Since the market boom in 2021, hundreds of NFT projects have been created and new ones are added every day. Only a few of these collections – often referred to as Blue Chip NFTs – have been able to establish themselves over a long period of time. An illustration of the blue chip debate with Project Moonbirds.
Moonbirds have been the number one topic of conversation in the NFT space for the past week. In the ten days since its inception, the collection has seen a total trade volume of over 150,000 ETH, or approximately $475 million, surpassing any other NFT project. Besides the reasons for the massive interest, the success of the Moonbirds has sparked a new debate about the status of top-notch NFTs.
What are blue chips in traditional finance?
Blue chip stocks are considered safe investments over the long term and provide regular returns on invested capital. Typically, blue chip companies have been around for many years or even decades, are well capitalized and have a long track record. even in difficult times for the markets. For example, companies such as Coca Cola, IBM, Disney and General Motors are considered “blue chips” of traditional finance.
Investing in a blue chip is considered less risky than more speculative bets such as penny stocks or early stage companies. The original etymology of the term dates back to the classic 3-suit poker chip game, where blue chips have the highest value. In the 1920s when the term was first used, stocks priced above $200 were the blue chips of the day.
Top notch NFTs
In terms of NFTs, blue chips refer to collections that have skyrocketed in value – with market watchers believing that these digital assets will hold their high valuations for a long time to come. Factors such as return on equity (ROA), leverage ratio (equity to debt ratio) or other metrics are not really relevant in NFT projects. Factors that determine blue chip status include overall brand awareness and community engagement. Additionally, it is the use cases and benefits, as well as prominent advocates, that determine a price floor and sales volume.
In traditional finance, blue chips are synonymous with longevity, which NFTs simply cannot yet do. CryptoPunks is one of the first NFT collections and it has only been around since 2017. The most successful NFT project to date, the Bored Ape Yacht Club (BAYC), has been around since April 2021. Since the explosion of NFT in the spring 2021, there are Hundreds of projects have entered the market and are growing day by day, it is impossible to follow them all.
In general, the term blue chip NFT means that the project will retain a high value in the future. In other words, the collection could behave like a traditional blue chip stock in the future and survive multiple market cycles. There is no “objective” definition of the term and in many cases market players simply describe their favorite projects as blue chips.
Moonbirds: the next blue chip?
Similar to the Bored Ape Yacht Club, the Moonbirds would bring other benefits besides the classic “profile picture” on social media. Holding an NFT unlocks membership in a private club that evolves over time. For example, users have access to an NFT-protected Discord server, where information about upcoming NFT drops, events, and other developments in the field are shared.
The collection was minted at a price of 2.5 ETH per coin and the smart contract includes 5% royalties on every secondary sale credited to creators. According to the official website, the owners of the NFTs also have all the intellectual property rights over them. The minimum (floor) price of a Moonbird is currently 32 Ether, which corresponds to almost 100,000 USD. Some users are convinced that the high volumes and prices already speak in favor of the classification as a top NFT. However, the collection is less than two weeks old, and the buzz surrounding the cute birds might die out as quickly as it appeared.