Rewards and other incentives in NFT projects

We have already discussed the two possible ways of looking at an NFT in our previous article: Another bubble, or why a pixel can be more valuable than Pollock. The two ways are 1) as a piece of art and 2) as a physical manifestation of an investment asset. Since, we, or at least the majority of us here are not professional art-collectors and also the artistic value of any piece is highly subjective, we will rather focus on the more quantifiable part — the investment aspect.

Let’s begin with introducing a few basic definitions. First of, when we speak of an NFT’s investment side, we merely refer to the idea of purchasing an NFT with the ability to profit later in the form of higher price capitalization or any other related income. While the former is pretty straight forward, the latter can be also broken down into finer pieces. We shall look at all of these in more detail.

1. Capitalization gain

Just like with any physical property, if one buys an NFT at the price of $100, for instance, and is able to sell it later for $200, the profit accrues to $100 (see, those maths skills did pay off!). In reality, of course, there would be additional charges such as the marketplace’s processing fee, gas fee and potentially an income tax from your friendly neighborhood tax-man. We will not be focusing on these, except for mentioning that unlike many other blockchains, Theta currently provides rather low gas fees of only 0.3 Tfuel — yet another reason to get into it (Why Theta Network?). Nevertheless, let us assume frictionless transactions, making the profit from our example to be exactly $100. Sounds good? Sure! But now, we want to look at why this happens, as opposed to cutting the losses at $50.

• The blockchain itself is the most fundamental driver of the price. If there is a high demand for the blockchain of a particular NFT, chances are that the associated tokens, as well as the NFTs are going to do well. Obviously, if a blockchain and its tokens are constantly decreasing in value, this would directly affect the price of any NFT collection, regardless of the project itself. So, picking the right blockchain is as crucial as ever; another reason to learn about the blockchain.
• The project behind the NFT collection is the next thing one should pay attention to. If the project itself is heavily invested in future development, it aims to generate some value in the form of creating new opportunities, content and otherwise bringing more demand, the price of these NFTs is doomed to increase. That is why, it is a good starting point when considering an NFT project — to read its White Paper, learn the web-site and the roadmap and generally understand the ideas behind the project. Also, being an active member of the community usually gives you a good feel for the project. Generally speaking, if an NFT project declares that it would have any combination of: integrations, collaborations, commercial usage of their assets, marketing, etc, it would mean continuously increasing demand and thus growth of the price.

2. Just like a company share gives the owner some dividends (not necessary, but let’s assume so), it also provides additional benefits that are sometimes not so visible beneath the monetary surface.

• Direct dividend-like benefit is rather straightforward. If you possess such NFT, you, as the holder, would be eligible to receive some form of dividends. Let’s assume the project generates $1,000,000 and the ‘share-like’ NFT holders are said to receive 1%. This would mean that $1000 would be split amongst such holders proportionately to every eligible NFT from the collection. Obviously, if the number of such NFTs is vast, the actual monetary reward can be insignificant: for 10,000 NFTs this would result only in 10 cents per NFT. Of course, one should also take into account how much he/she paid for it in the first place. Overall, just like with company shares, one should look at EPS (Earning Per Share) ratio. Likewise, one can estimate the timeframe when such NFT would pay for itself (anything below 5 years is considered a great investment by the ‘wall-street guys’).
• Indirect benefits can manifest themselves in various forms. These can be: access to exclusive information, discounts on another NFT or non-NFT project, real-life perks (e.g. a Starbucks voucher worth $50 or an invitation to a private party in Miami), etc. Of course these can range as far as one’s imagination goes and are often hard to measure in monetary terms. Even in the Starbucks voucher example, if one does not like or does not have access to Starbucks, the voucher would be merely deemed as a ‘nice touch’ souvenir instead of having some intrinsic value. All-in-all, it is also a great idea to learn in depth about the project, read the White Paper alongside the roadmap to understand what you can expect from holding a particular NFT.
• an additional point can be the presence of airdrops and/or other chance-to-win events. While some consider those to be more of a marketing move to gain more attention from the public, in reality they are a cost to the NFT project owners. In fact, not only do they have a direct cost, but this cost is redistributed to the lucky NFT holders, thus creating more value for the latter.

Overall, these cover most of the possible basis of the value generating mechanisms for the NFT holders. Perhaps, one more honorable mention is a pledge to continue marketing after the collection sells out. This part can be just as important as the future plans of the project since it creates more notoriety of the project, thus bringing higher demand, thus pushing prices higher.

To generalize the idea, if one is looking at an NFT as a potential investment asset, they should start with research. Researching the blockchain and its prospects, the global idea and future path behind the project itself, and both direct and indirect reward for the holders of the project — these together form the perfect understanding of the big picture. If you find yourself loving every of these steps — the project is great for you. Otherwise, think twice before committing.

What about ThetaTeeth?

Cashback (Early bird bonus) and airdrops

Before ThetaTeeth minting went live, we announced a ‘cashback’ feature that rewards those who got into ThetaTeeth early on, but in order to benefit from it the most, the whole collection of ThetaTeeth has to be sold out. The idea behind it is not only to bring something new to the market, but to incentivise ThetaTeeth holders to spread the word and raise the awareness about ThetaTeeth. We’ve decided that 5% of a respective Tier sales volume will be distributed among the holders of all previous Tiers. The chart below shows the Tfuel distribution among all Tiers with over 16,000 Tfuel to go to Tier 1 holders and just under 6,000 Tfuel for Tier 4. It is equal to 44 Tfuel and 7 Tfuel for every Tier 1 and Tier 4 ThetaTooth, respectively.

Based on this chart one would ask what is the incentive to buy when Tier 5 comes as there is no cashback? As we said before in this article, the cashback feature has been designed to make first stage marketing driven by ThetaTeeth holders. What hasn’t been said yet will be revealed in the next section of this article.

Upon sell-out of every Tier there will be celebratory airdrops. They will consist of NFTs from different creators presented on OpenTheta and the amount and rarity will increase towards the higher Tiers. Only wallets participating in the respective Tier will take part in the airdrop. We still do have a few surprises in our pockets for when all ThetaTeeth find their forever homes, so, stay tuned!

The ultimate purpose of ThetaTeeth

ThetaTeeth is a collection of 3232 NFTs that consists of teeth. Teeth are quite symbolic as they used to be collected by ancient hunters and were also used as a token. Our vision for ThetaTeeth is quite similar. We want to make sure that ThetaTeeth holders hold them for good and only sell them in exchange for something more valuable than ThetaTeeth themselves. In order to stimulate this behavior ThetaTeeth needs to generate income and increase in value on the secondary market.

Exactly for this reason we are happy to announce that all ThetaTeeth holders will be eligible to receive 5% from sales of all our future projects. These will be distributed equally between 3232 ThetaTeeth. On top of that, the true collectors (let’s call them hunters!) will be rewarded for their passion. Those who collect 16 ThetaTeeth will be called Golden Hunters, will receive a recognising NFT and will be eligible for extra 0.5%. Those with 32 ThetaTeeth will be known as Diamond Hunters getting a recognising NFT and will be eligible for extra 1%. One can’t be a Golden Hunter and a Diamond hunter at the same time. And last, but not least, lucky owners of 20 custom ThetaTeeth will be eligible for another 0.5%. In total, we are giving 7% of sales of all our future projects permanently to ThetaTeeth holders. This also includes a share of any creator’s commission from secondary market sales (subject to technical availability). Share of creator’s commision will be accrued and distributed annually. A snapshot of wallets owning ThetaTeeth will be taken after sell-out of any future project and rewards will be distributed in Tfuel.

ThetaTeeth are available to purchase here. While getting ThetaTeeth, make sure you check out NFTs from our fellow creators. Most of them will be included in our future airdrops, including those that are sold out already!

We are very grateful to everybody who trusts in us and we want to take this opportunity and thank all ThetaTeeth owners for this! At the end of the day, this is a community driven project and the community is at the foundation of the brand that stands behind ThetaTeeth — SkeletonArts. SkeletonArts is the brand and the studio that will be developing all future projects. Stay tuned!

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