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Why NFT Analytics Are Important
Why NFT Analytics Are Important
7 min read
Things can feel fast-paced and chaotic in the world of NFTs. That’s because they are! But don’t worry, you’re not alone in web3. To help make sense of the everchanging NFT landscape, traders look to NFT analytic tools for insights, trends, and a greater understanding of NFT trading dynamics on which they can base their decisions.
But before we break down why NFT analytics are so important, it’s essential to understand why the underlying technology of NFTs is important to collectors. Unlike fungibles (say BTC or BAT), which serve their own unique purpose, non-fungible tokens are one-of-a-kind digital assets that are backed by an underlying “receipt” confirmed on a decentralized blockchain. Due to the immutable nature of NFTs, they provide immense value to industries like art, gaming, and event access, where provable authentication is critical.
When collecting and trading NFTs, it is necessary to be making data-backed decisions; otherwise, you could fall prey to rug pulls or “being left holding the bag.”
Now, enter NFT analytics. With the right analytics at your disposal, you can better grasp trading behavior and market trends around your favorite NFT projects.
A Word Of Caution
Non-fungibles can be a way for the unwise to lose money on overhyped projects. Without looking under the hood — doing your own research (DYOR) — at some of the basic vital signs of a project (and seeing if they correlate with the current token price), many are often making purchases steeped in emotion, such as FOMO, hype, or wanting to flex on social media.
These types of decisions can result in you losing your entire investment, which further underscores the importance of NFT analytics.
But even the collectors who use NFT analytic tools to filter through thousands of projects, receive alert notifications, and spot early trends before the masses can also make poor trading decisions. So although analytics are not a bulletproof way to base your trades, they are fantastic at providing you with as much market information as possible before you purchase or sell an NFT.
What Are NFT Analytics Tools?
NFT analytics tools index the blockchain and provide data such as floor price, volume trends, sales history, historical charts, live live feeds, alerts, and more. Conventionally speaking, most blockchain explorers would give you generic reports and metrics, or, conversely, provide you with specific information that you query for, e.g. a transaction, a wallet address, a block. They’re not tailor-made for the NFT collector looking for intelligent insights into the NFT market.
Instead of overly generic reports or particular reports, NFT analytics tools work for you.
They intelligently scour, prioritize, and organize information from the blockchain according to your customizations and then deliver reports that you might find interesting and actionable.
NFT analytics tools (like ours) are laser-focused on sorting through the on-chain data for everything happening on that blockchain involving non-fungible tokens like the Ethereum standard ERC-721.
The tool looks for new minting and transactions, then assembles the real-time data into specified and ordered rankings, with everything the NFT trader wants to know, like an NFT collection’s floor price. It can also send NFT alerts about trending collections.
Why Do NFT Traders Use Data Analytics Tools?
With dozens of projects being minted daily, it can be nearly impossible to keep up with the NFT market on your own. As a result, NFT traders and digital collectors are obsessive about checking their NFT analytic dashboards.
The average trader can use blockchain explorers that have nifty explore features, insights, and alerts to surface opportunities early. But studious collectors and traders bookmark, sign up for and check their favorite NFT analytics tools daily for deeper insights. It’s part of their information diet along with other sources of crypto news and info about Ethereum, the NFT market, the DeFi sector, and the overall outlook of the blockchain industry.
Analytic tools are an easy way for NFT traders to find new web3 properties to consider investing in, spot trends as they happen in real-time, and generate ideas for new trading strategies in the NFT space. All with a well-organized and personally customized flow of high-quality data analytics.
What Information Do You Need to Know When Trading NFTs?
When trading NFTs, it’s important to have a basic understanding of an NFT collection’s floor price, average sales price, and sales volume. Rarity rankings are another factor that may come into play for certain collections. At icy, we use OpenRarity, “an open collaboration between OpenSea, icy.tools, Curio, and PROOF,” to “provide a unified and transparent set of rarity rankings across our marketplace.”
In addition to understanding the basic sales trend of a project, it’s helpful to familiarize yourself with the fundamentals of what makes an NFT project successful:
If we’re feeling confident in an NFT project, we obviously need to evaluate whether it is priced reasonably.
How To Know If An NFT Is Priced Correctly
When perusing through NFTs, you really want to know if a specific NFT is overpriced or underpriced. Otherwise, you can find yourself overpaying and struggling to recoup your investment in the future. To help inform your purchase decision, look to these standard metrics for better context around the trading behavior of an NFT project:
Also, keep in mind the price of ETH, gas fees for using the network, the overall cyclical market trends of crypto, and global macro trends affecting finance.
Pro Tip: One way to avoid difficult pricing evaluations altogether is by simply finding NFT projects early — before the rest of the market.
How To Track NFT Mints
NFT mints are the publishing of an NFT collection onto a blockchain for it to be bought, sold, or traded. When an NFT project is minted, collectors have the opportunity to invest in a project early and potentially flip it for a profit.
You can track NFT mints by using Icy.tools’ Discover tool. It will show you a list of NFT projects minting now, every time you load it. This tool works by monitoring the Ethereum blockchain for ERC-721 mints in real-time down to the minute. You can toggle the time period through several gradations from one minute up to one day.
Tap any mint in the list, and it will take you to an NFT collections overview with the collections metadata, 24-hour volume in ETH, sales floor, total 24-hour sales, and 24-hour average price. You can even browse through the synced tokens by tapping the “Tokens” tab.
The “Mints” tab takes you to mint data: Total mints, number of unique minters, average mints per wallet, and addresses of top minters. If you step back to the Discover tool page and select the “Trending” tab, you get a fresh list of Top NFT collections by volume.
Prices are updated every hour. You can also toggle the period past one day to seven days, 14 days, and 30 days. It will display all that same mint data for the collection if you select it from the list.
Level-up with NFT Analytics Tools
Overall, web3 unlocks a new level of real-time insight that web2 never granted us. We no longer have to wait for PR statements and social media announcements to receive event-linked information. Instead, web3 analytic tools can extract this information from the blockchain in real-time, and provide the masses with the information they need to make informed economic decisions. By leveraging web3 analytic tools, serious traders have the advantage of discovering trending NFT projects before the general public.
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