Hype, over-hype, and run away with the funds raised based on that hype – this is something we have commonly seen in the NFT ecosystem, not much on Aptos but yes, there are examples over here too already.
It isn’t easy to find out which NFT project is actually going to deliver, and which one is going to instantly, or slowly, end up as a rug. Now, what’s a rug? or a rug pull? “Rug pull is a scam in cryptocurrency and NFTs where the developers or the teams end up abandoning the project after securing enough funds from the investors”. While it isn’t easy, there are still ways you can actually try to find out how a project might be having wrong intentions. It doesn’t work always, but you still can have some raised eyebrows about projects when you have the following things in mind.
Transparency and Documentation
No one would ever have their own documents out in the open, and that is understandable, but the intentions to talk about themselves or their vision can easily give you an idea of what they are looking to do. Sometimes, doxxing is not really important when the team is fully transparent about what they are doing, what they plan to do, and how open they are with the potential investors. Some teams keep delaying in responding to questions like “Where are you guys based”, or “what do you plan to do with the raised funds?”, etc. These aren’t always considered red flags, but sometimes these are the easiest.
Even in the smallest of the chains, there are projects that are delivering faster and better than what they promised, and those take away all the need for doxxing from such teams, but these rare positive cases shouldn’t become a thought-changer for you for all the projects you plan to invest in.
Guaranteed and unrealistic promises
Often, some of the NFT projects showcase huge promises, and they guarantee that these would be done within the set amount of time, and that’s an easy red flag. If you look at how things are in the cryptocurrency world, you invest what you afford to lose usually, and there are no guarantees of anything. There are many examples of how projects promise huge future developments and none of those are ever fulfilled after the funds are raised and the mint is done.
Roadmaps, whitepaper, and info about the project are always needed, but that has to be believed if we knew who’s behind the project and what history they have to be able to promise so much and their delivery of utilities will depend on what they were able to do in the past. “Hey, invest $500 in us and you would be getting $500 a month for the next 12 months with our unique plan” is a red flag.
Botted numbers on social media
It is very easy to spot this one. A project just announces that “Hey we are finally here, we will be launching soon”, and they already have like 7000 followers with their tweets not getting even a few likes, a major red flag. I know many projects do this so that any probable new investors can easily trust things seeing the number of followers, but smart investors should spend a few minutes looking at the engagement in the tweets, the type of replies, etc.
Detail inconsistencies
A major red flag is when the team is not sure of what they are offering, how many assets they are selling, and for what cost. We have seen many projects changing these details from time to time, and that is not a convincing factor for anyone who is trying to decide whether to invest in the project or not. The $50 mint price changed to $100 in a few days, or the supply doubled without a good reason for the same, you surely should have a suspicion about the plans or intentions here. Sometimes, slight changes are okay when the team has been transparent about why they are deciding what they are deciding, but the ones that ride on the hype and make changes only to earn more than what they actually thought of, are a straight red flag.
Too less involvement in public events/talks
Being shy or introverted is one thing, but being lesser available due to some other reasons is a red flag. Public presence can also be deceiving at times, but not showing up publicly at places where you are invited virtually, for example, Twitter Spaces is when you should be doubting things. While it isn’t only unprofessional to not be available to your prospective investors to answer any questions they have, it also raises eyebrows.
The art – AI or too-good art also is a red flag sometimes
You don’t really know how art these days can be generated if you like every random art that is present on the Internet. AI has become so easy to use to generate art, you would be blown away seeing how it can produce the best of the images, that too completely original ones, within a couple of minutes.
So, you need to always see how the art is being made. I mean, this can sometimes be a bit confusing too, because if you look at how we have been talking about AptoRobos and its Robo art, you could pass it off as AI-generated art if you didn’t know the story. But, projects that don’t talk much and just are somehow showing off the best art can be seen with some doubt.
There are many other ways you can spot the red flags in the NFT space, but these were the most basic and common ones. Have anything else in mind that we might have missed out on? Join us on AptoRobos Discord and discuss!
Its nice to have community like your mate,thanks for the advice