Four considerations when creating an NFT strategy
Thomas Lim is COO of Technicorum Holdings, a Web 3.0 Coach & Dean with Enjoys consulting and Master Trainer: PEARLS Coaching Framework.
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Web 3.0 is a largely mysterious domain for most organizations. It is developing rapidly, and there is already talk of Web 4.0 and even Web 5.0. The reality is that the world is still mainly in a Web 2.5 world – one that is trying to understand what Web 3.0 can offer and figure out a strategy to transition to this new realm dominated by one compelling feature – blockchain-based digital asset ownership.
Non-fungible tokens, or NFTs, have been making headlines, fueled by reports of people paying millions for incomprehensible pieces of digital art and creating hype and speculation for the wrong reasons. As the understanding of NFTs and what they can do becomes clearer, the use cases for these cryptographic tokens will become more apparent, whether they manifest in digital art, gaming tokens, collectibles, or even real-world assets. Organizations looking to integrate NFTs as part of their overall strategy may want to consider these aspects in planning and implementation.
What is the history of NFT?
What is it designed to be and what will it do? Instead of blindly jumping on the bandwagon and creating a whole collection of NFTs with no use value, pause and examine the reason you need or want NFTs in the first place. Define the strategic intent and then create a clear roadmap by laying out the use case and how it contributes to your vision.
For example, is the NFT designed to encourage creativity and engagement from fans? If so, how will you engage the community to participate? The communication and the long-term value of the NFT enterprise must be done correctly. The point of the design is to provide value to fans and loyal users and reward them for their contributions. There are many ways to do this: for example, do you set it up as a DAO (Decentralized Autonomous Organization) and give the voting power to the fans? Would you integrate NFT for use in adjacent platforms, such as a Web 3.0 gaming platform?
What is the strategy and engagement plan for community building?
The community is the driving force and lifeblood of NFTs. A healthy community is supported by high levels of participation through growing a following. It is almost akin to building a culture. A comprehensive social media calendar that supports the NFT strategy is essential – this could include running regular Twitter Space AMA (Ask Me Anything) sessions, setting up a Linktr.ee website, posting regular updates on Discord and engaging the right the influencers in your business area.
How will you identify your top 10 advocates and engage them to create buzz? Some components to note would be: Does the NFT project revolve around a narrative that the community can connect to? How will the technical aspects of NFT be done, and do you have the necessary capacities to carry out the project? The initial narrative is instrumental, and to achieve resonance you need an iterative process to determine both the characteristics of the NFT and also its utility.
Who will work through the technical aspects of the NFTs?
This set of activities requires specialist skills and experience. The first consideration would be the design of the NFTs as visual, audio and text elements to file format and file sizes. Then there is the choice of the blockchain NFT will be built on and the setup of the smart contracts. Some key questions to answer are:
- What are the properties and characteristics to be attached to the NFTs?
- What is the transaction cost (gas charges)?
- Which marketplace would you launch the NFT project on?
- Which components are in-chain or out-of-chain?
- Are there vesting periods?
Remember that NFT only indicates ownership of assets. Where it can be “spent” or traded is the key to an NFT’s success. The design should inform the number of NFTs to be minted and the number of rare versus common tokens. If the organization considers that it has only a limited number of viable NFTs that can be created and the attractiveness of these NFTs is very modest, the corresponding cost may not be economically viable to begin with. You should not underestimate the cost of pre-minting, pre-minting and post-mint expenses.
How will you price the NFTs and prepare for launch?
Pricing an NFT can be a difficult task, depending on the nature of the digital asset and its corresponding use case. It is important to work with an established marketplace and you should also compare the associated fees and commissions based on the services required. Some exchanges are configured to accept a wide range of tokens. Others are niche exchanges or closed exchanges that only transact with their proprietary tokens. Depending on the industry, segment or community you are in, choosing a single marketplace or the option of different marketplaces can sometimes be confusing.
Other relevant considerations should include the security practices and level of support for new NFT projects. After minting NFTs, the follow-up, post-mint activities typically include a platform disclosure, private whitelisting, release of NFT teasers, and actual execution of the private sale and the public sale. Marketing the NFT minting event through social media live streaming and leveraging influencers and ambassadors in community-based networks should be part of any NFT PR and influencer marketing strategy.
Web 3.0 technologies are evolving. Until now, creating an NFT wallet and linking it to a crypto wallet has contributed to the steep learning curve and adoption. Marketplace support and use of technologies that simplify the process for your community and assistance with the rollout of the roadmap are important partnership considerations. Beyond minting and issuing NFTs, you need a way to maintain value and interest in your NFTs. Maintaining the community is an ongoing job, and you’d be wise to keep up with community engagement through forums and regular updates. Launching an NFT is just the beginning – having a robust post-NFT roadmap is key to its continued success.
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