- Various NFT drop styles exist, and they can have a great impact on how the NFTs sell.
- Dutch auctions are the most popular drop style, though others are gaining steam.
- Free mints have become particularly popular in recent months.
Blockchain networks servicing the NFT ecosystem with smart contracts are nothing but flexible. When an NFT project is at the end of the production pipeline, it then has to capture public attention. Picking the right delivery method — the NFT drop style — impacts that coveted traffic.
Some NFT drop styles are also considered to be fairer and more convenient for the end-user. However, each one has its own downsides and upsides. Let’s explore which one could fit your NFT vision.
The NFT Drop Styles
1. Dutch Auctions
Hailing from the 17th century at Holland’s large flower auctions, this is the most common NFT drop model. The project launches with a set mint price. That initial price is then periodically reduced, at a given timetable, until NFTs hit the floor price, and they are all sold out.
Interestingly, when interest is exceedingly high, it could happen that the price is never reduced. For instance, the growingly popular Azuki collection launched via Dutch auction at the beginning of 2022.
The collection sold out in less than half an hour without its initial price of Ξ1 going down. Since then, the average Azuki price floor has increased by 10x.
The point of Dutch auctions is to mediate demand, so that all prospective buyers have a chance to buy the NFT in a transparent manner.
However, the downside is that those with deeper pockets are in advantage as they can afford the initial price and scoop the offering.
For this reason, Yuga Labs, the creators of BAYC, its mutant derivatives, and Otherdeed, decided to scrap Dutch auctions because they are “actually bull****.”
2. First Come First Serve (FCFS)
These NFT drops are as popular as Dutch auctions. When the web3 team drops their NFT project for minting, anyone can acquire it if they are agile enough. However, that “anyone” part can be curtailed.
When people talk of FCFS, they primarily mean permissionless mints, as it happened when BAYC first launched. But, if there is an existing token ecosystem, then that token can be the mint barrier.
For example, when they launched, The Blitnauts NFTs could only be minted by existing Blitmap holders. The token barrier could also have been a regular utility token instead of other NFTs.
FCFS could also be issued via a raffle system. This usually involves one’s social media footprint. Those who associated with the NFT project in the early stage could get allowlist spots or premint links. And the more links (tickets) they have, the higher the chance they will be picked for a FCFS mint.
This May, Boki was the first big project to drop Boki NFTs with the raffle system, under FCFS.
Lastly, first come first serve mints could be sectioned into price tiers. The Hashmasks were minted this way as the middle ground between Dutch auctions and permissionless FCFS. While these types of NFT drops may seem the simplest and fairest, they tend to cause gas wars.
Gas wars happen when there is such a frenzy of traffic to be the first one, that this causes blockchain traffic overload. Which is typically Ethereum. In turn, gas fees skyrocket, with the potential for NFT shoppers to be left without their targets, but with gas fees for failed transactions.
This is why there is such a variety of approaches even within FCFS to mitigate demand, just as Dutch auctions aim to do.
3. Free Mints
After multiple instances of Ethereum’s gas wars, free mints came to the rescue. These NFT drops are free to mint, with the exception of the gas fee. Obviously, the web3 team would get much less income opting for this style.
However, because they can set royalties with each NFT sale, the free part can be mitigated. In fact, one of the most successful blue-chip projects of all time used free mints — CryptoPunks.
Likewise, the rising star Goblintown gained rapid market traction by employing the “1 free + gas mint per wallet” approach. Given the current rate of inflation, royalties instead of the initial mint price will likely become even more popular.
Also, free mint projects have more reasons to keep those royalties going by keeping the ecosystem going.
However, now that OpenSea offers feeless minting via Polygon, the novelty of free mints will not have as much momentum as it used to.
4. Open Editions
NFTs anchor their value based on their scarcity. The more numerous they are, the less value they have. After all, if we were to discover more mountains of gold to cost-effectively mine, the price of gold would plummet.
Open edition NFT mints have theoretically infinite supply. Meaning, the minting never ends. Nonetheless, because we are all constrained by the time-space continuum, there are only so many mints one could do.
For this reason, it is better to view open editions as unconstrained. One such NFT collection is Untitled Frontier with its Room of Infinite Paintings. When something is open-ended, work put into each NFT tends to be constrained as well.
It is no wonder then that this particular collection is abstract-themed, with an average floor price at Ξ0.02.
A variant of open editions is a timed one. It also has an open-ended supply, but the minting window is not perpetually open. Such NFT collections are usually centered around social activism or performance art, in order to raise funds in a short time.
State of Mind drop on Zora, a universal media registry protocol, is one of these open-ended but timed mints.
Interestingly, Zora has a different approach to digital scarcity, to begin with. Instead of making artificial scarcity, the Zora platform focuses on reselling the original NFT over and over again, with the proceeds going to the creator.
To encourage this approach that focuses on royalties, Zora has no fees for listing or selling NFTs.
5. Customized NFT Drops
If you’ve read this far, you may have noticed the pattern of trial-and-error with NFT drops.
Because this market is still in infancy, there is plenty of experimentation going on. One of the more successful ones is Nouns DAO’s. This NFT project generates one new NFT per day, indefinitely.
Pixelated and infinite, but with a Ξ130 floor price, who could have guessed? Nouns are still algorithmically generated, borrowing from a set of traits at disposal. Once the algo finishes its work, the new avatar is put for auction that is settled that day.
Although this style of auction has no supply limit, once per day is not that much. If the project becomes popular, even the infinite generation is not sufficient to mitigate demand. That’s why Nouns have such a high floor price.
Taking a hint from this approach, other NFT projects tweaked the timetable. For example, Wizards DAO upped the ante to three Wizard NFTs per day. But, they have also set the supply limit to 2,000 total. As they say, the sky’s the limit in customizing NFT drops.
Smart contract flexibility is such that even broadly labeled styles can turn into something else with a few tweaks. That is the ultimate lesson here. Don’t worry about falling into a style category, but make one of your own.
NFT Drop Styles Can Have a Huge Impact
As you can see, there are several different ways to release an NFT. Each has its own ramifications, and they can be quite pronounced. Different projects work with different drop styles to generate interest.
If you’re a collector, then you’ll want to take a look at what drop style is being used. This will alter your approach as well. Whatever the case, NFT collections will continue to experiment with how they are released.
Check out other tutorials!
Get to know more about NFT and tutorials at Omnimint tutorials. For more information on Omnimint, and details on how to join our community, please follow our Twitter, or subscribe to our Telegram channel for more updates and please feel free to submit your article.