5 simple steps to make money with NFTs

gm ☕️

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

Simple, right?
Simple, right?

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…

1️⃣ Create a fund

You gotta spend money to make money
You gotta spend money to make money

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.

2️⃣ Source deals

Follow the smell of fomo
Follow the smell of fomo

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:

🥉 Reddit is okay too

The NFT subreddit is okay I guess.

🥉 The world wide web has many sites devoted to this

3️⃣ Due diligence

What even is a good project?
What even is a good project?

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 👇

✨ 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)

If you want that NFT, you're going to have to werk
If you want that NFT, you're going to have to werk

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

Go ahead (or don't)
Go ahead (or don't)

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

wen money, now or later?
wen money, now or later?

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

Rinse and repeat
Rinse and repeat

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.

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