Derivative NFT Projects: Is There Value?

What is a derivative NFT project?

An NFT is a unique token on-chain, usually displayed as an image. Some projects are very creative with their artwork. Typically, the most popular projects are the ones with the best art and best utility. These projects will see massive amounts of volume and sales. Of course, they also receive the copycats and derivatives.

There are outright copies, like what we are seeing going on with Wolf Game, and there are derivatives. These projects often look like the original and function similarly in terms of utility. They can also just draw inspiration from the art or function of these popular collections.

Derivative collections often act as a lower entry point into a blue-chip-like community. But is there any value in collections like this long-term?

What Does a Derivative Project Look Like?

Derivatives look very similar to the most popular collections available. Collections that have the most inspiration drawn from them are:

  • Bored Apes Yacht Club
  • CryptoPunks
  • Doodles
  • Cool Cats

These projects will pull attributes and styles from the most popular collections to make their projects pop. The similarity in art style helps bring these collections to the top of OpenSea for a few days. This trend does seem to be unsustainable long-term though.

Often times, they are similar in name, or a play on the name of the original collection, as well.

Are These Worth the Investment?

Blue chip collections are often out of reach for 99% of traders, unless they get in early enough. But with so many collections minting daily, this can seem like an arduous task. Collectors see these projects that look similar to their most desired NFT collections and ape right in.

Everyone wants to be a part of the next BAYC, Doodles, or Cool Cats. Oftentimes flooded with hype, these similar-looking projects rocket in price upon mint. Some maintain these price levels; many others do not.

Society of Derivative Apes, for example, minted in November and saw 801 ETH in volume two days later on November 23rd. Yesterday, the collection saw 7 ETH in volume and 90 sales. It seems like the community has started to move on.

On the other hand, look at CryptoPhunks and NotLarvaLabs. You read that right! This is a collection of CryptoPunks that are flipped so they face left instead of right. This collection minted for free in June and now sits at a floor price of 1 ETH and sees record-breaking sales every few weeks.

Don’t Buy Every Knockoff Ape You See

While some of these communities seem enticing and have price points that are mere fractions of the original, be careful of what you buy. Some, like Ape Kids Club and Desperate ApeWives, have original BAYC holders rushing to find pairs. This causes massive spikes in volume and hype, leading to insane floor prices. If you can’t afford to be a part of BAYC, Desperate ApeWives provided an alternative the last few months.

But these projects need to grow and build their communities organically. Projects like Fox Game, a Wolf Game derivative, saw a peak floor of 0.40 ETH but now rests at 0.04 ETH. Collections popping up trying to take advantage of the hype will never survive long-term in this space. Organic community growth is the key to stable floors and volume. Invest wisely, and do research before investing in projects.

Note: Remember always to do your research, make your own decisions, and invest in projects that interest you!

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