Why NFT Projects Fail & How To Avoid Failed NFT Projects?

In this post, we will try to discuss all important factors, why NFT projects fail, and how to avoid failed NFT projects as a collector. This is a dedicated guide for collectors, investors, and holders. I will give the reasons why NFT projects fail and solutions as well as how can you determine a failing or failed project. To determine failing or failed NFT projects, we should know what is the parameter of failing or failed NFT projects. Let’s start

What is failed NFT project? 

Failed NFT project is a project that losses its floor price from launching by more than 60% and decreases trade volume over time. A failed NFT project can decrease floor price by 90% within the first 6 months after launch.

The number of holders will also decrease in a failed NFT project but it can also go opposite like the number of holders can increase due to low floor price. But it remains a failed project. An NFT project can also be failed by its internal reasons like rug pull. I will discuss this point in detail below.

6 Reasons: Why NFT Projects Fail & How To Avoid Failed NFT Projects As a Collector?

There are many reasons for the failure of an NFT project. I have listed below the most happening reasons that failed many NFTs projects. 

1. Marketing failure:

This is the big and main reason why NFT projects fail at the beginning of their launch. In most cases, this is the reason behind many NFT projects failure, and why they failed today. Marketing is the key point that should have done in the right way to the right audience. Let’s suppose a project is launched and nobody knows about it. So who is going to buy or invest in this project? Many NFT projects fail because they do not give focus to the marketing part and they eventually fail. Because there are so many potential holders and collectors in the market and they miss capturing them through marketing. 

Solution:

Always check the marketing strategy of the NFT project you are willing to invest in. Check how many platforms they are using to market, and how many collectors they already have captured. 

2. Failure to grow and engage communities:

When a project is about to launch or already launched the thing that makes a project successful is its community. NFT projects use different platforms to build communities like discord or telegram. Check the community size on the discord channel of the NFT collection. If it has a very small community size, it is about to fail or failed. Or if it has an average community and the project fails to engage the audience. The NFT project will probably fail.

Solution: 

Check the size and engagement of the NFT project’s community. Do not forget to analyze the loyalty of the community. Because of this, you will get to know how many of the audience is actually interested in investing.

3. Rug pull:

Rug pull is one of the internal reasons why NFT projects fail. Rug pull is when an NFT project owner liquidates all NFTs and collectors lose their all invested money at once.  A rug pull has multiple reasons why it happens. Most of the time NFT developers and artists stop production due to any reason and NFTs loss their value.

So the owner or CEO of the NFT project has to take a final decision and they rug pull the NFT project, most of the time. Investors lose their all money within no time and this is the worst that can happen to a collector or investor. Most of the time owners think that they can get away with the money but there is zero opportunity for that owner to come back in the market again. Because that one has already lost their reputation and no one is going to trust them again.

Related: What Does Rug Mean in NFT

Solution:

Check the team behind the NFT project and track their record of the previous projects. If an NFT project has an anonymous team, avoid investing with them. A team with successful projects in the past is recommended by experienced NFTs collectors and holders. Check the projects and analyze them for months before you invest. Always invest in your inner is satisfied with the project.

4. Failure in Creativity:

If your NFT project is another project with copy-pasting other’s ideas, marketing strategies, utilities, and merch. Believe me, your NFT project is going to fail. Because other thousands of NFT projects are doing the same so what is your NFT project turning point. Which makes you stand out from the others. Everything same will make the project blurred from other projects. 

Solution:

Try to find a project with artistic creativity and with some extra features that makes this collection interesting to other. NFT projects that connect with people and their emotions have a high chance of success. Find something that stands out from others.

5. Incompetent team:

It is pretty much half the battle won when you have a competent and dedicated team of experts. A badly organized and incompetent team is a big reason why NFT projects fail most of the time. 

Solution:

You can check the team behind the NFT project. If it doesn’t have a team of skilled professionals. Avoid investing with them. A project with the right team of skilled professionals can expect success.

6: Lose of interest in the community:

In the NFT world, your community is the backbone. One of the most important factors behind a project’s success is maintaining an engaged and vibrant community of supporters. The most effective way to do it is to offer privileges and white listings to loyal fans as well as arranging of fun or valuable activities. If a project doesn’t have engaging activities this could lead to failure. Because without these fun and privileged activities community will lose interest in the NFT project.

Solution:

In order for an NFT project to succeed, all of these factors must be present. You need to join the NFT project community one or two months before you think of investing. You can check the engagement and the interest of the community in the specific NFT project. 

What is the failure rate of NFT projects?

Why NFT Projects Fail & How To Avoid Failed NFT Projects

There are thousands of NFT projects launching every month. So with the high launch rate, the failure rate is also increased. The current failure rate according to our research is 80%. Yes, you heard it right. 80% of NFT projects are failing and the reasons are the same that I have mentioned above. With the high number of projects in the market, quality standards are also being settled very high. So which projects do not follow the professional protocols to achieve that perfection in creativity, utility, and marketing. They become a failed NFT project.

How to determine if an NFT project is going to fail?

Examine NFT projects with every important aspect before you make the investment in them. Immature and new collectors, invest in NFT projects early and blindfolded without having a plan. When their project starts losing trading volume and floor price they sell instantly or hold with hope. Both approaches are wrong. Make sure to have an exit plan and how much loss you can easily bear before you enter into any NFT project. This makes you confident and you have nothing to worry about.

Is it possible for failed NFT projects to make a comeback?

Digital assets and cryptocurrencies have been always so volatile. If an NFT project floor price goes down, it is very difficult to come back to normal again. However, there is a chance that it comes back again. It is always important to have a pre-plan, how long you will hold and how much money you can easily bear to lose.  

Conclusion:

So I have covered the reasons why NFT projects fail and how can you avoid failed NFT projects as a collector. This is not financial advice, we are here sharing our experience and research as experienced NFT collectors. If you have queries or suggestions about failed NFT projects, you can ask in the comment section below. I would love to help.

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