Have you always been curious how a certain NFT project (or collection) has become worth so much? How does value creation work and what are the characteristics of a project that you can pay attention to? These are the 5 steps that you must apply in your NFT project:
- Start with a creative idea
- Provide financial resources
- Work on passive income
- Use that money in a smart way
- Set up an ecosystem
Okay, we understand very well that the above steps sound easier than how this ultimately works. It is not without reason that there are numerous NFT projects that undoubtedly pursue the same kind of philosophy while ultimately failing. Let’s take a quick look at this to find out how to create the best value for your NFT Collection.
Start with a creative idea
Nowadays an NFT project comes in all shapes and sizes. From the start, however, you want to convince potential enthusiasts of the idea and the value that your project can have in the long run.
For example, think of the utilities that you link to the NFT or options to have clothes (sweaters are very popular) made with the NFT as an imprint. Real-life art is also a possibility to create an extra hype, which adds (can add) considerable value to an NFT project.
Provide financial resources
Every NFT project needs money because it is an industry where you need deep business. Before you can start creating value, it is important that the project has good funding. Some projects have one or two larger investors behind them, other projects are looking to find multiple investors. It is also possible that a creator himself has very deep pockets.
It is of course essential to get through that first phase, up to the minting phase. As soon as it is possible to mint, the project will automatically start generating income. The value a mint can yield can run into the millions, depending on the mint price and the number of NFTs.
Work on passive income
You can see an NFT Project as a real business (of course it is). In order to create value, money is needed, often a lot of money. In addition to the starting capital that is received at the mint, it can certainly pay off for many projects to set up a passive income. There are several ways to do this.
Create passive income through Royalties
As soon as you make an NFT, you can set so-called royalties. This is a resale percentage, which the creator will receive with every sale. Often this is somewhere between 2 and 10% of the total amount. Keep in mind that the higher the percentage, the less the seller is left with, which can cause the NFT to decline in popularity (because it makes less money for traders).
The income created with the royalties can either go to the creator, where it is also possible that the project has some sort of community treasure. This is a fund that benefits the community, such as marketing expenses. In the long run, this is often the best way for a project to create value and increase the popularity of the NFT.
Licensing deals also deliver a lot of value
A project that is very successful may choose to enter into a licensing deal. Project X, for example, can openly support project Y and collaborate in various ways. Project X can supply project Y with designers, take on marketing together, share customer files and so there are many other ways to create value for the new NFT project together. In principle, this is offset by a (passive) income (from project Y to project X).
Use that money wisely
Once a project succeeds in creating extra value or income in a passive way, it is of course essential to use this in a good way. In the NFT Gurus collection, you saw that they used money to advertise in Times Square in New York – a place that is often used by NFT projects.
Other ways to create value for NFT projects is e.g. hiring artists or influencers to promote your project. Sometimes you’ll even hear about NFTs being described in a book and it’s not uncommon (as a ‘real company’ would do) to hire people to make long-term deals with other companies in order to do the same in the long run. to create long-term value for the NFT.
Set up an ecosystem
An ecosystem is aimed at creating value for a certain NFT for the real long term. This goes beyond hiring influencers or running marketing in famous places in this world. Think, for example, of setting up your own token, which can be used for long-term trading. There are also projects that are working on TV series or setting up various sub-brands in order to increase the chance that they will still be around in a few years.