TL;DR

• DigiDaigaku has decent potential as the next Blue-Chip NFTs

• Proven execution record of Limit Break, consistent increase of Blue-chip NFT folders, lack of visible selling pressure and rising popularity of Web 3.0 community, are the favourable factors for DigiDaigaku’s future success.

• Potential wash trading activities are one notable risk since the NFT’s launch, as seen in the transaction spike in August 29.

Introduction

There are thousands of NFT collections in the cryptocurrency industry. However, only a few NFT collections are regarded as ‘Blue-chip’ NFTs — given their early mover advantages in the space, high floor prices and being the leaders in total NFT sales volume. CryptoPunks and Bored Ape Yacht Club are the first ‘Blue-chip’ NFT collections, followed by the likes of Doodles and Moonbirds. Recently, a NFT collection called ‘DigiDaigaku’ has attracted huge traction and part of the community speculates it as the next ‘Blue-chip’ NFTs.

In this in-depth article, we examine the current state of DigiDaigaku and what makes it stand out as the next household NFTs.

What is DigiDaigaku?

DigiDaigaku is a collection of 2,022 unique characters NFT on Ethereum, developed by Web 3 gaming company Limit Break. The NFT collection has attracted massive attention following its ‘free-to-own’ model in stealth launch.

Free-to-own model

DigiDaigaku introduces ‘Free-to-own’ model with the following characteristics:

• Initial traction — Stealth Drop: On Aug 10, DigiDaigaku came into surface in the form of ‘Stealth Drop’ — all NFTs can be minted for free and users only needed to pay a gas fee of 0.003 ETH. The floor price rose to 2.45 ETH and once reached an ATH of 20.9 ETH in early September. Currently the DigiDaigaku’s floor price stands at 8.45 ETH.

• **Free-to-own: **The model is built around free mints for Genesis NFTs, leading to other NFTs through airdrops and more. By launching a free mint and give away Factory NFTs that make holders eligible for airdrops, DigiDaigaku presents a unique opportunity turning fans and early supporters of the project into advocates.

Team — Limit Break

• **Proven track record: **Limit Break is founded by Gabriel Leydon and Halbert Nakadawa — gaming veterans with over 20 years of experience. Both served as former CEO and CTO for the mobile gaming firm Machine Zone, respectively. Game of War: Fire Age, Mobile Strike and Final Fantasy: XV were some household game titles built by Leydon and Nakadawa in the past.

• Machine Zone is reported to be valued at USD 9 billion in 2016. The studio was then acquired by AppLovin for USD 300m in 2020.

• Solid investor profile: Limit Break has raised over USD 200m over two venture funding rounds, backed by multiple high-profile investors including:

Josh Buckley

Matt Huang (Paradigm Co-founder)

Alok Vasudev (Standard Crypto)

Exchanges: FTX, Coinbase

VC Funds: Sfermion, Anthos Capital

• **Coming up from stealth mode: **While DigiDaigaku gained initial traction, there’s limited information available to DigiDaigaku and Limit Break. LinkedIn and Twitter are the main official channels.

User adoption

We look at the following core metrics to evaluate the current state of DigiDaigaku’s user adoption: Unique address growth, social media, proportion of Blue-chip NFT owner.

• Unique address growth: In general, the unique addresses of DigiDaigaku are rising steadily. The initial drop of unique addresses is attributed to profit-taking behaviour of some NFT holders after the initial free mint. In terms of seniority, the majority holds the NFTs between 7–30 days, meaning that they are medium term holders instead of profit flippers.

Seniority distribution and unique addresses growth (As of Sep 3)

Source: Nansen.ai

Holding seniority distribution (As of Sep 3)

Source: NFTEYE

• Social media followings: DigiDaigaku is at its early development stage compared to existing Blue-Chip NFTs — Total followers and KOL followers are not substantial at this point. Most followers are Web 3 natives, with the Web 3 Follower rate of 41.67%, outpacing sector average of 35%. In addition, DigiDaigaku generates decent market buzz as the number of mentions outpaced other NFT collections (7502 vs 4130), and the NFT series is definitely one talk of the town.

Social media heapmap for DigiDaigaku NFT (As of Sep 7)

Source: DegenKnows

• Proportion of Blue-chip NFT owners: We discover that the number of blue-chip owners that hold DigiDaigaku is on the rise. Among the 759 DigiDaigaku NFT owners, 242 are identified as ‘Blue-chip NFT’ holders (31% of total).

Proportion of Blue-chip NFT holder (As of Sep 3)

Source: NFTEYE

Mutual NFT collections vs DigiDaigaku (As of Sep 3)

Source: DegenKnows

Trading and holding pattern

Examining the trading and holding pattern helps us to understand whether DigiDaigaku has a sustainable market demand. In this analysis, we will look at wash trading patterns, NFT listing, wallet age distribution and current holding cost.

• Wash trading pattern: We did not identify any obvious pattern for wash trading during the first two weeks of DigiDaigaku’s launch. Data extracted from DegenKnows indicates that the floor price and sales are increasing at a moderate pace in the beginning. It’s worth noting that DegenKnows does not make any annotations on wash trading pattern.

Individual transactions pattern of DigiDaigaku (As of Sep 7)Source: DegenKnows

• NFT listing: By looking at the current listing pattern, we do not identify strong selling pressure of DigiDaigaku NFTs that is priced near the floor. Data from Nansen.ai shows that 60% of the NFT listings are priced above 20 ETH, and there’s limited sales for listings priced below 15 ETH.

Current listings of DigiDaigaku NFTs (As of Sep 3)

Source: Nansen.ai

In addition, the proportion of listing DigiDaigaku NFTs hovers at 7%, meaning that holders do not intend to sell their NFTs in short term.

Listing ratio of DigiDaigaku NFTs (As of Sep 3)

Source: NFTEYE

• Wallet age distribution: In examining the wallets that hold DigiDaigaku NFTs, we can see that 80% of wallets have a minimum age of 1 year (i.e. Advanced and Experienced) category. This implies that the majority of DigiDaigaku NFTs are held by sophisticated NFT holders, instead of crypto newbies.

Wallet age distribution of DigiDaigaku NFTs (As of Sep 3)

Source: DegenKnows

• Current holding cost: From the DigiDaigaku NFT current holding price distribution, it shows that most holders have not realised profits and the holding cost of DigiDaigaku remains low. The majority of holders have a holding cost of DigiDaigaku NFT at 2.95 ETH.

DigiDaigaku NFT current holding price distribution (As of Sep 3)

Source: Dune Analytics

Potential red flag

Despite the growing demand for DigiDaigaku NFTs, we have identified a warning sign regarding potential wash trades on August 29.

As noted in the graph on Individual transactions (from DegenKnows) above, we noticed a sudden increase of transactions on August 29, leading to the surging NFT floor price and trading volume. However, we have not identified a corresponding increase in unique addresses and diamond hands (holders that have not sold or give away anything for his DigiDaigaku NFTs).

This may imply the surging NFT floor price can be pumped by market makers, whales or even the founding team. However, these activities were not identified as wash trades. Compared to initial launch on August 11 (Floor price: 1.83 ETH) and August 25 (Floor price: 5.23 ETH), there were significant decrease in unique addresses and diamond hands, meaning that some users took profits after their free mint.

Unique address and diamond hands stay steady despite a huge transaction spike on August 29. (As of Sep 3)

Source: DegenKnows

Conclusion

Based on our analysis, we believe DigiDaigaku has a decent potential to become the next Blue-Chip NFT.

• There’s a consistent increase of NFT holders being ‘Whales’ or ‘Blue-Chip NFT holders’, providing a solid foundation for the market demand that discourages short term ‘pump-and-dump’ activities.

• There’s no visible selling pressure of DigiDaigaku NFTs, as seen in the current NFT listing.

• DigiDaigaku gained widespread attention from the Web 3.0 community. There’s no visible ‘paid-followers’ and started to accumulate advocates of the NFT collection.

• The team has proven execution to market DigiDaigaku NFTs despite the current bear market, introducing ‘Free-to-own’ model that allows new NFT projects to follow.

• Proven and solid track record by Limit Break: The team encourages participants to become DigiDaigaku’s advocates, mitigating the risk of potential rug pulls.

About Everest Ventures Group

Everest Ventures Group (“EVG”) is a Web 3 focused venture studio with presence across five continents. Since 2018, it has incubated multiple technology infrastructures such as Kikitrade, Aspen Digital, Vibra Africa, LiveArtX, Cassava and BlockTempo to drive the mass adoption of digital assets. In addition, EVG is an early investor and advisor to 30+ blockchain projects globally, including renowned startups like Dapper Labs, Animoca Brands, Immutable, The Sandbox, Yuga Labs, Krake, Lukka, Upbit and more.