really, really easy. New projects are minting every day. Look at OpenSea’s trending section for proof of this. So it’s not so much finding projects as being early to projects.

You want to get that sweet, sweet alpha (hot tips) and to get into the project’s Discord early. Twitter is great for this. Sometimes —if you’re early enough— you’ll get a special role or even access to the allowlist.

1. Optional Start a new Twitter (it will help Twitter’s algorithms know that all you care about is NFTs)

2. Follow some leaders in the space → Skiddily.eth has produced an excellent list

3. Follow some great projects → This changes over time, but follow Imaginary Ones and Cryptoon Goonz to start

4. Follow a handful of the recommendations that Twitter gives you.

5. That’s it. Keep that cycle going then you’ll have a decent feed.

6. Put notifications on for the accounts that give you good information or for the accounts of projects that provide limited access to their Discords.

🥈 Discord is great for finding projects because —once you’re in— you’re in

Once you’re bouncing around different Discord servers for the projects you’re looking at, you’ll start to see countless shill channels. People will invite you to the projects that they’re in because they get rewards for inviting others.

This will help you to find great projects but it’s better to find a source of Alpha, I’d recommend joining:

• Project Whitelist

• 49G Club

🥉 Reddit is okay too

The NFT subreddit is okay I guess.

🥉 The world wide web has many sites devoted to this

• https://rarity.tools/upcoming/

• https://nftgo.io/

• https://nfteagle.io/

• https://nextdrop.is/

• https://nftscoring.com/upcoming

3️⃣ Due diligence

You found a project, now you need to decide whether you’re going to work to get your allowlist spot or not.

✨ Tip

Here’s the tool I use to track and assess projects, make yourself a copy.

To assess a project, look at:

1. 🐺 Team

2. 🧑‍🤝‍🧑 Community

3. 🗺 Roadmap

4. 🎨 Art

5. ✨ Vibes

6. 📈 Hype

I also look at the whitelist requirements to decide if the juice is worth the squeeze.

🐺 Team

Key question Can you identify someone in the project whose reputation/livelihood is at stake if this project doesn’t deliver on its promises?

1. Does the team have applicable experience in NFTs and Web3?

2. Do you see indications of commitment, rather than team members bouncing from project to project?

3. Can you identify an IRL person associated with the project? Drippies is an excellent project where each team member’s LinkedIn is shown (it helps that the art is fire too).

🧑‍🤝‍🧑 Community

Key question Do you believe that the people who are going to buy this NFT will ensure its value in the long term?

1. Is the community engaged or is it relatively silent in the Discord?

2. Are the people that are sending messages repeating gm and gm and wagmi or are genuine conversations taking place? Are there people in the voice chats?

3. Do the people having conversations seem to know what they are talking about? If you’re reading this, you’re probably relatively new to this. If you can pick out a noob, you should be nervous.

🗺 Roadmap

Key question Do you think the roadmap is a good use of the resources provided from the mint?

To answer this question, you have to have a view on the utility of the project. Utility is the value that the NFT owners get back for having invested in the NFT (and for owning it ongoing). Utility could be anything from airdrops of tokens to access to merch.

Really you just need to decide whether you believe in the utility or —if not— whether the community will.

Here is what I look for (in order of value to me):

• Alpha Will being a part of the project give me access to new projects? I’m especially keen on this because I’m still relatively new to the space.

• Staking Some projects will reward you with tokens for staking the NFT. DeGods rewards you with $DUST.

• Metaverse If I’m sold on the community, I want to be neighbours in the metaverse.

🎨 Art

Key question If you can’t flip it, is it attractive enough that you wouldn’t mind hanging onto it?

For instance, this is completely and utterly my jam 👇

ethereum://0x0322F6f11A94CFB1b5B6E95E059d8DEB2bf17D6A/4122

✨ Vibes

Some projects just have excellent energy. There’s just something about them. DourDarcels undoubtedly has this energy.

📈 Hype

Some projects, by no virtue of excellent team or detailed roadmap, will just acquire 25,000 Twitter followers in a day and then keep everyone chasing a sniff at a chance to get into the Discord. If you find an in and can get yourself onto the allowlist, then you just need to decide if the hype will live long enough for you to flip during or just before the public sale.

4️⃣ Closing (the big one)

You found a project you like, nice. Let’s close the deal.

⚪️ Get on the allowlist

This is the simplest but maybe the hardest part of the whole exercise. You will now have to work. Getting on the allowlist will require at least one but sometimes all of these things:

1. Be early The first to the Discord are normally granted an og role, which will mean they are automatically added to the allowlist.

2. Invites Invite others to the project. This can be tracked.

3. Grind In return for being engaged you can be granted allowlist. In essence, you send messages, earn experience for each and level up over time. At a certain level, you may be granted allowlist.

4. Fan art My fave. Make art based on the project and share it with the community on Discord or Twitter. Here’s a Twitter thread with some free tools you can use.

5. Memes Be funny and get allowlist.

✨ Tip

It is up to the discretion of the moderators (mods) whether you get allowlist or not. Remember to be positive and bring only good vibes. One great comment can get you noticed.

✨ Tip

Try to focus your efforts on a couple of projects at a time, otherwise you will get overwhelmed. If your Discord is getting out of control, mute the servers you are not looking at and hide them in a folder.

🎉 Mint

You’re right there! There isn’t much to say here except that you need to follow the official links from the Discord server and make sure that you aren’t getting rugged.

I’ll trust that you have MetaMask setup. Head back to step 0 if you haven’t.

All you need to do is get to the project’s website, connect your wallet and mint yourself an NFT. You will have to pay gas and depending on when the mint is and how popular the project is, you may have to pay a lot. Gas is unfortunately a fact of life (at the time of writing).

✨ Tip

Before minting, ask yourself if it’s a rug. There will be plenty of people chiming in to say that it is in the Discord. This may be fud and it may not be, see how the team responds to it. You have to decide for yourself how genuine the project is.

If you need a couple of tips for the actual mint, watch these videos.

1. Minting strategy

2. Minting directly through the contract

5️⃣ Grow or sell

You’ve bought an NFT, ✨congratulations✨. Bask in it!

Now you decide whether to hold onto your NFT and derive value from it or flip it. Depending on what you unearthed during due diligence, you should have an opinion on this.

If you see value in the roadmap and the NFT’s utility then hold. If you don’t, then flip it.

If you decide to flip, the time around the public sale is hot, you can cash in on the fomo of those that didn’t make it into the allowlist. At the time of writing, it is often much cheaper to list sell on LooksRare than OpenSea so have a look.

🌝 Happy trails and see you on the moon

For questions, comments or abuse, hit me up on Twitter → @chr1stopherrrrr

Disclaimer: This post is not investment advice.