Have you heard about Stacks? If not, you really should read my article about it. I think it will become a major player of the art industry in the next couple of years. The reason is that it’s one of the safest platforms to store digital property as it’s secured by the safest network on earth: the Bitcoin network. I’m always trying to find collections on Stacks that are not too expensive, scarce, beautiful and with a bright future. I found one last week: the Tiger Force NFTs.
1. What is Tiger Force?
Let me introduce you to the smartest tigers in the jungle:
This Tiger Force NFTs project is one of the most recent Stacks NFT collections released and it comes with a roadmap including a DAO, a comic series, a metaverse project and a side collection called Tiger Robot:
Last week, I decided to invest in a tiger. Please welcome, the oil tycoon tiger:
He looks cute, he looks fresh, but it’s not the only reason for this investment. This time, I’ve tried to come up with a decisioning framework to help me to choose an NFT collection.
2. Why did I pick this NFT collection?
After some time playing around with NFT investments, I’ve defined an alpha ratio that takes into account volumes, scarcity (number of NFTs in the collection) and price. I’ve defined the following ratio to help me to invest, the higher the value the better:
“volume” is the all-time volume traded of the collection in STX, “price” is the floor price of the collection in STX and “N” is the number of items in the collection. This ratio has no unit as the volume and the price are both in STX and the items count has no unit.
For example, when I bought Tiger Force last week, this is what I used to calculate the ratio:
-The all-time traded volume back then was 85950.56
-The floor price was 80 STX
-The number of items of the collection: 2000
It gives an alpha of 85950.56/(80*2000) that is to say alpha=0.54.
You can find this data on exchanges like Stackart here (the values are from today so different from the above):
Here is a snapshot of the different alphas for various stacks collections at that time:
I’ve invested in the top 2, Tiger Force NFTs and Wasteland Apes NFTs:
I know, you want to see my ape. You’re a very demanding reader.
Here it is, fresh from the Stacks zoo:
Yes, he looks a bit high.
I like to be analytical and quantitative when choosing an NFT collection. I have a feeling that the scarcity, the volume and the price are all absolutely critical parameters. As a consequence, a linear indicator is a good start for me to shed some light on how interesting a digital art investment is. This is obviously not perfect and inexact but it guides me when I need to make an investment decision in the space. Last week, the Tiger Force NFTs came first based on this indicator among a list of projects I wanted to invest in.
Thanks for reading.
Disclaimer: this is not financial advice