Trading in Public, Ep. 1

A series of reflections from NFT trading land - crypto newcomers and NFT degens welcome. (If you’d to like to understand what NFTs are, start here).

Introduction

The MekaVerse is a digital art and metaverse project that was very highly anticipated by the NFT audience - garnering a following of over 200k+ on Twitter and in the project Discord, in what may have been the most-followed launch in late NFT Summer (Fall 2021).

(As comparison, two other notable names in the 2021 NFT bull year, Larva Labs, creator of Cryptopunks, has 85k followers on Twitter; Dapper Labs, the OG team behind Cryptokitties and the more recently-created NBA TopShot, has 93k.)

How It Started

I originally thought the MekaVerse launch would perform very strongly due to what seemed like:

• Genuine fanbase (the MekaVerse Twitter account started fast out of the gate and became one of the most followed NFT projects of the year)
• High-quality art, differentiated from the cartoon PFPs in existence throughout NFT Twitter.
• Fan engagement with Lore - stories about the MekaVerse world behind the NFTs

If you play their launch video from the August 30, 2021 Tweet below, I’m still convinced you can’t NOT feel excited.

Interest Built Up…

The project built up significant interest from its late August launch through September, with an originally-scheduled launch date of October 2-3, 2021. This was pushed back to October 7-8, 2021. The project launch took the form of:

• A raffle entry for access to mint, followed 24 hours later by minting by raffle winners only. Raffle entrants and winners were able to choose to mint either one or two Mekas for 0.2 Ether (approximately $700) each. (I’ll denote Ether as “E” for the remainder of this article)
• A pre-reveal style mint, where you couldn’t see what your Meka looked like until a later “reveal” date (originally scheduled for October 10, 2021, eventually postponed to October 13, 2021).

How It’s Going

For those following the NFT space and the MekaVerse launch, you’ll likely have seen the MekaVerse’s very NFT-emblematic hype cycle. What follows is my personal trading experience.

October 7-8, 2021: Raffle, Mint Day, and My Purchase Decision

I participated in the raffle (and actually used more than one wallet address), in hopes of minting two Mekas.

As the mint proceeded, Mekas (pre-reveal style) began showing up on OpenSea.

The immediate secondary market started within 15 minutes of the mint, with prices around 5E, quickly rising to 6E, then 7E. Then, prices started stabilizing at 6E, and retreated to 4E, and at its lowest, 3E. I was watching the aftermarket and those 3-4E entry points, but at the time, still waiting for my raffle in hopes of minting.

At 30 minutes into the mint, I received the notification that I had not been selected.

🙁

Suddenly, the floor on OpenSea started racing up, as attention turned to the secondary market.

OpenSea actually crashed for me at this point. I couldn’t load the website, getting gateway errors.

Meanwhile, Meka prices had gone up to 3.8, 3.9E, 4E - but were actually getting purchased so quickly that OpenSea listings (for those who could even access the site) went stale faster than you could click buy. Any Meka listed was already purchased by the time you could open the item page, and, if you made it to the item page, certainly gone before you could complete the purchase transaction.

As the floor raced up from 4E to 4.5E, to 5E, I also didn’t have nearly enough ETH in my wallet to afford one. I had loaded about 2.3E.

In my FOMO-focused tunnel view, getting a Meka in a race against the floor was of utmost importance. I liquidated BTC and ETH from my Coinbase Pro account not once, but twice, for greater purchasing power, first to 4E, then 5E, as I couldn’t keep up with the floor. My Coinbase Pro portfolio continue to suffer the drain. Ouch.

Having maxed out on ETH around 5.3, I had to find an affordable Meka. By now, Mekas at 5E were hard to come by, going for 5.5, or 5.9.

Finally, I bought a pre-reveal Meka at 5.0238E buried farther down the marketplace in a reverse auction, as prices continued to go up.

Whew. Despite the somewhat dubious motivations of consumer psychology that had led me to frenetically chase the Meka floor, I (and my Meka-owning friends) excitedly awaited to see which Mekas we would get.

October 8-13, 2021: Pre-Reveal and Reveal Day

Between mint and reveal (Oct 13), prices increased to around 7E.

After a few days’ delay, the Reveal happened on October 13. I realized mine wasn't super rare, though, in my humble opinion, and reaffirmed by at least one friend, it does look better than most 😌 - a clean, almost all-black, Delta Elite Meka! I didn't sell immediately in the first few hours due to... simple inaction, and not having a clear strategy in advance other than "hope it would be somewhat rare".

Mekas were transacting at a wide range of prices. As is typical at mint or reveal, “rarer” Mekas started going for 15E, 28E, 30E.

However, pretty soon after, the floor began dropping. 6E, 5E, 4E…

I decided to list my Meka at 10pm (~12 hours past the "reveal") due to realizing prices were starting to stabilize and the floor was trending downward. But I listed it at a high price (8E) that probably did not make sense for most buyers, unless they were even more in love with my particular Meka’s aesthetic than I was.

October 13-21, 2021: Post-Reveal Retrospective and 14 Days Post-Mint

Unsurprisingly, my Meka did not sell, even after I dropped the minimum bid price from 8E to 5E, then 3E.

In hindsight (20/20), here would have been a few optimal trading strategies for my position, assuming you missed the initial mint as I did (which would have been the most downside-protected option in this case):

1. Buy at any price if you think price is going up (pre-reveal), but be willing to sell to make a quick profit when you can (e.g., buy at 5E, sell at 7E).

   Tradeoff: you are giving up the option value of knowing how rare the NFT is, but taking the certainty of a small gain.

2. Upon reveal, list immediately in aftermarket at a price you’d like to sell for (based on your assessment of rarity and the market), even if you're not 100% sure about the exact clearing price (e.g., list at 7E or 8E right after the reveal).

   Tradeoff: option value of knowing whether the floor will trend upward or downward.

3. In general, take advantage of immediate aftermarket (post mint/reveal) where greatest activity and attention is - whether you think the project will perform better or perform less well, most likely the highest short to medium term profit opportunities are in the few days post-mint (this is also true of most, but not all, Art Blocks projects). Of course, medium to longer term this might not be true if a project appreciates over time.

Outcomes aside, my Thinking in Bets-style analysis (check out Annie Duke’s writing on decision-making if you are not already familiar) focused on the following:

• What I knew prior to mint: the artists were first-time project launchers; aftermarket trading tends to peak before settling and declining (in most projects viewed); speculators abound(!)
• What I didn’t know: where the post-reveal Meka floor would clear; whether the collection would be bought by “whales” or newbies

I am not sure I could have predicted where the floor price would clear, although I’ve heard the general belief that pre-reveal price peak (in this case, 7E) always prices in some hope of minting a rarer piece, and thus is likely to be higher than the majority of post-reveal non-ultra-rare pieces.

At the time of writing, the floor appears to have bottomed out a few days ago around 1.3-1.5E and now fluctuate between 1.6-1.9E. Trading volume is slowing but still reasonable at 100-200 Mekas traded per day this week, with median price between 2-3E. A few rarer or more attractive Mekas still selling for 4, 5.98, 7, though the average sale price has trended down from 4E+ on Reveal day to ~2E.

Controversy about the MekaVerse

There was also negative Twitter chatter about the MekaVerse shortly after Reveal, with some NFT collectors and developers either criticizing the project creators or highlighting potential issues with:

• Exploitation by bots (in the initial raffle)
• Exploitation of rarity traits either by insiders or fast-acting rarity snipers before the reveal
• Privately-hosted images and raffle code
• Multiple delays to the reveal date, accused of generating greater secondary sales for the creators
• Lack of communication in response to above issues raised by the community

The Community

Speaking of the community, within the MekaVerse discord and private channels for verified Meka holders, there is still a spirit of togetherness. There is fan art, there are Meka holders seeking to follow each other and support the community on Twitter, there are individuals who got their first NFT through the mint, and there are Meka holders “collecting the floor”, buying up 5, 8, 10+ Mekas.

The community has a positive ethos, and to me, this is one of the more promising indicators of longer-term staying power of the MekaVerse.

The Bottom Line & What’s Next

I’m currently still holding my Meka because a) I don’t yet want to sell it at a huge loss, though at the time of writing I have it listed for auction with a reserve price (allows me to set minimum sale price) and am always considering a sale for liquidity for other NFT investments; b) I don’t see that many floor Mekas that I like aesthetically better than my own. I guess that implies my desired ownership of a Meka, whether due to loss aversion or some curiosity about the materialization of future utility for (or returned interest to) the MekaVerse. To that cause, the Mekas were featured in Coinbase’s NFT newsletter on Reveal day, and the upcoming launch of Coinbase’s NFT marketplace could be an interesting variable, especially with MekaVerse creator teams hinting at discussions between them and Coinbase.

Ultimately, my reflections on the project are as follows:

• Huge expectations risk leading to a disappointing reality. The MekaVerse teaser video, combining an exhilarating animation with inspirational music, far exceeded the “cool factor” of not only most other NFTs on the market, but also of the eventual actual, static Mekas themselves, most of which I don’t consider look that cool. At the same time, the Mekas still represent a set of distinct, high-quality digital art with a floor 8x+ the initial mint price.
• The approach of using a raffle meant that each random NFT-hopeful or flipper had the same chance of minting as an NFT “whale” (buyer with significant capital or NFT collections) - minus any unfair advantages that a flipper or whale might have (e.g., bot farms to enter the raffle dozens of times). Bot issues aside, this meant that relatively fewer whales might’ve held Mekas, which may have contributed to a slipping floor.
• At the end of the day, it’s in the hands of the project developers. If they can produce cool art, cool games, and reach an increased audience (whether through a Coinbase partnership or otherwise) to drum up demand for the project, the price may return. If not, it’s a huge let down for those who have bought in, but there is not much other recourse. I'll definitely consider erring more on the side of known creators and companies (like the one I mention in the postscript below), or perhaps, buying in at lower mint or secondary costs if I do wish to bet on a new artist (example: my friend @NatFactsEth’s experience with artist GxngYxng, or the rise in popularity of artwork by pplpleasr). In a decentralized trust-less world, the premium for trusted, known sources may be even higher.

Time will tell on this one - I’m not entirely confident on what the MekaVerse creators will deliver, but also not giving up yet.

PS: If you enjoyed this account, thanks for reading! If you are interested in learning about more metaverse and NFT projects, I am also following an upcoming launch of 3D, full-featured avatars by the company RTFKT. (Disclosure: I hold an RTFKT pre-sale-eligible NFT). I’m hoping to purchase in the pre-sale mint & bet on a known team.

If you’d like to support and join my NFT learning journey, you are welcome to collect my writing (you are reading my first trading post!), Meka, or follow me on twitter @laurayd. And if you decide to participate in this market in any fashion, good luck and hopefully wagmi :)

Proceeds split recipients include early supporters on my learning journey :)