From what we have learned from the Non Fungible Token or NFT market so far,
it is one thing to have a quality NFT project
and it is totally another to launch it successfully. With 9 categories
and over 10,000 NFT collections listed on the leading marketplace
OpenSea,
NFT collections are plentiful. But what makes an NFT collection good?
In this guide, we will discuss all the factors
you need to consider when launching an NFT project.
What makes an NFT launch successful?
Well, some judge the launch of an NFT project
on its initial buzz and whether it manages to sell out in minutes.
A more intricate success metric focuses on the effectiveness
of the process involved.
For the latter, the main areas of concern are unexplainable fairness,
user experience, cost effectiveness and trustlessness.
Let's dove into what each of these mean.
If you ask any NFT collector
what they look forward to the most about a newly launched and promising project,
chances are it will be to acquire some of the rarest NFTs in the collection.
Note that when an NFT collection launches interested collectors can interact
with the project's smart contract in order to mint NFTs with varying attributes.
The rarer the attributes associated with an NFT,
the more value it fetches in the secondary market.
And so a majority participate in these launches with the hope
of minting NFTs with the highest rarity scores.
The popularity of NFT launches stems from the assumption
that the entire process relies on the random distribution of items.
In essence, the general belief is that luck, instead of a predetermined
requisite, plays an essential role when it comes to who ends up
with the rarest mints.
However, if history has taught us anything, it is that systems
such as this are constantly under threat of being exploited.
Hence, it is no surprise that some participants attempt
to improve their chances
of ending up with the most valuable NFT during the minting stage.
In most cases, these users
utilize mechanisms designed to exploit the launch for the most part.
This can be done by looking for ways to extract the metadata
of NFTs in the collection, using the metadata.
It becomes easier to decipher the frequency of traits in each rarity score.
With this information,
all that is left to do is to manipulate the smart contract of the NFT collection
such that only NFTs with high rarity scores are minted.
If this happens, the random distribution that was initially promised
is lost, leaving the average participants with the less valuable NFTS.
For instance, let us consider the launch of Lava Labs Meebits.
An attacker pulled the metadata from a distributed storage protocol
called the IPFS short for interplanetary file system and created a smart contract
that checks its ID before finalizing the minting process.
In the case where the ID of Meebit does not match a predetermined
rarity score, it automatically reverts the minting process.
As such, only the minting transactions for rare Meebit NFTs were finalized.
So if you're launching an NFT project, what can you do to avoid this?
The answer is relatively simple.
The launch model adopted should not favor those with high technical experience
or more familiar with the intricacies of blockchains and smart
contracts, thereby leaving everyday users at a disadvantage.
Another factor considered when assessing the success
of the launch of an NFT collection is user experience.
Knowing full well that blockchain and crypto are
generally perceived to be complex, it would behoove developers
to opt for minting processes that do not overcomplicate things.
More specifically, opting for simple models would level the playing field
for both the less technically inclined participants
and the blockchain experts.
It is worth mentioning that the cost of minting NFT
can be higher than the mint price, especially in cases
where the NFT projects utilizes a first come first serve model.
Naturally, the first come first serve model as witnessed
during the launch of the digital plot of Lands of OtherSide.
The NFT based Metaverse, created by Yuga Labs triggers a rise in gas fees.
Since this was a highly anticipated launch, a high
volume of transactions was submitted on the Ethereum blockchain,
making it difficult for the blockchain to scale properly.
As such, users had to pay more fees so that miners
would prioritize their transactions in the aftermath.
It turned out that participants paid over $176 million worth of Ethereum
as transaction fees alone.
One of the core goals of successful NFT projects is to build
strong communities around their collections.
Whatever your views of board a yacht club, one cannot deny
the strength of its community, which ranges from Bored Ape
themed restaurants to Ape holders donning merchandise representing the collection.
To achieve this, it is advisable to ensure that NFTs get to the hands of a diverse
group of users rather than concentrating on a particular demographic
or location.
In other words, the user should not be required to have to trust that
the operator or developer would employ fair procedures and mechanisms.
Hence, the use of blockchain.
How to launch an NFT collection successfully.
Having explored the factors considered when rating the success of an NFT launch,
it is time to highlight
some things you can do to optimize your upcoming NFT minting event.
But before going into that, let us first discuss the four main
phases of an NFT launch bidding the stage.
When the launch goes live and interested buyers are expected
to submit their bids to the smart contract or operator.
Clearing at this phase,
the Smart Contract analyzes the bids against the remaining supply of the NFT
to determine a fair clearing price, as well as the winning bids distribution.
Once the clearing phase has ended, it is time for winners to claim or receive
their freshly minted NFTs metadata reveal.
At the last stage, the operator or smart contract reveals attributes NFTs.
So the question is how do you optimize all of these processes?
The bidding and clearing phases.
First and foremost, it is crucial to decide whether a continuous
or sequential method for bidding and clearing is suitable for your launch.
In a continuous process, bidding and clearing occurs simultaneously here.
Each bid is matched instantly with the remaining supply of the NFT collection.
A prime example of the continuous model
is the first come, first served method mentioned earlier in this guide.
As stated earlier, this model puts a lot of pressure
on the underlying blockchain infrastructure.
It could also potentially cause a spike in transaction fees.
A preferable model utilizes a more sequential
method of implementing the bidding and clearing phases.
Unlike the continuous system, the sequential process ensures
that the bidding and clearing phases do not overlap.
In other words, the operator or smart contract
first collects all the bids for a specified duration
before attempting to match them against the remaining supply.
One of the perks of this approach
is that it allows the operator to determine the fair clearing price.
Also, it leaves no room for an unnecessary hike in transaction
fees, since users are not trying to beat the rush.
Lastly, it allows people from different time zones to participate
in the minting event as the collection of bids usually lasts for days.
Other decisions to make revolve around the trustless nature of the bidding process.
The goal is to ensure that most of the processes involved
are executed on the blockchain rather than in an off chain based setup
that requires users to trust the integrity of the developer.
The distribution phase in this phase, the major talking point
is the need to implement mechanisms that mint the tokens,
send them to the rightful owners and refund losing bidders.
The goal is to make each process as efficient
as possible to prevent gas auctions or cost inefficiency.
It is preferable to distribute NFT to winning bidders in batches
as opposed to settling
for an instant distribution approach that may force gas these to spike.
The distribution phase is critical as the potential of making a profit
in the secondary market may drive users to claim their NFTs at the same time,
thereby putting the entire network at risk of experience a gas fee hike.
One way of preventing this is to block users from claiming NFTs.
Instead, the operator will be responsible for sending out NFT
to winning bidders over time.
With this, users do not have to do as much to receive their tokens.
The only requirement is that they add a delivery fee
as part of the initial payment made for the NFT metadata to reveal phase.
The last stage involves the reveal of the attributes of the NFT.
To ensure that the entirety of the launch is not susceptible to exploitation,
the metadata reveal phase must be the last stage.
Remember that a leak of an NFT collection's metadata can give attackers
all the information they need to selectively mint the rarest NFTs.
Securing the metadata right
until minting is over is the best way of mitigating against such exploitations.
There are three options to consider when determining the time to reveal
the metadata of a newly launched NFT collection for collection reveal here.
The big reveal comes after all, NFTs might have been minted.
Although this is gas efficient, it might delay the metadata reveal,
particularly if the collection did not quickly sell out per NFT reveal.
The second option allows the metadata reveal to occur on a per NFT basis.
In other words, each user can decide to reveal the attributes of their NFTs
as soon as they mint them.
Batched reveal there is the option of utilizing
a batched system that allows a more flexible reveal approach.
With this, users either choose to open their NFTs after it has been minted
or wait for the metadata reveal date scheduled by the operator in this guide.
We have discussed some of the critical processes
involved in an NFT launch and how they can be optimized.
All in all, the core goal is to prevent exploitations,
preserve the fairness of the distribution, and reduce the costs of
minting NFTs.