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NFT DYOR Guide For Beginners

Things to look out for when buying a NFT 

The brand-new world of NFT’s (Non-Fungible Tokens) is very exciting, yet very little is known about it. Since its inception, hundreds of projects and artists have used NFT’s to sell their work. This way, artists and developers have been able to share their work with millions of people globally. Many digital artists finally had an opportunity to gain income for their artworks, all because of the rise of NFTs.

This new digital realm on the Internet has taken the world by surprise! Unfortunately, this has also been a breeding ground for scammers and rug pulls. This article will equip you with tools and tips to help you recognize a good project from a bad one. 

Starting out by looking at the fundamentals of the project helps a lot in determining its value. 

In other words, having the basics right is the key.

This article explains how to DYOR.

What does DYOR stand For?

The term DYOR or ‘Do Your Own Research’, is a very common phrase used in the crypto world and yet it does not say much. So, where should you even start your own research?

NFT Communities

The single most important factor in valuing an NFT is its community. The community surrounding the project must somehow distinguish itself from other NFT projects to increase its value. Simply put, the exclusivity of an NFT artwork generates its value. This provides an incentive to own an NFT because being part of a tightly knit community or owning an NFT from a limited series generates its value.

The first example is NeoTokyo Identities. They created a group of exceptional coders who had to solve coding puzzles to in order to mint an NFT. By doing this, they had control of the minting process. Anyone who wishes to solve this puzzle must be an exceptional coder and, therefore, certainly understands a thing or two about crypto. Consequently, holders of this NFT series, and the hard work they put in to acquire this NFT, built a like-minded community that supports all of its users. 

This is how NeoTokyo Identities created a very successful NFT. To become a member of this community and to join their Discord channel, you must own the NFT and verify your wallet address. The floor price of the NeoTokyo NFT is very high because being an owner of such an NFT gives you access to an exclusive community. Nobody wants to sell such an NFT, for doing so disqualifies you from being a member of the community. The economic principles apply here. The low supply of NeoTokyo Identities and the incentive to hold it because of the access it grants its owner to the exclusive community creates a demand for such an NFT.

Their selling point is, ‘’Who does not want to join an exclusive community with probably the best crypto coders in the world”? Thus, the community is one of the most important factors determining the price of the artworks of the NFT set.

How Do You Find a Healthy NFT Community?

Here are a couple of indicators to help you find a good NFT community.

The number of followers on Twitter and Discord offers a good estimate of how popular an NFT project is. A high follower count on the socials of the NFT set increases the chance of a successful mint and a high valuation. Keep in mind that the number of followers could be bought and thus, be filled with bots. It is therefore also important to look at the engagement (e.g. comments, likes, etc.).

The real determinant is how enthusiastic the current fanbase is. Are they emotionally invested in the project? Do they really care about the founders and the artwork? Is the fanbase genuinely interested in the value of the project or are they only concerned about the (floor) price of the NFT? And, coming back to the example of NeoTokyo, is being a part of the community an asset in itself? These are the questions you should ask yourself before buying an NFT.

You can have a glance at the Discord (if available) and see if there is a bot that measures activity in the chat. If a lot of people have a very high ‘level’, it could imply that those members are very active and are willing to stay there for a reason. If you can join a Discord group, we recommend you have a couple of conversations with the people involved in the project. Talk to everyone, high ranked developers, as well as lower-ranked new entrants. Ask them what brought them into the project and what value the project brings to them. Do not forget to begin with a compliment to start off a nice conversation. It can take you a long way. 

The goal of the project should be to provide long-term value to the community, especially the NFT owners. The longevity of the project portrays how the team can provide the community with a reason to invest. Preferably the project should be at least three months old to determine if it is credible/viable. The reasoning would be, ‘’Surviving three months in the crypto world is relatively long, thus, the development team is involved enough to provide value in the long term and will probably be able to keep doing so to the best of their ability”. Although three months is an arbitrary number, it can be used as a simple threshold. If the project’s evaluation goes up very quickly and becomes almost worthless in a very short period, you can assume that the team has done a poor job keeping the project alive. Or perhaps there is something fishy, and the team just wanted to fill its bags and leave the project (rug pull). The value of the NFT is a direct representation of the value of the holders in the community. 

The Whitepaper & Roadmap

Each legitimate project should have at least a whitepaper or a roadmap (preferably both). Check this before even considering investing because projects that do not have at least one of the two are prone to be scammers or have not yet come up with a clear vision for their project. In the whitepaper and roadmap, you should find all the information about the project with a detailed description of what it does or plans to do. In the introduction, you should find: the purpose of the project, how the project started, what problem the project intends to solve or what value the project provides. Next, the thing to look for in the document is the development team. If the team seems to know what they are talking about, this is usually a good sign. Furthermore, it should become clear how the tokenomics of the project work (how the tokens are to be allocated). Finally, there should be a conclusion with a disclaimer.

In a roadmap, the rollout of the project is planned with dates. The roadmap contains the major deadlines and milestones of a project. It is the overview of how the process and the project’s development are written down for the public to see. As an investor, it is nice to see if a project continuously keeps its promises and delivers on every milestone on time. 

Even though the whitepaper and roadmap should contain all the information you need, your research must not end after reading these documents. Contacting or monitoring the community and the development team is just as important.

The Development Team

The value of a project can partly be determined by the composition of the development team. By checking the Discord or looking at the Twitter account of the project, you can find out who the moderators and developers are. Have they been involved with previously successful projects, or have they been involved with previous scams or pump-and-dumps schemes? This can indicate if the project is credible/valid or not. 

First, you should determine the integrity and professionalism of the team. You can see if the team’s founders have doxxed themselves, meaning if they have made their identity known to the public. If they have doxxed themselves, do they have social media accounts that show that they can deliver good projects? E.g. do they have a high follower count on Twitter, or do they have a LinkedIn profile with a respectable education or previous achievements? This can indicate their networking skills, which are crucial in the crypto world. However, be cautious, their previous achievements should be fact-checked as well.

Doxxing is not a necessity, as some anonymous accounts (anons) have built some very good projects. Usually, this will be displayed on their account. Anons can still have a valid track record, in our opinion, even if they have not used their real identity. One of the main arguments for anons to remain anonymous is because they want to be valued purely for their content and not by previously acquired social status. For instance, avoiding pumps because Elon Musk says the word ‘’doge’’.

The artist of the project can also influence the value of the NFT. The prime example is Beeple, a famous artist. He sold an NFT set for a whopping 69 million dollars.

Secondly, if the team organizes various activities, it could be an indication that they care about the community. Organizing events, doing large-scale marketing campaigns, and/or forming collaborations with popular influencers are all very important developments a team can partake in. In addition, we advise you to monitor the daily interactions as they are just as important. Are the founders/team members friendly? Are they always working in the background? Or is the team quiet and/or rude? 

Last but not least: is the project created and guided with passion. Do you find that there are other motives behind the creation of their tokens/NFTs? If the project is involved with charities, sustainability or even for/with other external entities/reasons, this could be an indication that they have a vision of what their project needs to achieve. This extrinsic incentive could be an indication that the project is destined to do everything in their power to succeed. 

Again, a project could have all these things in place and still end up being a scam. Consequently, we advise you to always stay vigilant and to invest with caution. In the end, these are merely tips that are meant to guide you during your research and should not be taken as the end all be all. 


Tokenomics is a combination of the words “token” and “economics”. It is about understanding the supply and demand characteristics of cryptocurrency. It describes all aspects of coin utilities and their management. Each project issues a token or NFT. This is the supply side that is important for the price. The whitepaper should display all the information about the tokenomics of the project.

The number of tokens in circulation and whether or not it has a maximum supply is an important fact. With this metric, you can calculate the market capitalization of the token. It is calculated by multiplying the number of tokens in circulation by the price of the token. Usually, NFT projects have 10,000 NFT’s in circulation. 

The burning mechanism is also a factor that must be considered. Burning a token means that the token gets taken out of circulation (usually upon mint or during certain transactions), lowering the total supply. The token gets sent to a wallet address to which nobody has access to, burned. Burning tokens can also be a way for the team to increase the token price as a way to reward holders.

Some tokens can also have other utilities. E.g., give an owner voting rights. If so, this implies you will be able to vote on certain decisions within the project. Other utilities could be in-game rewards (in P2E games).

The issuing account for a token should be included in the whitepaper as well, preferably with the wallet addresses of the developing team. Those wallets can be assigned for a budget of certain operations, e.g., a wallet address that will only be used for marketing expenditures. On XRPscan, you can check the remaining balance per wallet. Now you can find out how the developers spend their money. Transparency!

Utility of The NFT

The NFT has to provide value to the community members as well. Currently, the primary utility of XRPL NFTs is the status you can get through owning the NFT. Apart from being a status granting asset, projects should have plans to increase the value of their NFTs through additional utilities. For example, NeoTokyo has an implicit utility. The NFT grants you access to a private network with valuable members and provides you with an in-game character that can generate benefits. 

At the moment of writing this article, one of the more promising utilities for NFTs are: the art, the access to a community, potential game items, and other redeemable. 

People who buy art NFT’s purchase them for the same reason as people that buy physical art. They buy it because it elicits a specific kind of emotion; they like the art and wish to support the artist/creator.

Accessibility is also a use case for NFT’s. It could be used to gain access to private groups on the Discord app. In addition, it might change the way traditional tickets for events are being sold. Presently, the music industry is affected by ticket resellers. With smart-contract blockchain technology, the middleman can be cut out. The NFT tickets become 100% traceable and, therefore, impossible to counterfeit, making the resale conditions both fairer and more secure for the artist and their fans.

Gaming is a huge part of the current NFT industry. NFT technology allows players to own in-game digital assets and trade them on marketplaces outside of the game for real value. Whereas historically, games used to discourage the trading of in-game items for real value, P2E games facilitate and encourage this through the implementation of NFt technology… Commonly, P2E games have a wrapped version of a known coin, or the game developers have issued a native in-game token to help reduce transaction costs. 

Owning exclusive items in video games has, of course, been possible for a long time. However, increasingly, games are opting for NFTs. The advantage of NFTs is not only that the items are more secure but also that they can have an attached value. The most interesting innovation is that you can exchange your in-game item for real money. You are the actual owner of an in-game item!

In the future, when Web3 further develops, more utilities can be added, e.g. digital identities, housing sales, etc. NFT’s are going to change how the world works and the NFT world is here to stay.


Bryan indulges in every bit of crypto-related news and material he can lay his hands on. As such, he often shares his views and advice through the onXRP content platform. He is a firm believer in crypto’s potential in the financial and economic world. With 5 years of experience in investing and trading Bryan brings excellent insights to the table. He is excited to bring much of this knowledge and many of his skills to the onXRP platform.