Guide to Avoiding Scams: Thirteen Characteristics of Revealing NFT Projects

When it comes to outstanding NFT projects, we consider talented creators, innovative mechanisms, and vibrant communities as important factors. So, what are the characteristics of a bad NFT project?

This article is authorized and reprinted from the Metaversal Way, with the original title "A Guide to Avoiding Pitfalls: Thirteen Characteristics of Garbage NFT Projects". For the original article, please click here.

• Original article: Bankless
• Author: William M. Peaster

Below, I have listed thirteen warning signs that you need to keep in mind when exploring new NFT projects. Ranging from oversights to outright manipulative issues, let's protect our wallets.

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Danger Signal 1: Unstable Minting Prices

There is a lot of room for what is considered a "reasonable" NFT mint price, and there is no single correct answer. However, if a new team's fees are significantly higher than its "predecessors" or similar projects, it indicates that they may be more focused on taking your ETH rather than anything else.

Danger Signal 2: Suspicious Social Media Activity

If an NFT project suddenly messages you to draw your attention to an upcoming NFT sale, and you just saw an ad tweet about it a few hours ago, and when you click on the project's profile, you find:

1. None of the people you follow are following the project.
2. This new project has a large (unusual) number of followers. These are all danger signals! Good projects do not need to attract personal attention through DMs or Web2 advertising; they have organic traffic and do not need to buy followers.

Danger Signal 3: Deliberate Floor Price Maintenance

If you see the project leader discussing or trying to maintain the floor price of an NFT, you should leave, as they are simply running a financial scheme and have little interest in cultural value or community. This lack of sincerity will affect any trouble they encounter in the future, so be cautious.

Danger Signal 4: Discord Abuse

A worrying scenario is when an NFT team chooses to ban a community member's Discord account when reasonable questions are raised. You want to see projects that are inclusive and straightforward, not combative and secretive. Teams have no good reason to abuse their moderation duties.

Danger Signal 5: Lack of Audits

Audit reports from security companies are not perfect but do provide some basic security checks. If you are in Web3, you want to use audited DeFi and NFT projects, as unaudited infrastructure is more prone to attacks or exploitation.

Every audit firm has recently been overwhelmed with demand, and some new NFT projects are unwilling to wait, so they launch unaudited infrastructure to seize the opportunity. We should be cautious with such projects accordingly.

Danger Signal 6: Poor Design

A poorly designed project can lead to vulnerabilities, inefficient gas usage, exploitable mints, and more. It can be challenging for newcomers and non-technical experts to gauge bad code, so following those who understand and learning from their judgment will be crucial.

Danger Signal 7: Low-Quality Artwork

If you come across an art project that looks like it was conceived and completed within an hour by a Fiverr content platform, then that's probably what it is. So, if the NFT team itself does not take their content seriously, why should you?

Remember, there is a huge gap between tasteful/charming/witty/quirky minimalist works and tacky junk. You can make judgments, but in my experience, projects within this range tend to be poor quality.

Danger Signal 8: Whitelisting Sales

A new trend I have recently seen is NFT teams selling their NFT minting whitelist. Wow! This is just a cash grab, plain and simple, and I personally see no legitimacy in it.

Danger Signal 9: Overly Optimistic Claims

Has the creator of a new NFT collection claimed that their work is of "blue-chip quality" and will be the next Bored Ape Yacht Club? Does the project's roadmap metaphorically aim for the moon or make some outlandish claims like being the first real moon NFT marketplace? Avoid pure rhetoric.

Danger Signal 10: Completely Anonymous Team

Having a completely anonymous team is not inherently a problem; people have privacy rights, and in many cases, the quality of the project and codebase will speak for itself. However, in the worst cases, a completely anonymous team can cause significant harm, such as disrupting liquidity with little to no accountability.

Danger Signal 11: Lack of Track Record

If an NFT project team lacks experienced NFT veterans, the project is more likely to be eliminated.

Danger Signal 12: Not Verified by Etherscan

Verifying your code through Etherscan ensures that it functions properly on Ethereum for the public to see. Using unverified smart contracts means you lack basic performance guarantees, so this is something to watch out for in your NFT activities. For example, you can see how the Cool Pets smart contract is verified through its selected status. Be wary of projects without similar checkmarks.

Danger Signal 13: Poor Ownership Distribution

Suppose a PFP avatar project with a total of 10,000 catches your eye, but when you look at its OpenSea collection page and notice that the ownership of the project is spread across hundreds of addresses. In that case, you must be cautious as these people can have a significant impact on the collectible market.

Conclusion

The impact of some of the danger signals described above can be significant, such as the abuse of Discord. While other signals, like a completely anonymous team, may not always be critical, they should at least raise attention. Develop the habit of spotting these danger signals so you can navigate your NFT activities more astutely.