In the NFT space, there's a huge mix of rug pulls, failures, and incredible success stories. Since it's usually WAGMI stories we see on our TL everyday, I want to explore why projects, with seemingly solid and ambitious roadmaps end up rugging or looking like this:

Okay Bears was at 100+ floor price within a couple of days. DeGods is buying a team stake in Ice Cube’s BIG3 League. Moonbirds launched 2 weeks ago and is already the 11th biggest NFT project ever with a $455+ million of secondary sales volume. Meanwhile, Blue Terra, a project expected to mint at 20 SOL last month is completely silent with an indefinite mint date, as more projects continue to get stuck at secondary market limbo with no hope for higher floor prices.

But, why?

Disclaimer: I'm a shit NFT trader and flipper (my best flip was a 10x on Baby Ape Social Club). I often overinvest in projects I predict will have the most positive, long-term impact for the ecosystem instead of buying into the hype and selling the news. This means staying a brokie and waiting for longer plays. 🥴

But, this has allowed me to focus on my strengths: observing the market and human behaviour to help me gather unique perspectives to offer insights over alpha when degens are too busy "grinding" for their WL.

So, why do projects fail to deliver when their roadmap looks so good?

Roadmaps are like the Witch's house in Hansel and Gretel, except in the web3 world, it's not gingerbread, cake, and candy...it's made out of staking, tokenomics, and utility. 😂 They look good AF...but they're usually just tricking you.

Here are some reasons why most NFT projects fail:

🚩 Poor project management: it's easy to create a Discord server, but managing questions and FUD from newcomers, current investors, and the community as a whole requires experience– or at least, some sort of skill at management.

🚩 Too much focus on superficial elements, using buzzwords like "staking" and "tokenomics" with no real understanding of how they actually work: This means project teams are essentially forced to fulfil these utilities without tying any real value to their NFTs. Too many coins, not enough value.

🚩 Little to no marketing strategies: There's nothing worse than having really good art and a "promising" roadmap but no one knows about the project because project owners refuse to invest money into marketing, or they're just not willing to put in the time  themselves to promote their project.

🚩 People don't look at NFT projects as actual businesses. It's easier to start an NFT project than to register an LLC, right? Exactly. It's easier to put together an aesthetically pleasing roadmap design than it is to actually fulfil the intentions in that roadmap because the barrier to start an NFT project is much, much lower.

🚩 To DAO, or not to DAO?: Some project leaders make the mistake of allowing DAOs to have the final say on issues that require expertise, inevitably creating an unsustainable voting system that delays and challenges unanimous decisions.

🚩 Overpromising, underdelivering: Most of the time, it actually comes down to team leaders' inability to commit to what they said they would offer/give their holders. Some of them create brutally ambitious roadmaps only to find out later on that it's actually really difficult to fulfil.

🚩 Timing: NFT communities move so quickly with new projects popping up every day. If teams aren't quick enough to adapt and make their project stand-out from other better looking and higher engaging ones, they're soon forgotten. Not enough project leaders have the skills and resources to stay relevant.

"90% of NFTs Will Be Worthless in 3 to 5 Years"- Observer

There are always these statistics being thrown around saying the large majority of NFT projects will be worthless in several years to come. But actually, we don't need to wait that long to see most of them already at zero.

NFT projects that are successful have loyal investors who don't sell their NFTs just to liquify for another project's mint. This is often a testament to the value they offer their communities and shows the strength of their conviction.

What makes projects like Okay Bears an anomaly as of recent?

Marketing, branding, and all the hype in between! ♻️

They seem to have used Azuki as their inspiration behind their branding style and marketing approach...that's dope for them. (Insert crying face behind a happy mask meme).

After seeing 👌🏽🐻 's crazy floor price run, it's forced an honest discussion amongst the Solana community as far as where the bar is now set. Frustrations have risen surrounding the question of, 'Why do hyped projects that have only been around for 24 hours get more love than projects that have been building for months?'

The truth is, utility isn't enough when marketing is subpar. Air Jordan sneakers and Yeezy sneakers have the same utility, but the more successful company comes down to who has the strongest branding and who has the most consistent marketing– not necessarily who has been in the game longer. (That's why "Yeezy, Yeezy, Yeezy just jumped over Jumpman" 🤷🏽‍♀️🎶!

Here's a thread that summarises my further thoughts perfectly:

The importance of following through with roadmaps have potential legal implications

The Department of Justice (DoJ) charged 2 men with wire fraud and money laundering following the $1.3 million Frosties rug pull, and it's set a precedent that issuers can be criminally charged if they make promises they don't intend to keep. 😬

"In January 2022, Ethan Nguyen and Andre Llacuna issued a collection of 8,888 NFTs called “Frosties,” promising their holders benefits in addition to the digital art, including a “metaverse game,” free giveaways, and other exclusive opportunities. After generating over $1 million in cryptocurrency, the duo shut down the Frosties website and Discord server and transferred all sale proceeds to various digital wallets. Now, they each face up to 40 years in prison."- ipandmedialaw.fkks.com

Such legal ramifications places a huge importance on a project's roadmap and the project owners' intention to execute what they've outlined to do. Due to the anonymity we’ve allowed in web3, rug pulls are inevitable and are byproducts of an open market.

Will these legal cases be enough to deter bad actors in web3? No. But the teams who are transparent while delivering will rise to the top.

For many SOL maxis, rug pulls are almost the norm in this space. A couple of notable projects like BDAC and Balloonsville caused even the most experienced NFT traders to become victims. Yet, we consistently see investors fall for these roadmaps when all signs point to red flags. Of course, not every project that fails to deliver are intentionally rugging. Most are just inexperienced and/or too prideful, perhaps even greedy, to pay someone else who knows what they're doing to help them execute. Failure, therefore, is pretty much inevitable.

**Sometimes, it's actually our fault as investors why the probability of an NFT project's success never rises above zero. **🫣

In Solana, there are notoriously impatient investors who ask 'wen staking?', 'wen ME?', 'wen lambo' at any given Discord channel. But it's frequently overlooked that as investors who spend our money on jpegs on the internet, there's a lot of work that goes into running NFT projects. It's also easy to value something less when we're too busy looking at other things around us, that we end up never holding anything long enough for us to actually see through its potential. Effectively, investors actually have a huge role in the the success of NFT projects as a whole.

There's a study conducted on the impact of behavioral aspects on investment decision making. It's specific to the development of investment activity in the Indonesian capital market, but I've found that the conclusion is also relevant to NFT investing.

The study found the following human characteristics that affect our investment decisions:

💹 Sentiment: Investors can be influenced by their belief in the company's future cash flows even though they're not supported by fundamental accounting information. The sentiment is closely related to a high level of optimism or pessimism.

💹 Overconfidence: Investors who feel they have high competence tend to underestimate risks because they strongly believe that they can get a higher return. It's a tendency of unconscious decision-makers to give excessive weight to the knowledge and accuracy of the information they have.

💹 Salience: This means investors prefer to invest in better-known projects because doing so tends to increase the level of confidence and optimism. When applied to NFTs, these are the people who skip DYOR and mint anyway just because the project is associated with an influencer.

💹 Herding: This behavior is when investors follow the majority of other investors in making investment decisions. How many times have we seen projects shilled on the TL and we mint because of FOMO? 🥵 #guilty

As investors, we should take more accountability when making a decision to mint projects and ensure that we've conducted enough due diligence to see through the facade of a '100% roadmap'. Analysing information whilst being conscious of our own human behaviours can help us create and sustain a better ecosystem for NFTs. But more importantly, it might actually help us gain bigger bags in the future. 💰