1 – Identify your value
What should be considered when designing proprietary NFTs?
Below is a list to help you identify your value and choose which type of NFT and design to pursue.
Identify the use cases of NFTs
How do you plan to use NFTs?
Depending on the use case, there are different technologies, platforms and mechanisms for designing an NFT. The main use cases are:
Are you an entertainment, sports, cultural, or tourism company? Consider that NFTs can be used as admission tickets for events, community and cultural initiatives, or for selling experiences and overnight stays.
NFTs can be used to reward customer loyalty and to incentivize a certain behavior, according to best practices in nudging theories.
NFTs in recent years have also been used as “membership cards” of various organizations, which are thus able to provide digital security of voting and participation.
If your intent is to enter the metaverse as a brand, NFTs are the best tool to offer your services and products within virtual platforms.
Additional revenue streams
The smart contracts on which NFTs are based allow you to create new revenue streams through royalties on future sales of your creations. So keep in mind the possibility of creating collections of items and allowing resale of what you create.
NFTs have revolutionized the video game industry by allowing an independent secondary market and/or token-based reward mechanisms. If you wish to enter this world, consider the potential of implementing your own NFTs on major gaming platforms.
Customer relationship management
Tracking NFTs opens the door to better customer segmentation and more personalized customer engagement. New variables can now be used to understand customer habits and retention levels, such as: types of portfolio-owned NFTs, quantity, duration.
NFTs can be used as secured loans. Borrowers can offer NFTs as collateral, and lenders can choose which NFTs they are willing to accept before initializing a loan. The NFT is used as collateral and if the borrower defaults on his loan, the NFT is transferred to the lender.
The future of tokenized assets
Tokenization is a logical progression in the growth of securitization made possible by blockchain technology. Distributed ledgers enable unprecedented transparency, transactional efficiency and risk control. In addition, it can turn previously non-tradable asset classes liquid, significantly increasing financial involvement and information efficiency in these markets.
In the future, we expect to see increasingly innovative and value-creating applications of tokenization, especially with regard to assets previously unavailable or available only to a select group of investors.
Film rights or investments in natural resources, such as mineral rights, may be among them. Virtually any asset can be domiciled and its cash flows or future appreciation broken down in a fully automated, transparent, regulated, and essentially cost-free manner, thanks to the power of blockchain and tokenization.
2 – Tokenize your assets
What is asset tokenization on a blockchain?
Asset tokenization is an extended use case of blockchain technology beyond Bitcoin (BTC) that enables the buying, selling and exchanging of digital assets.
Asset tokenization is the process of issuing security tokens (a type of blockchain token) that represent real tradable digital assets through a security token offering (STO) process, through which investors can purchase payment, capital or utility tokens.
This method can transfer the economic value and ownership rights of real assets off the blockchain into blockchain-based tokens. In addition, asset tokenization can help alternative financing models overcome obstacles to infrastructure development, given the rapid transfer of infrastructure to smart systems and the desire to unlock efficient finance.
How does asset tokenization work?
If you want to know how to tokenize assets, the first thing to understand is the role of smart contracts in transforming real assets into digital assets. Digital tokens backed by underlying assets are controlled and executed using a smart contract. The terms of the agreement between the parties are embedded in lines of code already on the blockchain network, making the smart contract a self-enforcing, self-executing contract.
Once the terms of the contract are met, tokens can be delivered to investors directly through a smart contract, offering transparency, accuracy and efficiency to participants through the public availability of contract terms and historical data.
In technical terms, asset tokenization refers to the development of a computer code that highlights the essential elements of the asset and also provides some methods for the user to interact with the digital representation of the asset. This computer code is created in Solidity for the Ethereum blockchain. In general, the asset tokenization process can be divided into the following steps:
Choosing the asset representation model
The Ethereum community has developed several token standards to represent various types of assets. Adoption of distributed digital assets is made easier by the definition of these standards, which enable interoperability between different blockchain projects.
The unique characteristics of an asset can be represented by a set of established features, called standard tokens. The fundamental properties of the asset, such as whether or not it is fungible, must be evaluated before deciding which token standard to use.
But let’s go a little deeper and see what “token” means in our case. Of course, as with many other cryptocurrency-related terms, there is no single, agreed-upon definition.
Let’s take a look at three types of tokens that you may come across on a regular basis and break them down:
These are the most obvious ones. Just think of classic cryptocurrencies such as Bitcoin.
Currency tokens are built on independent blockchains. They are not asset-based, but their value is directly tied to the very mechanism that distributes them.
As the name implies, the purpose of currency tokens is to be traded, spent and received. Just like traditional currencies.
Utility tokens give you future access to a particular product or service, while the money paid to obtain them allows startups to raise enough capital to actually develop the product.
Utility tokens are not considered investments; however, they are often treated as such and purchased with the hope that their value will increase along with demand for the company’s product or service.
As an investment asset, a security token is a digital asset that represents ownership or other rights and transfers value from an asset or package of assets to a token.
In other words, security tokens are the digital form of traditional investments such as stocks, bonds or other securitized assets.
Before implementing the chosen token model to represent assets, several aspects need to be considered so that it is clear what data will be stored on-chain and off-chain.
For example, during the development of the specific code and token behavior, any legal or regulatory restrictions on data privacy, the degree of trust in the data, and scalability requirements must be considered.
Appropriate engineering is needed for tokenization of financial assets during issuance, liquidity management, etc. A term sheet document should contain details on token behavior, as regulators may require issuers to issue digital assets.
Review of technical and security aspects of code
It is essential to conduct a review of smart contracts using standardized methods or by requesting experienced third parties to evaluate and certify the IT code before it is put online.
After completing a security assessment, the code can be deployed on the blockchain, either public or private, depending on the use case and perimeter under consideration. Users should be able to transfer and store these tokens after the deployment of the computer code.
Token owners receive future dividends and interest from tokenized assets in the form of cryptocurrency in their wallets. In addition, issuers of digital tokens are also responsible for accounting and taxing these tokens, as well as preparing financial reports.
3 – Generate new revenue
As NFTs (Non-fungible Tokens) become more and more established in the market, many brands and individuals are eager to understand how to take advantage of this technology.
But what exactly does it take to create a successful long-term NFT project? This article will cover some of the tips to help you set yourself up for success.
Your NFT community comes first
Your community is what will ultimately determine the success of your NFT project. Whether you are an independent artist or a brand looking to experiment, your collectors should be the top priority.
Creating a strong community is easier said than done. Here are some NFT tips to get you started.
Start building a community now
Whether it’s growing your brand or interacting regularly with your prospects, start now. There will never be a perfect time to launch your community.
The more effort you put into brand building now, the better your chances of selling a successful NFT project and building a loyal long-term following. Invest time in where your audience spends time.
Tips for building NFT communities
Find out where quality investors spend their time and make an investment in their channels.
Connect with NFT buyers and cryptocurrency enthusiasts.
Buy and support the original, 1/1 NFT art.
Join Twitter spaces to share your idea
While Discord is one of the most popular platforms for those interested in cryptocurrency and NFT, Twitter, TikTok and Telegram can also be worthwhile.
Collaborate with trusted influencers and companies.
Many NFT projects fall into the trap of hiring ‘big name’ blockchain influencers, celebrities or social media personalities to promote their story.
Unfortunately, this does not always go according to plan. It is essential to partner with reputable cryptocurrency influencers and companies with a history of integrity and are not known to support scams.
Don’t let a “big name” damage your project’s reputation. Choose partners who believe in your project and NFTs.
Do your research and work only with people you trust.
Don’t wait until the week before your launch to glorify your launch: it is critical to start sharing your NFT collection as soon as possible. For this reason:
Create a social media campaign.
- Share the long-term vision
- Post teasers of your collection
- Participate in whitelist contests
- Create games that encourage participation.
Unless you are launching a stealth NFT collection where you are intentionally not marketing it, launching a new NFT collection should never be a surprise.
Give your NFTs a fair price
One of the most important parts of building a successful NFT project is setting the initial price correctly. If it is too high, you risk losing your initial momentum, not selling your collection, and losing the support of your audience.
In addition to setting a fair price, it is also important to set a fair royalty on all secondary NFT sales. If a high royalty is set, those who buy NFTs will not find it worthwhile to resell what they have purchased, and thus may deter them from buying.
NFT price suggestions
Here are some practical tips for setting an appropriate price on your NFT:
- It is important to talk to the community to understand what they think is a fair price.
- You need to take into account your vision and ability to provide long-term value.
- In general, 0.05 to 0.1 ETH is the range in which the most successful NFT projects set their initial price.
- It is important to remember that initial sales are not the only way to earn money from NFTs: secondary sales can drive long-term revenue through royalties.