In recent years, non-fungible tokens or NFTs have been hyped to the public due to its potential to earn fast money, with some earning as much as hundreds of thousands to millions of dollars. During these times, many companies have taken advantage of the positive NFT climate, and some have issued over 10,000 NFTs per collection. This contributed to the growing number of NFTs in existence, which totals to over 36 million, based on latest data from NonFungible.com.
But before that, it was technologically challenging to issue a high volume NFT collection as it would cause interruptions in the blockchain system. When CryptoKitties was launched back in 2017, it was so popular that the transaction volume exceeded the capacity of the Ethereum network, overloading the system and slowing down on-chain transactions at the time.
But we see the continuous efforts in improving blockchain technology to enable high volume NFT issuances. “The Merge” in the Ethereum blockchain will bring about major development in the industry by reducing blockchain’s world energy consumption by 99.95%.
The Ethereum Merge will switch the blockchain from the current proof of work (POW) scheme to a proof of stake (POS) mechanism. The current POW scheme is energy-consuming as miners around the world secure the network through mining or solving complex problems to complete and verify a block of transactions in the digital ledger. The reward for this is one crypto coin to the fastest miner who solved the problem, regardless of how many miners around the world did it and consumed computing powers for it.
The POS, on the other hand, is much more energy efficient as the blockchain network is secured by a validator. To become a validator, they must "stake" their current ethereum holdings, which is the act of having some of their ETH as deposits which can be given out to other validators if the computations they made were erroneous.
The Merge is important as this will make the Ethereum network more efficient, reduce its energy consumption and can lower transaction fees. This will open up a lot of opportunities for more and more companies to scale and launch high volume NFT projects. And some of the major companies have already been seizing opportunities from high volume NFTs for quite a while. As shown in this study, most of the top firms with the best selling NFTs in the world profited a lot from high volume NFT projects.
But how did they do it? Whether it is for more revenue streams or higher audience engagement, how can brands and companies succeed in issuing high volume NFT collections that comprise of 5,000 NFTs or more?
High volume NFT collections present a chance for brands to issue more affordable and accessible utility NFTs to the public that can potentially be resold over and over, and increase in price through the years. Utility NFTs are tokens with additional value such as utility, early or exclusive access to experiences, or other benefits.
Some companies that did this strategy have gained royalties from secondary sales of its holders. An example of this is Taco Bell issuing its NFTacos, which are $1 NFTs that are digital replicas of their tacos. When it launched, the NFTacos were sold in seconds and were reselling for thousands of dollars not long after.
Brands that have issued best selling NFTs also did this strategy. They either launched a very limited number of NFTs with sky high prices, or in most cases, issued affordable high volume NFTs which are then resold by holders and have increased in price over time. As prices of transactions decrease, as well as with the upcoming Ethereum Merge, brands are exploring cheaper NFTs and focusing on other additional value that attracts reselling from its followers, thus earning more from royalties over time.
To ensure resaleability of the tokens, brands must pack as much value as they can with their NFT issues. It can be a membership with future benefits, early access to limited offers and exclusive events, paired physical merchandise of the digital version, and so on. The more benefits and uses, the better. It is better to focus on offering the best quality NFTs you can for less – or even free, such as Pepsi's free Mic Drop NFT collection – which in turn raises its timelessness and demand among your audiences.
A famous example is Bored Ape Yacht Club's 10,000 NFT collection which sold for only 0.08 ETH during its launch – equivalent to $138 as of writing – but are now reselling for at least 72.69 ETH or more than a whopping $125,000. BAYC became popular due to its celebrity and wealthy buyers, offering its holders a membership club that will be entitled to future experiences and benefits including an upcoming cool metaverse project where the NFTs can be used as avatars.
Bored Ape's success also teaches us that utility NFT and social token launches must be backed by a solid genesis story – a story that people can hold dearly, energize them and make them feel things. By bringing outworldly experiences and futuristic styles and concepts to their NFTs, the company gives their NFT holders something to look forward to.
Another application of cheap NFTs can be various forms of transactional digital ownership that do not last forever and can be used one time. An example would be NFT tickets which are issued solely for a one-time event or experience.
As prices of blockchain transactions decrease it is more viable to consider an NFT strategy that focuses on cheaper NFT issuances, and secondary sales volumes and royalties. This opens up NFT projects to more people, widening audience reach, and potentially increasing the selling power through the years.
There is power in harnessing the talents and creativeness of the people. This is what builds the creator economy, which is leveraged by some companies launching their high volume NFTs. A gamer can design metaverse or in-game assets, and also own their digital assets. This model is a win-win set up for everyone: the company, creators, artists and their buyers and fans.
A company can partner with a community of artists and creators, empowering them and using their creative and artistic flair to come up with an NFT collection that is relevant to the company's audience. This can be applied in NFTs being used as in-game and metaverse wearables for avatars, metaverse assets and virtual land parcels, or simply digital assets sold in crypto and NFTs marketplaces. It can draw engagement not just from the buyers overjoyed that they can hold an in-game asset of their favorite game, but also from the community of artists that are proud to be a part of creating the project.
These are some ways that brands and companies can adopt to help with the success of their planned high volume NFT projects. Follow Gigster for more information as the Ethereum Merge continues and more brands experiment with NFT drops.