Four Categories of NFT Utility
With the Crypto markets collapsing, the NFT market is going through a transition. Projects that sold simple profile pictures (“PFPs”) to buyers without any actual real-life value or utility are being pummeled. The best NFT groups like Bored Ape, Doodles, and VeeFriends created communities and provided utility in multiple forms to their buyers. These types of projects have seen their prices take less of a hit, and they have all had the ability to launch secondary projects to bring in new revenue to fund new utility in a virtuous cycle.
I was at an event last week at the Atlanta Blockchain Center, and I struck up a conversation with a fashion designer who was beginning to explore web3. She asked me what types of utility the best projects were giving to their community. It was a great question, and I broke it down into four big categories. These categories can apply if the NFT project is made by an artist, a musician, an athlete, a social media creator, a brand, or a media company. Projects don’t need to hit all the categories, instead they should find the ones that are most authentic to their mission. However, if you want to see a project going all out in nearly every category, then definitely check out Gary Vaynerchuk’s VeeFriends. GaryVee really gets it! The different characters in his collection had specific utility attached to them that can be used with him. I’ll hit the high notes on all four NFT utility categories below.
First, NFT projects can offer their holders direct access to the creator. In the simplest form, this can be regular Zoom calls or Discord chats with the creator. Direct access can also mean in-person meet ups with the creator in small groups or even one-on-one. GaryVee crushed this category on VeeFriends. He had NFTs that allowed for FaceTime calls, dinner meetups, fishing days, workout sessions, and more. SportsIcon’s LionClub did a great job with this too. Their NFT holders were invited to Zoom calls with the SportsIcon team and legendary athletes including Floyd Mayweather, Baron Davis, Luis Figo, and more. For the fashion designer I met, I told her this could be virtual or in-person discussions with her holders where she would discuss her creative process and new collections.
The second category of NFT utility is access to products. The Bored Ape Yacht Club sells exclusive hoodies to their holders. They also gave their holders the chance to purchase land in their metaverse. Additionally, they gave their holders free NFTs in the form of an airdrop of mutant serum that was worth thousands of dollars. Holders of the Gift Goats in the VeeFriends collection get curated gift baskets from GaryVee on the regular. Shopify is working with their huge seller base to create NFT gated stores. In these, a creator could offer NFT holders discounts on products, and they could also give their NFT holders first shot at buying new merch. With my new fashion designer friend, this is an easy one to provide utility to her NFT community. She could give holders first crack at her new collection or give them discount codes. Easy stuff.
The third way I have seen NFT projects give value to their holder is through real world events. This could be parties or tickets to events. Doodles hosted an amazing activation at SXSW. Doodles owners checked in and saw their NFTs displayed on big screens as they navigated a funhouse. Several projects held big parties with major musical guests at NYC NFT last month. Artie had Wu Tang Clan for their community, and the Knights of Degen brought in Ja Rule. These were both free to NFT holders. GaryVee crushed this category too. All VeeFriends holders get passes to attend his VeeCon event annually. The Lion Club has regular raffles with their NFT community for tickets to sporting events like the Super Bowl and England soccer matches. You will also see music artists allowing their NFT holders first shot at tickets to concerts or giving them discounts on ticket prices. For my friend the fashion designer, I told her to consider fashion shows or collection launch parties that she could open to her NFT holders.
The final category of NFT utility is allowing holders to impact the creator’s work. This could be something as simple as a podcaster polling their NFT holders on what guests to have on their shows or what questions to ask guests. A podcaster or YouTuber could even allow an NFT holder to be a guest on their show. GaryVee did this too. We have seen athletes ask their NFT holders what color shoes they should wear in a game. A fighter could ask their NFT holders to weigh in on what their next walkout song should be. An author could allow a NFT holder to have their name worked into a story. If you want to see an extreme version of this, check out Fan Controlled Football. This is a new arena football league where NFT holders get to vote live which plays the offense runs. NFT holders also got to choose the team names, logos, jerseys, and even draft the players. Talk about ability to impact the creation! For the fashion designer I met, this could be polling her community on colors for her next collection or what types of items to include.
When designing an NFT project and community, the ways you can give value to your holders is limited only by your creativity. Think about what you can do for your community across these four dimensions and maybe you can even come up with some new categories on your own. When looking at NFTs to buy for your own portfolio, dig into what the creators are doing for you as a holder in this same way.
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