By far the loudest and most controversial subject in the NFT space right now is Pixelmon. Pixelmon is a 10k collection that minted for THREE ETHEREUM each, generating 70 MILLION DOLLARS of revenue for founders. Yesterday they had their reveal. To call it an unmitigated disaster would be an understatement. The art is literal comedy. The models were provenly stolen from Unity 3D packs. And the floor quickly dropped from 1.3 ETH to .3 ETH.
I invested early in this project. I bought 2 Pixelmon on the secondary because I’m extremely bullish on blockchain gaming. When it comes to gaming projects I’m a little looser with my investment rules. The value for the 2 I bought did not hold up. I betrayed my investment discipline and came out a big loser. I don’t want to just talk about the projects I make money in, I also want to be transparent to you when I make foolish moves and share my lessons. Pixelmon was the biggest investment mistake of my career and hopefully some of the lessons I learned will be of value to you the reader.
Broken Rules
If you’ve read my previous articles on my investment rules I made it very clear how I make my decisions. When I made my decision to invest in Pixelmon I did not follow these rules. I betrayed them. First, I betrayed my roadmap rules. Pixelmon had a long list of roadmap items, with absolutely no reputation, doxxed team, or proof at all that they’d be able to execute on a AAA game. In my rules article I say watch out for roadmaps that have unrealistic expectations. To expect an NFT project with 0 game development experience to build a AAA videogame is unrealistic. I fell for these promises. I was blinded by the promise of a true Pokemon NFT experience. Emotions took over. Lesson learned: Do not invest in projects with unrealistic roadmaps.
Let’s also talk about the mint. NO project needs 70 million dollars before any product is released. Setting a dutch auction this high is a major red flag. Especially in a space where rug pulls and scams are numerous, every tiny red flag like this should be taken into account. Every red flag should be dissected and considered. I didn’t consider this for a second. I convinced myself that 70 million would only give them more resources to make a better experience. Build product first then raise money. Lesson learned: Unreasonably high mint prices is a major red flag.
The founding team here was a major red flag I ignored. Completely undoxxed and no developers listed. Major AAA games like Call of Duty and Elden Ring take years to make with teams of hundreds of experienced developers. This project promised a AAA game with absolutely no development team listed. Depending on the project, there are different requirements for the type of team behind it. If it’s a pure PFP project I want a doxxed artist. If it’s a cheap Pokemon ripoff, I want a development team listed. When investing in a project with an undoxxed team ask yourself this, why wouldn’t this team doxx themself? What would I need to know about this team in order for the project to be a success? Lesson learned: Think about what kind of team is necessary for a successful project and validate the project has them.
Let’s also talk about investment time horizon. In the NFT space projects come and go every day. 1 day in NFT’s is about a month in stocks. If you are looking to participate in high quality projects while also making a profit, you have to consider time horizon. Developing AAA games takes years. There was a good chance I wouldn’t make money on this project for multiple years, which is basically decades in real world time. Lesson Learned: Invest in projects with shorter more realistic time horizons.
Lastly let’s talk about hype and FOMO. This project exploded. The attention from the dutch auction was massive. Everyone in the NFT space was talking about this game the day they minted. The goal for any investor is to remove emotion from the equation. On mint day a lot of investors including myself let emotion get in the way. I FOMO’d in. I built out a list of rules for myself in order to make my investing as objective as possible and I failed when it came to this project. I lost my discipline and because of that I lost cold hard ETH. Mistakes happen but this is yet another reminder next time you feel emotion overtaking you before an investment put down your ledger and go for a walk. Lesson Learned: Constantly strive to remove emotion from the equation.
As you can see there were a lot of lessons learned here. This kind of list is not only important with failures, but also successes. In the future I plan on creating this kind of breakdown with my investment successes as well. I highly encourage you to make your own lists of lessons learned when you make investments of any sort. I keep an investment notebook that I maintain for stocks, options, crypto, and NFT’s. Highly encouraged as you can only get value out of this type of habit.
If you found this article informative and would like more research in your inbox, feel free to subscribe to my absolutely free newsletter. Also engage me on Twitter if you have any feedback, would love to hear from the community.