Towards the end of last year, Collins’ Dictionary announced that their word of the year for 2021 would be, NFT. Deservedly so, as the NFT industry had been booming these past few years, drawing in billions of dollars (in the form of cryptocurrency) and taking digital art to the next level.
But the definition of NFTs provided by Collins’ Dictionary did not clear things up for the general public. Instead, it raised further questions as to whether NFTs are legitimate, are they really worth their hefty price tag, and is this all one huge bubble bound to pop (like the Dutch Tulip Mania)?
Amidst the noise, stands out a few noteworthy NFT projects which have risen to the top. One glance and they seem like just another collection of art on the blockchain; some can argue they’re poorly drawn!
However under the surface, lies a solid and wide moat that backs these pieces of digital art. They’re not just art anymore, these projects have built a brand. And this, is what we’ll be talking about in today’s article.
Starting as an innocent movement to facilitate arts patronage with the power of the blockchain, NFTs have unfortunately turned into something more sinister. Today, the term has a negative connotation of being a scam or Ponzi scheme. And these people aren’t entirely wrong. In fact, co-founder of Ethereum Vitalik once notably said:
"Crypto has a huge NFT problem."
Let’s talk more about this NFT problem; and how an NFT brand strikes differently.
There’s no denying the immense profit potential when it comes to creating and selling an NFT collection. If one makes a very typical collection with 10,000 NFT PFPs, priced at a relatively low mint price of 0.01 ETH each, the founders of the project walk away with a grand total of 300K if the mint sells out. Of course, having such a hyped mint is improbable and unrealistic for the average Joe. But for the excellent marketer, it’s an easy way to make amass a quick fortune. Almost too easy, it seems.
In the current state of the NFT market, most collections are driven by hype. FOMO, or the fear of missing out, kicks in, and thousands of inexperienced players dump in that 0.01 ETH, with the hope their NFT becomes the next big thing. And herein lies the problem.
💡 A Brand is not built overnight!!
It is much more likely that the marketer with 100K followers, most of them bots, will delete their account entirely and flee with the mint funds.
A great example would be the Frosties NFT rug pull, the founders running away with over $1.3 million in mint funds. Luckily, US authorities have recently caught up to two Americans, allegedly behind the scam.
But in most situations, these scammers escape scot-free. Whether it’s the founders being hard to track down, or more likely the project flying under the radar of authorities; once rugged, funds are almost always unrecoverable.
“Faked utility” sounds like a small crime to commit. In reality, it is the silent killer of NFT projects... probably the main reason why NFTs are a huge problem. It would be naïve to think that everyone can be a patron of the arts. And we shouldn’t criticize those who don’t appreciate the arts; which is why most novel NFT projects have what we call, utility.
Utility is the use case in owning an NFT. Some examples of utility in NFTs would be fractional ownership of a property IRL, lifetime VIP access to luxury events, or perhaps, even a source of passive income!
However, too many NFT projects are throwing around the term “utility” way too lightly. This creates what I call “faked utility”, which the inexperienced person would not be able to differentiate from real use.
One most common fake utility is “staking”, or locking up your NFT in a protocol to earn passive income. This passive income usually comes in the form of the NFT project’s native token. The project then prices their token at a high price, concluding that you would “earn back” your money in less than a week. See the problem here?
The creation of staking to earn a native token IS utility. But just getting a token without utility, simply means that the whole staking process has NO use.
💡 To establish a powerful brand, EVERY UTILITY must have value.
In most cases, the price of the native token tanks spectacularly right after launch because most people cash out.
Looking at the bigger picture, faked utility is even worse than blatant moneygrabs. By failing to deliver, these faked utility NFT projects just prolong the bitter aftertaste of failure.
What I’ve mentioned above paints a rather negative picture of NFTs as a whole. So here at NFT Paris, why do we still firmly believe in NFTs? The answer is simple: NFT Brands exist. And they fit the vision of the ideal NFT project perfectly.
Next, we’ll be discussing the factors that build a brand.
A brand is more than its product. In the physical world, making a name for your company is all about gaining the trust of your consumers. In the world of web3, things aren’t that different. While the current NFT space can be a mess, what’s stopping NFT projects from becoming established brands?
Here are some traits of a “Brand-worthy” project to look out for.
If you’ve ever watched ABC’s Shark Tank (a reality TV show where budding entrepreneurs pitch business ideas to investors), you should know that one key criterion for funding a startup is if its founder is 100% dedicated to the business. There’s really no halfsies to entrepreneurship.
Likewise, we should expect the same from NFT projects.
A dedicated core team means active participation in social groups (such as Discord & Telegram), and not just overreliance on paid moderators. Reaching out to the public and collaborating with other servers through social media platforms (most likely Twitter) is a good sign of the team’s dedication.
💡 While we cannot expect the team to be online 24/7, clear communication with community members is key.
I simply cannot stress this enough. Too many project devs have been either too quiet, or too spammy. Being focused on solving internal problems and having periodic check-ins with the community is my idea of dedication.
What is a project, without its community?
I think it goes without saying that a strong community is one of the “must-haves” for brand building. A healthy base goes a long way, especially when the going gets tough.
In times of crisis, would the community of FOMO turn to FUD? Or would it stand strong because of trust in the core team and each other, to HODL NFTs through the dark days? It is these moments that truly make or break the NFT project in its path to building a brand. Most other things, are secondary.
An overlooked part of community-building happens at its early stages. “Early supporters” of an NFT project are often under-credited. These are the people who’ve found you early, would promote the project 24/7, and HODL with the community down to the grave.
💡 Getting those “first supporters” is extremely crucial to building a strong community. They are the pillars of social support.
NFTs are built on the blockchain, so they should directly benefit the web3 space. After all, what does it say about a project when NFTs are used to fund activities outside the blockchain, behind closed doors?
💡 We look out for NFTs that benefit the space. Not suck money out of it.
To build a successful NFT brand, contributions to the industry are key. This not only helps establish project recognition by other NFT goers, but also opens up new opportunities for partnerships and further brand establishment.
A product NOT built for web3 is one that channels funds outside the NFT market. Such as investing in real estate instead of metaverse land. If even NFT projects don’t support NFT innovations, who would?
This is yet another obligation of the core team. As I have mentioned earlier, even a collection with 10K NFTs minted at 0.01ETH each gives the devs over $300K initial funds. Are they completely pocketing this amount?
I find it absolutely absurd that some NFT projects pocket majority of the mint funds, and leave a little for “community giveaways”, etc. This is not by any means giving back to the community... it’s a sign of an incoming rugpull.
Instead, teams that dedicate most of the funds back to building the project spell potential.
💡 In a way, building, giving back, and reinvesting shows that the devs are confident in their project.
They reinvest into their own NFTs, giving off the “We’re in it for the long run” vibes. In turn, the community usually takes this as strong leadership, drawing even more investors into the project.
Even the most legendary teams and communities need that spark that ignites the flame; or the element of luck.
Whether it’s a flood of Ether whales sweeping the floor, correct timing of mint date with a pump in the general crypto market, or an influencer absolutely “buying” your project’s idea, this luck is, fortunately or unfortunately, vital.
💡 But as Matt Damon said in an advertisement for Crypto.com, “Fortune favors the brave.”
If a community relentlessly strives to further build, develop, and innovate for the NFT project, establishing a brand is within an arm’s reach.
Now that we’ve defined how an NFT project can build its brand, we face a more fundamental question. Building a brand takes decades; and a ton of resources. Is it even feasible for digital art collections to go through this process? Well, let’s take a look at 3 different NFT projects which have made it as a brand, in their own unique way.
An unlikely trio, yet one of the best encompassments of what it means to build an NFT brand. Here’s a quick case study on how BAYC, Mfers, & PROOF acquired their “brand” status.
Bored Ape Yacht Club (BAYC) is the most successful NFT brand to date. With many celebrities and personalities apeing into BAYC, a trading volume of well over 1 billion dollars, and what most people think of when the term “NFT” is brought up; it’s no question that BAYC has built a brand out of NFTs.
Believe it or not, the original BAYC collection did not boom in floor price as one would imagine. In fact, it took several days to sell out... perhaps because of a lack of “utility”, as one would call it. So, what made BAYC what it is today?
After doing some digging into the history of the project, I’d say a dedicated core team and strong community was the two factors bringing them to the position they’re in today.
The BAYC team set a roadmap - which they fulfilled down to the very last detail. While a lot of these goals were more on the “creative” side and did not exactly benefit holders financially, it goes to show that the devs were hard at work to deliver on their promise.
Another aspect of BAYC’s subsequent bullrun would be the community. In a collection with 10K NFTs, getting “paperhanded” can and should be expected. With a roadmap without much promise, what made BAYC holders continue believing in its future? Nothing but apeish-ness, I guess.
Mfers is what I like to call a degen project. A 50-50 play, depending on external factors like the NFT market sentiment and what vibes the project gives off to NFT’ers. For Mfers, the gamble really paid off.
Mfers is a collection of “stickman-style” NFTs, with no utility, no roadmap, and no promises. Even Sartoshi (founder of Mfers) emphasized that Mfers’ growth was all organic... there’s not much official information about the project.
Whilst it is a degen project, what turned Mfers into a brand? I’d say two things; building a collection for web3, and CC0.
First, Mfers is an NFT collection suited to web3. Unlike other projects which focus on raising funds to create a metaverse or embark on some other huge project, Mfers goes a different route. They’re letting the community decide where to go next, the future is decided by the holders.
Another defining aspect of Mfers is its CC0 license. CC0, or creative commons zero, is a license where the artist gives up their IP rights, putting the artwork in the public domain. This allows Mfers to do anything they want with their Mfers (without legal ramifications), which also means more Mfers derivatives, and further extensions to the Mfers ecosystem.
The idea of making everything not “set in stone” allows Mfers to define their own project. With the freedom of choice, comes more flow of ideas, bringing more innovation to the already strong Mfers community. I guess we can say Mfers is a community-centric brand.
Holders of PROOF Collective NFTs gain access to a private Discord server, exclusive events, and coveted collaborations in the space. Founded by an entrepreneur in the web3 arena Kevin Rose, and having a community with blue-chip NFTs like Bored Apes and CryptoPunks, PROOF Collective gives off “whale” vibes.
In my opinion, PROOF gives back to the community a ton. Kevin Rose hosts the PROOF podcast multiple times a week, inviting guest speakers to share insights with those who tuned in. This is free, by the way. Through such podcasts, more NFT-goers can get to learn about PROOF and appreciate its contributions to the space.
Most recently, PROOF collective launched their secondary collection, Moonbirds. Primed to give some benefits that Genesis holders have currently, Moonbirds is living PROOF (pun intended) of PROOF’s success in building their brand.
In less than a week, Moonbirds has gone from a mint price of 2.5 Ether, all the way up to over 40ETH, a staggering statistic indeed! Do keep in mind that every PROOF Collective NFT holder was airdropped 2 free Moonbirds; a free 80 ETH is not too shabby.
As such, it’s safe to say that PROOF has established its brand in the NFT space. With Moonbirds as a mint to remember, we can say with gusto that PROOF has a bright future ahead!
As it stands, I find it imperative that we change the current narrative of “NFT is a scam”, to “NFT is a brand”.
While it may be impossible to eliminate moneygrabs, rugpulls, and faked utility in the NFT space, we must take it upon the founders and community of genuine projects to build. Yes, building and giving back to the NFT’ers, putting in value rather than sucking money from the space.
If more NFT projects take after the five features of NFT brands I’ve listed above, we may just see more of the BAYCs, the Mfers, and the PROOFs.
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