The term "blue chip" is passed around a lot in the NFT world - it's often used to describe projects like CryptoPunks and Bored Ape Yacht Club, but beyond those two there's a lot of debate. Not surprisingly, the term "blue chip" has become a controversial one in the NFT world and nobody seems to be able to agree on how many projects have earned the title.
Not to start off my article with some disappointing news, but I may as well come out and say it - I don't have the answer you're looking for. Sorry, I don't, but I'm not alone because the reality is, the term "blue chip" means different things to different people.
Of course, this is my blog so I sure can share my opinion, and you can either stop reading now, or forge on and hear what I think. Still here? Doh - I was hoping I'd lose you by now...
So in all seriousness, how can we develop a framework for determining if a project is a "blue chip" or even better, has "blue chip potential" since identifying projects before they reach this level is really what so many NFT investors are looking for. Let's face it - when you mint a new project, your goal, as an investor, is to hopefully discover the next "blue chip" early, as early as you can get really.
While I could share some fuzzy ideas around what makes a "blue chip" NFT project special, I'm a numbers guy, so I'm going to take a stab at quantifying it if I can. First things first - everyone needs to stop being myopically focused on the floor price itself. I've seen way too many people say, if the floor is above X it's a "blue chip," and well, that makes no sense IMO.
That being said I do think the movement of the floor price can factor into what makes a "blue chip" NFT. However, I think the most important thing to look at is the community, how engaged they are, and how many unique owners the project has over time.
Which leads me to a complete work in progress, but at least a starting point for trying to condense "blue chip" NFT status into an equation, albeit an equation we can all agree is probably wrong, very wrong now, but has the potential to someday be right, or at least that's my hope.
So here we go.
I think there are a few key variables we need to look at:
- % growth in floor price since mint
- % growth in average sales price since mint
- % growth in active Discord members since mint
- % growth in Twitter followers since mint
The formula we could derive from this could honestly be something incredibly simple like:
(floor growth) + (avg sale price growth) + (active Discord member growth) + (Twitter follower growth) = X
You could then look at what X is for a project like BAYC and use that as your high bar, cut that down by say 25% and use that as the target. Of course, this is the most simple approach, there are a lot of ways these variables could be scaled differently based on impact, another thought is to scale each based on how important it is to the "blue chip" value of the project.
In my mind, I see the % growth in average sales price since mint being the most important, followed by % growth in active Discord users, then Twitter followers, and last floor price. That would yield a little different equation that maybe looks a little like:
(0.2 * floor growth) + (avg sale price growth) + (0.6 * active Discord member growth) + (0.4 * Twitter follower growth) = X
I think the formula above might be closer to what we'd want to get to, but it's going to take some experimenting to really hone in on something that makes sense. Like I said much earlier on, I don't have the answer here, but I'm interested in exploring a better way to define "blue chip" NFT projects so I'll continue to develop this more and share what I come up with.
If you made it this far, you're a trooper - thanks for reading.