Blue Chip NFTs – What are Blue Chips in the NFT Space

Statistics show an astonishing 98% of NFT projects fail within the first 12 months.

There are those NFT projects that have done an amazing job. They are the projects who created a buzz with exceptional marketing, have enlisted influencers to promote their collections, have encouraged holders to share with others, and they have already started delivering on their roadmap promises.

These NFT projects are often referred to as Blue Chip NFTs.

Blue Chip NFTs are generally the most expensive NFTs to invest in to. The two most expensive are Bored Ape Yacht Club, and arguably the first mainstream NFT collection, CryptoPunks.

The cheapest Bored Ape Yacht Club NFT costs over $170,000! This would be considered a Blue Chip NFT.

Let’s look into the characteristics that make up a blue chip NFT collection, and also look at some examples and case studies to illustrate those traits.

What are Blue Chip NFTs?

Blue Chip NFTs are those NFT collections everyone wants to get in to. Paper hands are few and diamond hands are plenty.

This simply means those who are looking to make a quick flip and a quick buck are generally fewer.

Diamond hands keep NFTs. They are looking at a long-term ROI, and therefore the floor price usually take longer fluctuate unless there’s a major pump or dump.

The most expensive NFTs to buy into are those rare blue chip ones. These tend to be full of whales and deep pocket investors, including those who bought early and cheap and have seen an incredibly high ROI.

The reason blue chip NFTs are full of this type of group is because everyone else sold ad they saw small profits available. The smarter investors can see the longer term potential, and bigger returns, so hold their NFTs for the future.

NFT collections are rarely minted as Blue Chips. They usually have to earn that status as they grow and develop. That said, if a large brand launches an NFT collection, they would be considered blue chip straight away.

For example, when Adidas announced an NFT launch they were considered a Blue Chip NFT collection immediately, before even a single NFT had been created.

There are many obvious characteristics that show whether an NFT collection would be classified as Blue Chip, these we will cover in this article.

Characteristics of a Blue Chip NFT

There are several characteristics that can identify a blue chip NFT collection.

From blue ticks to a high floor price, to market capital (I will show you a handy industry standard formula to help calculate this) and doxxed founders – there are blue chip signs galore.

Spotting such a high profile NFT is like searching for a big brand in the search engines, or established company in the S&P 500. They become second nature to look for, once you know what you’re looking at of course.

There isn’t a magical definitive formula, and no one officially declares an NFT blue chip status in a secret ceremony held in the Metaverse. It’s simply a way of looking at and categorizing an NFT collection.

Here are some of the characteristics of a blue chip NFT:

Blue Tick Validation

On certain social media platforms, such as Twitter and Instagram, you may have noticed a recent change to some profile accounts which now have a blue tick beside their name.

Blue Tick Validation

This blue tick isn’t an emoji that can simply be attached to the name, it is added by the social media platform upon request.

The blue tick is intended for the average user to help identify authentic social media accounts from copycat, fan, spoofs, and clone accounts set up for malicious purposes.

Social media platforms can’t manually check everyone’s account to make sure all that use the platform are who they say they are, but if you are an account of public interest with a high following then you can apply for the blue tick.

It’s a badge of authenticity, and for those research NFT collections it’s a mark of an NFT collection deemed popular enough by the platform for the need to be given a validation mark.

This blue tick on platforms such as OpenSea and Twitter are a good sign the NFT is either blue chip or heading towards a blue chip status.

Current Floor Price

Nothing screams popularity and the high-profile status of an NFT collection than its current floor price.

A high floor price of, say, 10 ETH ($20,000) or more not only says NFT buyers are willing to pay a small fortune to own an NFT in the collection, but also the market capital of such a collection is likely to be high, as well as the DAO or wallet of the project.

Both are an indication of a blue chip NFT.

A general rule of floor price is:

  • Greater than 10 ETH = Blue Chip NFT
  • 5 Eth to 10 ETH = Potential Blue Chip NFT
  • 1 ETH to 5ETH = May be growing to Blue Chip NFT status
  • Less than 1 ETH = Not a Blue Chip NFT collection yet

A high floor price may not though give an indication of a high market capital of the NFT collection.

Market Capital

Market capital of an NFT collection is usually calculated using the following method:

Floor Price * Number of Minted NFTs = NFT Market Capital

For example, if an NFT project has a current floor price of 0.22 and there are 5,555 NFTs in the collection, this would give the NFT collection a market capital of 1,222 ETH ($2,444,000).

This calculation is missing an important piece of the puzzle.

Usually, market capital is the size of a business. The assets of a company.

In the example above the $2,444,000 can’t be got at by the NFT project or the founders. This is money owned by the NFT holders who hope the market capital reaches $10,000,000 or more to 4x their original NFT investment.

I have found a better way to calculate the true market capital of the NFT project:

(Mint Price * Number of Minted NFTs) + (Value of Resold NFTs * Royalty)

Let’s break this formula down.

The first part (Mint Price * Number of Minted NFTs) shows the amount of revenue the NFT project collected when they launched through sales.

A floor price now of 0.22 ETH may have been 0.05 at time of mint.

As the project minted 5,555 NFTs at 0.05, the amount in the first part of the calculation is 277.75 ETH ($555,500).

Once a project has minted, NFT holders who minted can choose to HODL (Hold On for Dear Life) or sell their NFT to other NFT buyers wanted to get in on the project.

When selling an NFT on an NFT marketplace such as OpenSea there are generally three costs:

  • Listing Fee – (this is only payable once per NFT collection and on the first NFT the holder sells in the collection)
  • Marketplace Fee – this amount is paid to OpenSea for running the service, which is 2.5% of the NFT selling price
  • Royalty Fee – this amount is paid back to the NFT Project based on a % of the selling price.

The Royalty Fee amount is set by the NFT project before the project is minted and set in stone on the blockchain.

Every single time an NFT is resold, the applicable royalty is paid automatically to the project, which is usually between 5% to 10%.

As a reminder so far, the calculation currently looks like this:

$555,500 + (Value of Resold NFTs * Royalty)

If 326 ETH is the value of resold NFTs and the Royalty of the collection is set at 7.5% it would mean a total of 24.45 ETH ($48,900) has been paid as Royalties back to the NFT Project.

Therefore, the true market capital of the NFT project is:

$555,500 + $48.900 = $604,400

This amount a much more accurate picture of how much funds the NFT Project has had access to and is able to grow their start-up or continue with their business.

The values of $2,444,000 and $604,400 are very different of course, but both figures are a good way to help determine market capital, and blue chip potential.

The higher the amount of both market capital of collection and project the better.

Volume Sold

We’ve already touched upon the volume sold as part of the market capital, but there’s another thing to pay close attention to.

A high floor price – although a high floor price with a low selling volume is a red flag.

It may be an NFT holder agreement to only list their NFTs for 1 ETH or more with the hope this high price sparks demand, and those NFTs worth 0.05 are sold for 20x what they are worth and give NFT holders an early Christmas present!

A high volume of sales shows that there is trade and interest in the project.

A low volume of sales shows a lack of interest in the project and possible price setting from within the community.

A low volume of NFTs sold – less than 10 ETH in value – would not be considered a blue chip NFT.

Find a project with higher than 1,000 ETH in sold NFTs, and the project is well on its way to blue chip NFT status.

Volume of NFTs vs Holders

A lot of research and due diligence conducted on an NFT project is to prove its legitimacy.

The NFT world has been plagued with a huge number of scams and rug pulls, so due diligence in the NFT space is more important than most industries.

Once cryptocurrency leaves your wallet you can’t phone up your bank to try and recover your funds if you are scammed. It’s gone forever.

One due diligence check to carry out is to look at the number of NFTs compared – as a percentage – to the number of people holding the NFTs.

For example, if 10,000 NFTs were sold in the collection, but the number of holders is just 50, this is a real red flag. The NFT to holder ratio is just 0.5%.

If 10,000 NFTs were sold within a collection, but there are 7,300 holders, this is a much healthier ratio of 73%.

You wouldn’t want a small number of holders as it could mean just one person could cause a huge floor price fluctuation if they decide to list all their NFTs for sale at once.

This adds a huge amount of risk or volatility to all other holders.

If though there are 7,300 individual holders of 10,000 NFTs, the chances of a huge price fixing collaboration are a lot less, plus it is very unlikely one or two people could influence the floor price on their own.

This project therefore more stable and less risky. Not risk free, or even low risk, but has less risk attached than a 0.5% ratio.

As a rule, most NFT buyers look for a ratio of more than 50%, but ideally more than 65%.

Examples of Blue Chip NFTs in 2022

We have already gone through the traits of a blue chip company, how to identify them and what characteristics to look for.

Now let’s look at some real blue chip NFTs and how the blue chip characteristics apply to each one.

This will help give you real life case studies to compare against NFT projects that are launching today:

Bored Ape Yacht Club

Find Good NFTs

BAYC has to now be the most recognized NFT brand on the planet, and I believe now out-ranks Crypto Punks as the collection most individuals want to get in to.

It is now an exclusive club of millionaire investors and celebrities.

With a current entry price of over $170,000 to join (based on the current floor price and the price of Ethereum today) it isn’t an easy club to get in to.

By owning a BAYC, and displaying on your social media profiles, you are symbolizing your status.

To those not in the NFT space they have no idea why anyone would spend $170,000 on a image of a cartoon ape, but for this deep in the NFT industry it would be like striking gold to own one!

Let’s see how Bored Ape Yacht Club meets Blue Chip NFT status:

  • Blue tick validation on both OpenSea and Twitter
  • Current Floor Price greater than 10 ETH
  • Market Capital greater than $10million
  • Volume sold greater than 10,000 ETH (now above 500,000 ETH)
  • Holders as a ratio to NFTs greater than 50% (currently 64%)

All boxes ticked which is why Bored Ape Yacht Club has well and truly earned they blue chip status.

Moonbirds

Moonbirds

Moonbirds launched in 2022 to huge demand.

Having founders associated with other big blue chip NFTs help with the initial market campaign, and also legitimacy of a new project.

It didn’t take long for Moonbirds to start hitting every trend list from OpenSea to Twitter and beyond.

For such a relatively new NFT collection, can we be sure they have reached blue chip status?

Let’s take a look at the Moonbirds stats and see how they compare against our traits list:

  • Blue tick validation on both OpenSea and Twitter
  • Current Floor Price greater than 10 ETH
  • Market Capital greater than $10million
  • Volume sold greater than 10,000 ETH (Now above 140,000 ETH)
  • Holders as ratio to NFTs greater than 50% (currently 66%)

VeeFriends

Veefriends

VeeFriends may not have the nicest looking art in the world, but with a founder like Gary Vaynerchuk behind the collection, it really doesn’t need it to mint out.

Gary Vaynerchuk – or Gary Vee as he’s more affectionately known – has been part of the internet market scene for over 10 years now. He’s a multi-millionaire with his own digital empire.

He has amassed an army of fans that wait with anticipation for his next NFT YouTube video or his next NFT related tweet.

Gary Vee has gone all-in on the NFT craze and culture and released VeeFriends.

With such a high-profile name in the internet marketing space what could go wrong. It was always likely this project would sell out and grow due to the name behind it, but let’s check to make sure VeeFriends has ticked all the boxes:

  • Blue tick validation on both OpenSea and Twitter
  • Current Floor Price greater than 5 ETH (which puts it in to the Potential category here)
  • Market Capital greater than $10million
  • Volume sold greater than 10,000 ETH (now above 50,000 ETH)
  • Holders as ratio to NFTs greater than 50% (currently 50.4%)

Future of Blue Chip NFTs

NFTs entered the digital market in 2017 with the launch of Crypto Punks, which is still one of the most popular NFTs in the space.

With the explosion of interest in cryptocurrencies in 2020 and in to 2021 and 2022, it naturally followed on to a cumulative interest in NFTs.

A particular barrier to entry to buy an NFT is the need to know how cryptocurrencies work, how to buy them and how to open a digital wallet.

The spike in cryptocurrency interest and users meant the knowledge barrier to entry was quickly broken down and led to an influx of people buying cryptocurrency and then spending it on NFTs.

Stories of Crypto Punks and Bored Ape Yacht Club NFTs selling for over $1m each meant the gold rush was about to begin!.

As the market turned towards NFTs, so did software companies as well as influencers and YouTubers sharing the methods on launching NFT collections with the chance of minting out and becoming a millionaire for what could be a relatively small investment.

It’s possible to launch an NFT collection for $500 to $1,000.

In fact, the hardest part of the process is marketing the NFT collection, rather than producing it.

So, what does this have to do with blue chips?

If we look back at how the internet started in the 1990s, it began with a small number of huge established businesses entering the market and a huge number of mom-and-pop stores and online start-ups.

Billions of dollars poured in, looking to find that website that would take off, become a recognized brand, and make millions of dollars.

Sound familiar?

We can see a similar pattern breaking out in to the NFT space twenty years later.

By 2004 it was the blue chip large corporations when realizing the internet was not just a fad but a movement, they then made their play.

Their late and cautious entry on to the internet meant the end of many small start-ups and businesses.

A small number though succeeded and are still alive today, like Amazon who started as a simple online bookstore way back in the late 1990s.

The blue chip businesses are still watching the NFT and Metaverse industries. Some have showed their hand and making a play.

Companies like Adidas, Nike, Coca Cola and even JP Morgan have entered the NFT and digital age.

Thousands more of these businesses are still watching with caution. When the time is right, they will also make their play.

Blue chip NFTs are only likely to grow in number, if the NFT industry space continues to grow.

Blue Chip NFTs – in Conclusion

Many current blue chip NFT companies and founders created their blue chip status from within the NFT industry.

Many aren’t even known out of the confides of the NFT space.

As the NFT space settles down from the wild west period it is currently in, and the next version of the NFT space takes shape, the blue chip companies who are watching on the side lines will see the industry as less risky and start to enter in large numbers.

There will of course still be those breakthrough brands that will go on and earn their blue chip status, but the market over the next few years is likely to be dominated by the same companies we currently see in the stock market.

This isn’t necessarily a bad thing, as the NFT industry has so many more beneficial uses than cartoon apes or goblins.

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