In this video I reflect on some key lessons that I’ve learned after being full time in NFTs for over a year.
These are some insights based on my own experience – don’t take them as fact and always do your own research.
follow me on twitter: @giancarlochaux
0:00 intro
0:33 lesson 1
2:07 lesson 2
4:51 lesson 3
7:14 lesson 4
8:54 lesson 5
10:15 lesson 6
11:54 lesson 7
tags: bayc, cool cats, cryptopunks, doodles, azuki, invisible friends, world of women
Hey guys so i saw this interesting tweet A while ago by bentleboy where he asked If people had generally made money or Lost money in nfts and i was surprised To see that it was pretty evenly split Okay way more people were losing money Than i had expected and i started to Think why right what are people getting Wrong and look personally i’ve been in The nft space for over a year and i’ve Had a lot of success but i’ve also made A ton of mistakes and i’ve learned some Things the hard way so i figured i would Make a video going over those key Lessons that i picked up over the last Year and the things that i really wish i Knew when i first started lesson one There’s a lot of advice out there but Context is everything all right this One’s kind of meta since this is a video Where i’m giving advice but the point I’m trying to make is that when you First enter the nft space you are going To get bombarded with all these tips and Techniques and strategies but the nature Of platforms like twitter is that a lot Of context gets left out specifically Context around who the person is that’s Giving you advice in the first place and That’s a problem because you don’t know If this person is a whale who just Throws eath around like it’s nothing or If they’re a long-term collector that Intends to take their jpegs to the grave
Or if there’s someone who watches entire Videos without smashing the like button Even though they know it feels so damn Good these factors are always left out And without that context the advice is Almost useless because you don’t know How to apply it to your situation at all This actually goes for wallet tracking As well because people are obsessed with Tracking you know wallets from Collectors that they believe are smart Money but again without context it’s Almost useless take pranxy for example One of the top nft whales in the space i Often see people ape into new projects Simply because pranksy swept the floor But have you considered that maybe he Made a bet that is only point one Percent of his bankroll whereas if you Follow in it’s more like five or ten Percent of yours so the risk reward on That trade is completely different Because if your investment goes to zero It can actually impair your ability to Make more trades and so the opportunity Cost is way higher the point is don’t Take all this advice at face value and Always consider whether the person Giving that information is in a Situation that’s completely different Than your own lesson number two like Many things nfts follow a power law so We always say that 95 or 98 of all nfts Are going to zero but we’re now getting
A better idea of what happens to that Last two percent and it turns out that If you’re a blue chip life is pretty Gucci and the long-term potential is Massive i had a tweet a while ago that i Think is relevant here and i said if Bordeaux yacht club pulls off their ape Token successfully it raises the value Of all the other top profile pics in my Eyes because it lays the road map for Going from collection to brand ecosystem Which is a huge leap and so far i think Ape token is going fairly well and Obviously it’s still early but it shows That if a profile pick can reach a Certain status you know a certain Momentum it can go down a similar route And capitalize in a huge way and so what We can expect is that nfts will follow a Power law distribution which when it Comes to markets means simply that the Vast majority of returns will come from A tiny number of projects essentially When a project reaches a certain point It starts to pick up a momentum that Runs on its own and so you’ll start to Get celebrities and each celebrity Brings in you know potentially millions Of impressions for that brand also when Celebrities come in it makes it more Likely that other celebrities will pile Into the bandwagon this reputation makes It easier for the project to hire top Talent and also to get funding from
Well-connected vcs basically the big get Bigger it’s true in other markets and It’s going to be true here as well now What practical advice can you take from All this well obviously you should buy Blue chips that’s a good idea but that’s Easier said than done i think my Takeaway is that you should let your Winners ride and when you do find Winners when possible you should double Down and let me show you what i mean so This chart shows all the big collections That i found that have hit five eth i’m Excluding collections that are very Small like less than a couple thousand Tokens and i’m also excluding Collections that basically started above Five eth like megaverse and hate beast And the question i’m trying to answer is What would have happened if you bought Every single one of these collections When they hit 5 eth and as you can see There’s a mix of winners and losers but In total you’d be up 207 eth for a gain Of 180 percent if we get rid of boarded Yacht club and crypto punks which Doesn’t really make sense because the Whole point of this is to try to capture These outliers but let’s just do it Anyways you’d still be up 38 eth or 37 Also keep in mind that this doesn’t Include air drops and when it comes to These top collections you do get a lot Of value from those airdrops i mean
Boarded holders got six figures recently Just from the ape token alone and look This was kind of fair last year because We didn’t really know how high these Nfts could go but the playbook is now Established and so i think doubling down Is gonna be a much more viable strategy Going forward of course this points to Another problem so let’s move on to the Next lesson so lesson number three you Need a real budget to do well with nfts Look i’m not gonna sugarcoat it it’s Hard to make serious money with nfts Unless you have a decent sized budget to Begin with we’ll get into exactly how Much in a minute but first let me Explain why as we saw on the last point Nfts follow a power law that’s very Similar to startup investing and many Other arenas and if you listen to Established investors they’re gonna say Yeah this is a pretty risky game and It’s hard to make money unless you’re Able to make 15 to 20 bets at a minimum This is what you need for a reasonable Chance at hitting a home run because you Basically assume that you know 90 of Your bets are gonna go to zero and you Hopefully catch one winner that more Than makes up for all your losses they Also recommend having extra money on the Side so that you can double down on your Winners for all the reasons that we Mentioned earlier so let’s see how that
Might look for nfts let’s say you take Their advice and you go with 20 buys at An average of 0.25 each per buy so this Includes some mints and maybe some Secondary purchases as well this already Comes out to a total of five eth but as We saw this strategy works best if you Can double down on a winner which means That you might want to have at least Three eth to buy in again if one of These nfts starts to moon and so this Comes out to a total of 8 eth or about 25 000 if you say this advice is too Aggressive maybe you can get away with Just 10 bets but that’s still almost 18 000 Now this does not mean that you can’t Make money with a smaller budget okay There are some things you can do first Off maybe you can reduce the average Purchase price by playing the whitelist Grind and so you are exchanging time on Top of money so in this scenario let’s Say you get in on a bunch of white lists And bring the average down to just .08 Each and with only 10 purchases now you Can get away with just 3 to 4e you could Also buy nfts on chains with lower price Points like solana or you can team up With some friends to pull your money Together it’s all possible all i’m Saying is that the optimal strategy is Taking many bets assuming most of them Go to zero and then doubling down on
Your winners that’s also something you Should consider when you’re watching Videos on my channel or other nft Channels on youtube personally i do plan On making many bets and i talk about Things that i like on youtube but i do Have the assumption that a lot of these Are gonna go to zero and so if you’re Copy trading that with a much smaller Budget It might not work out as well okay Lesson number four echo chambers are Hard to avoid but you gotta learn the Hard way so i remember as a philosophy Major in college i would have classes Where the professor would present some Argument about how true knowledge can Exist or why free will is a lie or Whatever it was but they would present It in a way where you’d be convinced Right and i’d go home and be like well i Guess that’s the thing free will doesn’t Exist but then the next week the Professor would start the class by Taking that same argument and then just Absolutely destroying it to the point Where you couldn’t believe that you fell For it in the first place and over time This builds a reflex where as soon as You start getting too emotionally Attached to an idea you have like these Alarm bells that go off and it tells you To take a step back and maybe approach It with a more skeptical view and the
Same thing happens with nfts okay Everybody who trades nfts has had a Moment where they fell into an echo Chamber and truly believe the story of Some nft and why it was going to moon And change the game and you can Basically get caught up in what is like A mini identity cult that rises and Falls in a matter of days so you get This experience where you’re emotionally Attached to an idea then you quickly see That belief fall apart in front of your Eyes and it’s like speed running through A process that’s teaching you a lot About yourself and so what i would tell Myself if i was starting out is don’t Get too down if this happens to you Because it is like a learning curve that You have to go through and just be lucky That it’s happening now and that Hopefully it didn’t cost you too much Time or money and over the next few Years i do think many newbies are going To fall into this trap and they might Over invest in some of these so if it’s Happening to you now Just chalk it up to paying tuition in Order to get those alarm bells that will Hopefully help you from making bigger Mistakes down the road lesson number Five curating the right network might be The most important thing you can do now I don’t mean this in the sense that you Should try to get you know tight with
The founders of doodles and high-five Them backstage and that’s the way to win The game obviously if you have those Contacts that’s going to help but that’s Not practical what i mean is in the Sense of crowdsource due diligence okay Because nfts have gotten to the point Where they’re too broad for any one Person to follow everything you’re just Going to completely miss 90 of what Happens and the other 10 you often don’t Have time to go as deep as you should Luckily we can curate a network that Effectively acts as scouts okay and they Broaden your reach beyond what any one Person could do personally i keep Expanding the list of people that i rely On as a signal and you can check my Twitter to find a lot of the people that I do follow but ultimately you have to Curate your own and basically how it Works is if a project gets one mention Across my network then i get interested If it gets two mentions then i’m Probably reading the white paper and if It gets enough mentions i get to the Point where i’m like all right there’s Something here so yeah sometimes in Crypto you can make money by just Following your smart friends but you Know that could be a recipe for disaster If you don’t curate your list properly For example if you’re following pump and Dumpers and hype boys then yeah it’s not
Gonna feel so good if you copy trade Them but if you follow thoughtful people Long-term collectors then this is one of The fastest shortcuts that i can think Of lesson number six embrace the weird Stuff so nfts are basically internet Native memes and if you’ve been around The internet long enough you’re going to Realize that this is a pretty chaotic Place and there’s all these weird and Underground subcultures and so yeah There are times when nfts will follow What’s called you know fundamentals Which is like the predictable patterns Of success for example doodles for me is A brand that knows what they’re doing Okay good looking art super polished Marketing they crush it at these real World conferences it’s all on point but There are also going to be massive Projects that don’t follow any rules Mfr’s is now one of the top collections Despite basically being stick figures And other projects have done well Seemingly because of how ridiculous they Look sometimes you’ll just get projects That feed off of troll energy okay and So as the floor goes up people start Getting mad because it’s not following These fundamentals that makes the people That are holding these nfts start Laughing and more people join in because It looks fun floor goes even higher they Get angrier and it’s just this troll
Cyclone this is kind of what doge was Right just a ridiculous meme that was Almost a satire of crypto and the fact That it was being promoted by a Billionaire that already rubbed the Establishment the wrong way just added To this troll chaos trust me that nfts Will have their doge moment and we’re Gonna see a project skyrocket to Ridiculous levels just because it’s like This countercultural thing but the General point is that yes we talk about A lot of frameworks on this channel but Don’t fall into this trap of Narrow-minded thinking because again the Internet has all these weird subcultures That haven’t even gotten into end of Tease yet and so you can fade something Because it’s weird or you can just Accept that these weird things can also Be super popular finally lesson seven We’re still doing many things wrong and The competition will only get better Nfts as you know them right now are like The v1 okay it’s 2005 and people are Buying razer flip phones thinking this Is as cool as it gets only a couple Years before the iphone comes out it’s Basically the indie garage phase where All these amateurs are just Experimenting with new toys and for all Intents and purposes you can assume that Nobody really knows what they’re doing And as a result things are going to
Improve heavily from what we’re seeing Today here’s a couple of examples maybe Just maybe it’s not a good idea to make These creators rich on day one and to Give them millions of dollars to the Point where they can just retire right Before they’re expected to make a Product or a community usually one of The hardest things you can do in your Life as a result i expect a lot of these Teams to just abandon their projects When things get tough or they’re going To get out competed by other teams that Are still hungry as a result of their Community using a more sustainable model Okay another example maybe the best way To set up a long-term community isn’t to Have just a one-time paid drop where Everybody’s there just because they Grinded a white list and nobody really Has any shared values in common okay a Final example is the fact that nfts Still in general lack a storytelling Element if you think of any ip that you Would recognize from hollywood or video Games there are always very clear Leading characters that tell a story However right now the current 10 000 Profile pic meta doesn’t really allow For this they’re kind of just variations Of the same nameless npcs but in the Future i think we’re going to see more Character based collections and these Are going to be much likelier to get
Netflix shows or other media products Like that alright guys that’s it thanks For watching i’m very excited to see What we learn in year two and i’m gonna Keep updating the channel as we go along So stick around and i’ll catch you in The next video
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