Six NFT Red Flags to Avoid and How to Spot them
NFTs became a very hot topic among Filipinos who use social media, the hype around NFTs is expected as well as the occurrence of new projects.
Based on Wilson Lee’s Top Six Red Flags, this will help and assist the enthusiasts on how to immediately spot those little red flags that an NFT might have.
So here’s some of the Six Red Flags that we must first consider before jumping into an NFT project.
1. Undoxxed Team
Some people are using “dox” as a way of revealing someone’s true identity on the Internet as well as to help the community of the crypto world to be identified. Before getting involved with any project you wish to be involved in, you must check if the team behind the NFT project used to have detailed profiling of their members, this will show their credentials that will help them build trust with their potential investors. Sometimes, having members who have achieved something about crypto might give the team an edge.
On the other hand, being anonymous will give a certain project an impression that it has no accountability and might eventually end up to a rug pull. Rug pull means that a project might be instantly pulled out by the developers once it becomes successful.
But also, there are still some successful NFT Projects that have undoxxed teams, as Wilson Lee suggested, if the team’s explanation won’t make sense, then staying away from them will be a great choice.
2. Fake Followers and Accounts
Bots and even other people who were being paid can still engage with a community to make that “hype” possible for a project. Lee emphasized that you must observe the engagement on their posts to know if they are real people or if they are bots. You must verify the number of likes and followers of the account. Seeing at least several notable people on an NFT social media account might become a green flag, but if none of them makes sense, then it may be a red flag.
3. Artificial Hype
Projects that are quite shady may often purchase endorsements, some projects were also using celebrities to just simply hype up a certain project but doesn’t truly support the NFT project. With this, it might appear to be an unrealistic hype.
4. Unrealistic Mint Price
FOMO or Fear Of Missing Out and the hype can eventually end up for an unrealistic mint price. Starting with an affordable price and the ones who do not extract all the liquidity from a market is what real community builders usually do. Does not mean that a project can or may demand a raise to a price means they should really make that decision.
5. Predatory Tactics
There are a lot of different techniques that may appear during the times of pre-selling of an NFT project, even those with evil intentions should be expected to appear there. Hoarding those NFTs with an affordable price o that no one could buy them is one of those “evil techniques”, another one is harassing developers and even banning other members for being able to list down their initial prices, as well as creating echo chambers which will only allow certain opinions to be heard and read.
6. Meta Cliche
Lee said that repetitive meta or roadmaps that was believed to bring a little innovation to a project, or the failure to address the legality that concerns the security and insurance of tokens as well as the lack of ability to create a proper tokenomics or play to earn (P2E) for the longevity of a project are the things that an enthusiast will always take to a consideration.
Wilson Lee said that there is no right and wrong when it comes to approaching an idea or a project in this new industry, this all comes down with the founding team starting from how they work, their values and main vision. Respect, communication skill and transparency are the main key skills to help a team that’s still growing.