Introduction

In this article, we will explore the fundamental aspects of NFT collections, the challenges encountered by their creators, and potential solutions to these challenges. The focus will be on examining the issues that can arise during the creation, promotion, and management of NFT collections, as well as strategies to maximize their market potential.

Art

During the creation of images for an NFT collection, numerous problems can arise. For instance, artists working on NFT image creation have been caught using pre-existing material from the internet or engaging in partial replication of existing collections.

1. The use of pre-existing images or icons. Some artists may utilize ready-made images, icons, or elements found on the internet in their NFT collections. However, this can infringe upon copyright laws and lead to accusations of plagiarism or unauthorized use of materials.

1. Partial replication of collections. In certain cases, creators of NFT collections may attempt to copy or imitate elements, designs, or concepts from existing successful collections. This could involve replicating the style, color palette, or core elements, which can result in allegations of lack of originality or idea theft.

1. Violation of copyright. Creators of NFT collections may employ images or materials belonging to other artists or organizations without permission or proper licensing. This encompasses the use of photographs, illustrations, or other artworks, constituting copyright infringement and potentially leading to legal consequences.

The problem

Creating high-quality art that simultaneously serves as the face of the collection's brand, is recognizable, visually appealing, and suitable for partnerships can be extremely challenging. It requires the art to be unique and of exceptional quality.

For example, these are 2 collections from the same team (Azuki), the art on the left is the OG collection, the art on the right is the Gen2 Elementals collection.

Successful examples

1. BAYC is a good hit with the narrative, an ape movement and the association of the crypto community with a pack of wild monkeys who are bored with the world.

1. Pudgy Penguins is an NFT collection that has a minimalist and sweet style with the theme of a flock of penguins living at the North Pole.

1. Mad Lads is an NFT collection with an anime-inspired noir twist.

1. Doodles is a collection with artwork by Burnt Toast in a very simple but very striking and memorable style.

1. DeGods is the first NFT collection in the ecosystem and revitalized the market upon its launch due to the high quality of its artwork.

1. y00ts is the second collection by De Labs studio featuring highly qualitative, original, and intricately detailed artwork with attention to every little aspect.

Utility

Currently, the use of NFTs is primarily limited to a few established methods, namely:

1. Exclusive giveaways and events. New collections form partnerships and collaborations with successful projects to attract user attention. As a result, whitelist giveaways are organized among collection holders. Additionally, considering that NFT holders come from various parts of the world, they arrange events and meet-ups where they can connect with each other and enjoy their time together.

1. Merchandise. Many collections have released exclusive merchandise for NFT holders and offer free worldwide shipping.

1. NFT staking. Different projects offer varying staking rewards, such as earning ETH/SOL (depending on the blockchain the collection operates on) or receiving the project's native token.

1. Access to exclusive communities. Upon purchasing an NFT, users can join the project's Discord server, verify their wallet for ownership of the collection's NFT, and gain a role granting access to private channels reserved for holders.

What is the purpose of NFT staking?

NFT staking helps reduce the number of NFTs in active circulation and decreases the supply available for sale on marketplaces. This reduction in supply, combined with sustained demand, can lead to price appreciation.

The problem

The main issue lies in the fact that NFTs themselves do not inherently provide benefits, bonuses, or privileges. You only receive these rewards for owning the NFT and refraining from selling it.

Therefore, the goal of collections is to retain the user's attention for as long as possible, ensuring that the community, actions, and other benefits they receive are worth the money spent on NFTs.

Successful examples

Yuga Labs initially hinted at the release of the latest Bored Ape Yacht Club (BAYC) merchandise on March 25th 2022 through their Instagram page. The official BAYC Twitter account later confirmed the upcoming sale, emphasizing that only holders would have the opportunity to purchase the merch using APEcoin, the project's native token.

This announcement showcased BAYC's unique approach. While some NFT projects accept Ethereum (ETH) or even USD for their merchandise, none have made their own ecosystem token the exclusive payment option. This decision sets BAYC apart, highlighting its influential status within the NFT community. However, it seems that introducing APEcoin payments also introduced some complexities to the merch drop.

Airdrop Bored Ape Kennel Club each cholera original collection in June 2021.

Airdrop of APE tokens in March 2022 for NFT holders from the BAYC and MAYC collections.

The tokens went to the holders of the BAYC and MAYC NFT collections. Owners of copies of the first collection received 10,094 APEs or about $80,000 each, owners of the second collection received 2,042 APEs or about $16,400.

At NFT conferences such as NFT NYC or NFT Paris, successful creators of major collections serve as speakers. This provides NFT holders with the opportunity to access a private lounge, where they can personally engage with developers and enjoy a pleasant time.

Community

Upon purchasing an NFT, users can join the project's Discord server, verify their wallet for ownership of the collection's NFT, and gain a role granting access to private channels reserved for holders. A closed community creates a network for networking and coworking, as the holders can be people from completely different fields of employment who can help each other to some extent, communicate, launch projects together, or simply spend time together. This is a great way to find like-minded individuals with whom you can continue your journey in the world of web3.

Problem

The main problem may be that the project team doesn't pay enough attention to and doesn't actively engage with the community. They believe that people will organize themselves, but the project team is the main driving force behind the community.

Successful examples:

1. BAYC is the most famous NFT community.

1. Cryptopunks are the most exclusive community in terms of entry price.

1. Underground is a highly exclusive and unique community that is very difficult to enter. It consists of top representatives, analysts, and traders in the NFT market.

1. Memeland is a leader in the "meme" collection space with a highly active, dedicated, and fun-loving audience.

1. DeGods / y00ts represent the Solana NFT ecosystem and have migrated to Ethereum and Polygon, respectively. They are leaders in how they interact with their audience, develop their community, and support projects of their participants.

Revenue

In most cases, NFT projects generate revenue through two main avenues:

1. One-time revenue. During the collection launch (minting), the project gathers a certain amount of funds that are subsequently used to evenly distribute payments for team work, marketing, and development.

1. Ongoing revenue. The majority of NFT collections receive a predetermined percentage (royalty) from each NFT sale on the secondary market. This provides a continuous stream of income for the project.

Additionally, NFT projects may explore other revenue-generating opportunities, such as collaborations, partnerships, sponsorships, or licensing their intellectual property. These additional avenues can contribute to the overall financial sustainability of the project.

The problem

The main challenge arises when a project fails to establish itself among the top collections, resulting in insufficient royalty income to sustain the project, compensate the team's efforts, and further develop the envisioned ideas.

As a result, many projects, without devising an original approach to refine their business structure, simply launch a new Gen 2 collection and gather funds through minting. Alternatively, they introduce a token where a portion of the total supply is allocated to the team and project development. This allows them to secure additional resources to support their endeavors.

It is also worth noting the importance of promoting your brand in web2 since the potential audience that can be interested in your project is hundreds of times larger than the web3 audience. This presents excellent prospects for developing your business structure.

Successful examples

Pudgy Penguins

On May 18, the Pudgy Penguins NFT Twitter account released a thrilling video revealing the introduction of Pudgy Penguin merchandise. The Pudgy Penguins made their debut on Amazon and within 48 hours, they sold over 20,000 figurines, generating an impressive $500,000 in sales for their "Phygital" goods. Holders of Pudgy Penguin NFTs received royalties every time someone purchased a toy associated with their NFT.

This achievement marked a significant milestone as the first-ever mass-market product line, licensed by the community, from a Web3 brand. It showcases the collaborative and innovative spirit of the Web3 community.

DeGods

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DeGods, a Solana-based NFT project, made a significant acquisition in the world of basketball. They purchased a basketball team within Ice Cube's BIG3 association for $625,000. The purchase was made by the DeGods DAO, which acquired 25 'fire-level' NFTs representing ownership stakes in a team called Killer 3s.

The DeGods DAO's acquisition specifically involved purchasing all 25 of the highly sought-after 'fire-level' NFT ownership stakes in the Killer 3s team. Each NFT was priced at $25,000, resulting in a total transaction value of approximately $625,000.

Conclusion

In reality, the NFT market is thriving, and the community enthusiastically supports worthy projects when the team diligently and meticulously approaches every aspect, from the artwork and the establishment of multiple revenue streams for natural and seamless project development.

Furthermore, it has become relatively easy to distinguish a dubious project from a worthy one. If the project team doesn't put effort into creating high-quality artwork and their roadmap consists of typical Staking, Token, Merch, etc., then it is likely that the team aims to raise funds and follow a proven script to launch a token, Gen2 collection, ultimately dooming the collection to a slow death.

Therefore, pay attention to the details because it is precisely based on how much attention the project team devotes to the little things that we can make conclusions about the project's prospects.