How to Value NFT Fundamentals

Art I PFPs I Collectibles I Games I Metaverse Assets I Historical Artifacts I Utility
Jul 5, 20228 min read

Dear Bankless Nation,

New month, new half to the year. It’s time to take a look at your portfolio and assess.

Just like macro and crypto markets, NFTs are in a volatile phase. It’s rough out there.

When the seasons do turn, we’ll likely be looking at a very different NFT market landscape.

You’ll have to reassert NFT fundamentals when putting together your hand to play.

PFPs, games, metaverse assets, historical artifacts, utility tokens — they all require a different lens for analysis.

Let Bankless NFT maestro WM Peaster walk you through how to approach NFT fundamentals, broken down by category.

- Bankless Team

There are a multitude of NFT formats: art, PFPs, Collectibles, metaverse assets, Games, historical artifacts, utility, music, digital land. The list goes on and will continue to grow rapidly.

When analyzing a particular NFT, it’s important to note its category.

For example, the way you approach and value a PFP is different than how you’d purchase digital land in a metaverse. Each category has unique questions you’ll have to answer to find success.

This Bankless tactic will show you the main questions to ask when analyzing NFTs across all the top NFT categories.

  • Goal: Learn how to analyze NFTs on a category-by-category basis
  • Skill: Beginner
  • Effort: 30 minutes
  • ROI: Bolstering your NFT analysis skills


To analyze an art NFT, start by digging into these six fundamental questions:

Who is the artist?

Research the artist some by exploring their other works, website, presence on social media, and background. Getting to know an artist’s story sheds light on the person behind the pieces and the “hows” and “whys” of their creative practice as it relates to NFTs.

What is the genre?

Consider the genre of the NFT artwork in question. Conceptual art, generative art, pixel art, music, and photography are examples media that have gained major traction in the NFT ecosystem recently. Accordingly, noting a piece’s genre will help you better understand its context and placement in the NFT art scene.

What are the technical characteristics of the artwork?

Note the design of the NFT. Did the artist mint it as an ERC721 on Ethereum? An ERC1155 on Polygon? Is the piece’s metadata stored via decentralized storage solutions like Arweave, or is the metadata maintained entirely on-chain? Answering these questions will help you understand an art NFT’s technical infrastructure.

What are the aesthetic characteristics of the artwork?

The aesthetic value of an artwork boils down to how that work instills pleasure (e.g. from beauty) or displeasure (e.g. from horror) in its audience. So when we look for the aesthetic characteristics of a piece, we consider things like its content, its form, its sense of visual harmony or the lack thereof. How successfully does the NFT approach these factors in your view? And in the views of others?

What is the scope of the piece?

Did the artist mint the artwork as a one-off, 1/1 NFT? An edition of 1,000? Or is the work instead part of a larger interconnected series of works that are being created on an ongoing basis? Make sure to understand how the scope of the piece fits into the artist’s personal canon and in terms of supply.

What does the piece’s market look like?

Consider the piece’s initial primary sale stats (ETH price and USD value at the time, etc.) and any ensuing secondary sales data. A useful resource for searching out this info cryptoart.io by Richard Chen.

After this walkthrough of art NFTs, you’ll have a better sense of the sorts of questions you’ll want to apply to NFTs from other categories. There will be some overlap across categories, but every arena will have some unique questions to consider.

Collectibles / PFPs

Fundamental questions you can use to analyze digital collectibles or profile picture (PFP) projects are as follows:

Who are the creators?

Consider the team’s talents and track record in the ecosystem, like if they have any previous projects you can check out. For the sake of accountability, also consider whether the team is public, semi-public (i.e. some members are pseudonymous or anonymous), or totally anonymous. It’s not that anonymous teams are bad per se, it’s just easier for anons to sail off into the distance after promising the world —only to do a whole lot of nothing after that.

What are the technical characteristics of the collection?

Note what chain the NFTs are minted on, what token standard they use, how they are implemented (e.g. ERC721A or solmate), how they approach metadata storage, and so forth.

How is the art?

A collection that has memorable, visually striking, charming or memetically irresistible art is always a good sign!. This is the most subjective element of the process.

How’s the supply set up?

Take stock of the collection’s total supply. Does it have 10k pieces? 20k pieces? It’s also good to look into whether the team has retained a large chunk of the overall supply. For example, the creators of goblintown.wtf retained 1k of the collection’s 10k NFTs.

How’s the community?

Consider the reputation of a project’s community, and observe some of its members yourself. Like what you see? That’s a big plus.

What does the collection’s market look like?

You’ll want to review things like floor prices, trading volume, market caps, number of holders, and more. Reviewing these stats will help you check the pulse of the project’s market activity.

What’s the roadmap?

Take note of the project’s publicly-stated plans. Does the collection intentionally have no roadmap, or does it have an expansive one filled with all sorts of transmedia projects?

What are the use cases?

Also note whether the collectibles or PFPs in question confer any additional utilities, like being able to stake them to earn ERC20 tokens, automatic consideration for future allowlists, DAO governance, meatspace access, and so forth.


When analyzing NFTs from NFT games, these are the key questions to ask:

Who are the creators?

Teams with accomplished game designers and gaming veterans on board are a good sign. In other words, people who live and breathe games have what it takes to make great games.

What’s the genre?

MMOs, role-playing games, sports games, and trading games are some of the more common genres around the contemporary NFT gaming scene. Where does the project you’re analyzing fit into this scene? Some genres like MMOs will be much more complicated to pull off, whereas others will be considerably simpler.

What are the technical characteristics of the NFT?

Note what chain the NFTs are minted on (Ethereum, Polygon, Ronin, Arbitrum, etc.), their token standard, implementation style, and so forth. These days, the vast majority of web3 gaming efforts are building on low-cost sidechains or layer two (L2) scaling solutions, so expect to be researching and mainly playing with non-Ethereum NFTs in gaming now and going forward.

How do NFTs factor into the game’s overall design?

You’ll want to consider how NFTs are used in the game itself and how the creators approach NFTs as a business model. Do they directly sell NFTs to users — if so how many, and at what pace? Do they instead rely on royalties and revenues from in-game economy fees? Does their NFT approach seem thoughtful and sustainable or clunky and short-sighted? One red flag is if a gaming project seems more focused on NFTs than building out an actual sensible game. In contrast, Axie Infinity is an example of a team who has focused firstly on gameplay, and their Axie NFTs support that gameplay first and foremost.

Is the game playable yet?

Many NFT game projects release NFTs before their games are built or playable. Projects that already have playable games that people can use today are less risky.

What’s the roadmap?

Lastly, always take note of the game’s publicly-stated plans. What’s coming next for the project? Have they come good on their roadmap thus far in a timely fashion?

Historical NFTs

I try to keep up with the discussions and debates around historical NFTs as best I can, but I’m certainly far from an expert on the category.

Someone who is an authority on this topic, though, is data scientist and NFT historian Chainleft, who recently wrote an insightful Mirror post titled “Defining ‘NFT’ in historical context.”

I recommend reading the whole write-up as it’s a great deep dive, but note that near the end of the piece Chainleft highlighted five fundamental factors that people have been tending toward when analyzing the collectability of historical NFTs. They are:

Factors that contribute to the collectibility of historical NFTs - via Chainleft

Metaverse / Digital Land

If you want to analyze a virtual land NFT from a metaverse project, you can start with answering these fundamental questions:

Who are the creators?

Consider the project’s experience  and track record in Web3, and presence in virtual worlds in general.

What are the technical characteristics of the NFT?

Is the digital land issued on Ethereum, Polygon, some newfangled metaverse chain?

How’s the NFT supply dynamic handled?

It’s key to research whether a project has a fixed supply — 5k plots, for example — or an uncapped supply of land. Also, at what pace is the land being released? Is there some sort of schedule published somewhere or is the release process ad hoc?

Is the virtual world easy to build in?

You want to see projects that are very easy to use when it comes to creating land “builds.” There’s no point buying land if you can’t do anything to accrue value atop it.

Is the virtual world accessible?

Is the virtual world open and freely usable, a roped off digital garden? Can people still create around and enjoy social spaces in the virtual world without having to hold the project land NFTs themselves? The more accessible the better.

How’s the in-world location?

Location, location, location. For example, consider how the Origin City sector of Ethereum-based virtual world Voxels is the oldest and most desirable land in that project. Research the contexts of in-world locations to better understand them and their desirability.

How many active users?

Is the NFT from a project that’s a virtual ghost town right now, or does the world in question have many hundreds of hardcore users? Lots of activity is ideal.

What does the project’s market look like?

Review elements like floor prices, trading volume, market caps, number of holders, and more.


Utility NFTs are NFTs that are useful for specific purposes beyond simply being art, collectibles, virtual land deeds, etc. Two popular classes of NFTs within this category are domain NFTs, e.g. .eth Ethereum Name Service domains, and membership NFTs, e.g. Kevin Rose’s PROOF Collective Passes.

Some questions to explore when analyzing such utility NFTs include:

Who are the creators?

You know the drill here, experience and reputability are great signs.

What utilities are conferred?

You can use an ENS name to manage wallets and decentralized websites, or membership NFTs can offer access to future NFT drops, like how PROOF NFT holders received free Moonbirds claims. Researching what the NFT in question actually does and how it works is key to understanding its value.

How long does the utility last?

A utility NFT may offer its benefits indefinitely to whoever holds it, or it may have to be periodically renewed and re-registered upon expiring like ENS names. Understanding the maintenance and upkeep of a Utility NFT is key to harnessing its value.

Action steps

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

Account Light mode Log Out