Blue Chip NFT Collections
NFT collectors typically refer to certain collections like BAYC and Azukis as blue-chip collections but what does the term actually mean? Is it merely a social status attached to well regarded NFT projects or can we ground the definition on quantitative factors?
In this article, we delve into the details on what makes a blue chip NFT collection and examine the factors that contribute to the desirability of an NFT collection. In doing so, we explain one of our factors within the "Collector Profile" narrative - namely "Does the collection attract blue chip collectors?"
Definition of Blue Chip Collection
In the NFT market, the term "Blue Chip Collection" refers to a group of highly sought-after NFTs that are rare, unique, and historically significant. While the NFT market can be unpredictable, blue chip collections tend to hold their value and even appreciate over time. This is because they are considered among the most valuable and desirable works in the NFT market.
At Neah, we curate and adjust the composition of collections that makes it into our blue chip collection list on a quarterly basis. The selection criteria includes, but is not limited to:
- Presence of smart money
- Price stability
- Time in the market
- Social factors
Smart money plays a significant role in determining the potential growth and profitability of an NFT collection. By smart money, we refer to the "whales" in the crypto community, i.e., addresses with very high net worth, we use a threshold value of at least US$ 500,000 in NFT holding value based on the time of purchase. Retail investors often look to smart money as a validation of a collection's value and potential.Azuki Price Floor
In the case of Azuki, as of early May 2023, almost 3.3% of its holders are considered "whales". This is approximately 3.5 times higher than the market average rate of 0.92%. This figure is also comparable to other prominent NFT collections such as BAYC, Doodles, and Pudgy Penguin as shown on our platform.
One of the most significant challenges facing the NFT market is price stability. The fluctuation in prices creates a lot of uncertainty for collectors, and it can be challenging to know whether an NFT is a good investment or not. A blue chip collection should be able to withstand negative market sentiment and gradually appreciate in value over time.Azuki Price Floor
Despite the tough macro environment for NFT collections, Azuki has shown remarkable resilience over the past few months month. This is noteworthy, especially given that many other notable collections saw a steep decline in their floor prices within the same timeframe.
Another important factor is liquidity, which refers to the ease of buying or selling an NFT. High liquidity can indicate strong demand for the NFT, which can attract more investors and increase the asset's value. By contrast, low liquidity indicates that the asset may be difficult to sell.Azuki Marketplace Volume
To evaluate a collection's liquidity, we look at its sales volume. Azuki's has significant sales volume over the week compared to other collections. To ensure this is not an isolated event from a recent announcement or drop, we look at a longer period to ensure that the collection has sufficiently high liquidity over a longer time horizon for it to qualify as a possible blue chip.
Time in the market
We also consider the amount of time a collection has been on the market. This factor is particularly important because it provides insight into the collection's performance over time. By comparing a collection's early metrics to its current performance, we can evaluate its progress. Additionally, we take into account the number of long-term holders (more than 90 days) which shows their confidence in the long term future of the project.Duration Held by Azuki Holders
The average duration of a holder exceeds 250 days. More than 80% of the holders have held their NFTs for more than 90 days, while about 16% have held their NFT for between 5-90 days. This highlights that a vast majority of the NFT holders are long-term investors who have faith in the team and the future of the project, building up trust within the Azuki NFT community.
In addition to the quantitative on-chain factors, we also take into account the social aspects of the collection whether it qualifies as a blue chip collection. This includes its overall branding and how it is perceived by the market, its level of adoption by the community, and the engagement and involvement of its community members.Azuki Media
While the evaluation of qualitative content is very subjective, on Neah, we collect and index key information pertaining to a collection such as partnerships, benefits to the holders and upcoming events. We believe that this helps collectors understand the value proposition of a collection and showcases its outreach and standing within the community.
This rounds up our criteria of what we consider to be a blue chip NFT. While we have tried to be as objective as possible, we acknowledge that there is a degree of subjectivity in the evaluation of both qualitative and quantitative data. Importantly, all of the data that we have presented is also available on our platform for collectors to make their own informed and independent decisions!
List of Blue Chip NFT Collections
Based on the above factors that we have identified, we have classified 7 collections as blue-chip NFT collections. The collections are: Azuki, BAYC, Punks, MAYC, Doodles, Proof Collective, Clone X and are bolded in the table below.
|NFT||Whale %||Median PnL||Average Time Held||Volume (7d) Rank|
Other collections with strong communities and growing metrics such Pudgy Penguins and Potatoz may be inducted in the blue-chip list and are included for comparison purposes.
With the fast changing NFT landscape, we will continue to monitor and update the list on a quarterly basis and hope to see more diverse collections with growing use cases and communities in the future.