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The Art of Building an NFT Project.
How to launch and distribute NFTs in your project to ensure you are content with the community you build. Alongside providing utility and raising funds.
It’s been a while since I’ve had time to sit down and write something. During the bull market, everything is going up and people care a lot about buying the next thing whilst education is tossed aside. The bear market brings people down to reality and those remaining take their time to learn. Remember everyone is continuously learning and no one knows everything.
Since I founded Treeverse and Interleave, I postponed things I previously spent time on like trading and writing. But, I’m going back to my roots.
Loopify was created from wanting to educate people about the space early on. Education. I have been working on something related to this for a while and will announce it in the near future, it is connected to the free course I have been working on (it is not an NFT project).
The Art of Building an NFT Project
There is no one formula for building a successful NFT project. It is based on so many personal variables that you have to account for. But, I will lay out a framework that I think will give you a good starting point to hopefully build the next sustainable unicorn NFT business*.
*= in this post, it is not about infrastructure-related projects or art collections, but rather projects that utilise and build around nfts minted
Before even thinking about the NFT, you need to think about what part it plays in the bigger ecosystem you want to create. That NFT needs to make sense in the environment built.
For Yuga Labs, the BAYC NFTs are a membership pass to the Yacht Club which grants access to members-only benefits. The roadmap they work on is designed around a larger goal whilst the NFTs accrue value through limited access to things in that roadmap. So, their ecosystem is the Yacht Club.
For the ecosystem that you want to build: Is it a game? Is it an exclusive club? Is it a SaaS?
Purpose of the NFT
Identifying why you want to release an NFT will help you answer future questions you will come up against. And, be honest when thinking about this. Your NFTs will suffer if you add them for no reason.
Looking at the ecosystem you want to build: Where does that NFT fit into it? Do users need to own it to have exclusive access to a platform? Maybe it gives people additional benefits over a normal user inside of a game?
The purpose of the NFT inside of your ecosystem relates to the utility. But it’s a bit more than that. It is not as simple as giving more utility to an NFT to make it more valuable. In the scenario where you may need an NFT to play a game you are building — you are limiting millions or tens of millions of potential gamers from experiencing your product. This could be fine! There could be a reason why you want this. Again, it depends on the goals you want to achieve with your project.
But for someone who may not want that, you can change the utility of your NFT to have additional benefits instead of being the exclusive access key to your game.
It all comes down to this: The NFT plays a part in your ecosystem and the ecosystem built is not built around the NFTs, sometimes you have to sacrifice the utility for an NFT to benefit the project (which can actually lead to more value accrual in some cases).
After figuring out the broader ecosystem of your project, how NFTs fit into it and the utility they have… the next important thing is launch strategy. It’s where your initial community will form. Where your struggles and support will come from. Launch strategy is the distribution of your NFTs, but it also includes how you market.
There are ways to create more hype for a project that can make a collection sell out fast, with the downside of heavy sell pressure and fud long-term. As an example, whitelist grinding is one of them.
Whitelist grinding became popular in the bull market when everyone was making money minting a collection. Everything was going up, it was practically free money to win a whitelist and mint. So, if you saw a collection giving out whitelists, you would go for it (without caring about what the project is).
On the project side, the metrics looked great! Thousands of likes and retweets, tens if not hundreds of thousands of followers, super active discord, etc. So, Loop, what are you trying to say?
The people you attract are people who could care less about the project. It’s designed in a way where they can participate (grind on discord/engage on Twitter) to get a whitelist mint. If you launched and the floor price went down due to things you couldn’t control, they are the people that will turn on you and fud the project. All projects need holders who believe in them or it’s ultimately a hot potato game that will trend the NFTs to 0.
Ok, so my point is, marketing and distribution of whitelist grinding creates high demand for your project—but it will hurt you in the long term if you have a long roadmap ahead.
First come, first serve can work but it could be a gas war. Maybe you want to manually curate and whitelist individuals. It could be a refund-dutch auction mechanism.
Look at the downsides alongside the upside to choosing a specific launch method.
Having a minimum number of funds you need to raise is key to ensuring the NFT launch is all you need to rely on until your project can make revenue.
Your product is the key focus and the NFT ties in with that, to avoid traditional VC funding, NFT launches help you to raise and crowdfund projects.
Here is an extract from the free course I am working on, with a hypothetical example of structuring an NFT raise for a project:
You have an ecosystem and a vision for what you want to build at scale. You have a purpose for the NFT in that ecosystem alongside the utility it has. You have a launch strategy that will get you the funds you need.
I won’t actually go through this section because it’s the same as building a successful business. Not a successful Web3 business, but a normal business. You have the NFT aspects and now it’s about providing value in some way, whether entertainment from a game or usefulness of an analytics website.
This is important. If you don’t have a product, it will be hard to drive intrinsic value towards the NFT and make sustainable revenue.
Product is the most important thing.
Now I am going to use this framework with a real example. Our plots from the Treeverse collection did $3.3M in primary and over $55M+ in secondary volume.
Endless Clouds is a studio working on games that tie in NFTs to bring digital ownership to a generation of gamers who have only paid for access.
Purpose of the NFT
Players with Plot NFTs have the opportunity to place them inside of the game we create.
A plot can be redeemed for a land deed title. When a land deed is placed in Treeverse, every user on the server can see it on the open-world map. Holders can customise the interior and exterior of the plot. They can rent it out. And, there are small in-game bonuses for them. No other plots will be released and this is the only way to get this utility.
10,000 NFTs sold for 0.125 ETH each. 420 airdropped to Nftree holders (our genesis collection). First come, first serve.
Raised roughly $3.3M at the time of sale, this allowed us to expand from the initial product that we created and build something even bigger and better. We had a roadmap where if a % of the NFT mint sales sold (50%, 75%, 100%) we would expand the scope.
Endless Clouds is working on Treeverse as our first game. A mobile MMORPG. The vision is to create a phenomenal game experience that can compete with the likes of WoW and Runescape.
Items that users earn inside the game can be turned into NFTs. It’s optional so traditional gamers will have a smooth onboarding process without requiring a Crypto wallet.
As with all "framework" answers it is partially right and partially wrong. My goal as always with frameworks is not to convince you if they are "right" (no such thing), but to give you a tool that might be "useful"—Punk6529
Again: There is no one formula to succeed. Being in the NFT space this early, there is a beauty in exploring different ways to experiment with projects, try things out and innovate! However, I do believe these are a few fundamentals you always need to think about. It can be in a different order, or maybe even thought about later—but it’s important.
Purpose of the NFT
If you are reading this, I encourage you, if you have the passion—to build and create a project. Big or small.