What is #FreeMint and How Can it Be Good for NFT Producers?
FreeMinting means allowing users to generate NFTs for free. That sounds great for the users. But how can it be a viable business model for NFT developers?
There is a practice in the NFT community that I learned about only two days ago.
Some NFT producers allow their community members to mint NFTs with zero minting fees.
What is minting?
After NFT developers complete the creation of their NFT images, they publish their collection on the blockchain. They do this using a “smart contract”. This smart contract is a package of code that contains a lot of general rules that govern how NFTs work. The smart contract also controls when, how, and who can buy the NFTs at what price, etc.
But this publishing process only creates potential NFTs.
“Minting” brings these potential NFTs into existence so that their owners can view, use, and trade them.
NFT developers usually leave it to members of the community to mint the NFT collection. They do this because minting an NFT generates a transaction on the blockchain. And transactions on the blockchain require “gas” (transaction) fees.
These “gas fees” become a part of the purchase price when members of the community mint the NFTs. The other part of the purchase price is (usually) a “minting fee” that goes to the NFT developers.
On the Ethereum blockchain, the gas fees are significant (tens of dollars). On other blockchains, the fees are insignificant (pennies or fractions of a penny).
What is an NFT #FreeMint?
A #FreeMint is when the NFT developers set the minting fee for a collection to zero.
Community members are still required to pay gas fees to mint the NFTs. But on the Solano, Polygon, and Waves blockchains, the gas fees are almost zero as well.
This begs the question “How can the development team afford to do that?”
The amount of work the development team must do is the same, whether the price is zero or one ETH. The marketing effort required is much the same.
How can this be a good idea?
It’s About the Community
NFT developers go to great lengths to build a community.
Doing so usually requires quite a bit of time, money, and effort.
The goal is to develop a big group of people who are ready, willing, and able to buy your NFTs as soon as you release them.
That group can consist of a mailing list, a following on Twitter or Instagram, members on a Discord server, or any combination of the above.
Some NFT developers spend money to hire “shillers” and “community managers” to get new members. Others pay to get listed or promoted on “NFT Calendar” and “Drop List” websites. A few spend their time educating readers about NFTs on Medium.
The #FreeMint developers want to cut out some of these promotional steps and expenses. There can be at least two good reasons to do so.
First, the NFTs that you give away in the #FreeMint could soar in price on the secondary market. This is what happened with GoblinTown. They gave away the entire collection in a #FreeMint. But today the floor price for their NFTs on OpenSea is 5 ETH (over $6,000 as I write this).
Remember, the development team gets a commission on each resale of each NFT in the collection. This has worked out well for the GoblinTown team. They have made 7.5% of the $64.7 million of sales volume.
Second, the developers may have other follow-on collections in the works. They hope to sell these collections to their community in the future, instead of giving them away.
For a team with a small budget, it can make sense to offer a “loss-leader” on their first project. Then, they can offer future projects for sale to the community they built using the first project.
The Obvious Benefits
Participating in a #FreeMint allows NFT enthusiasts to get new NFTs for almost zero cost.
This is a low-risk activity that has very high upside potential. Imagine if you had gotten several GoblinTown NFTs in the #FreeMint and could now sell them for thousands of dollars.
In the worst-case scenario, you might get some NFTs that you enjoy and appreciate. Even if they never make you rich.
What are the Drawbacks?
The developers must still create the collection and publish it on the blockchain. This is not a trivial task. And there are some costs.
The team must still market the #FreeMint, even though it is free. And, marketing a give-away is not much easier than marketing a sale. People have become suspicious of things that are touted as free. So, this is not a trivial task. And there are some costs.
The collection must consist of images that people actually want. Otherwise, people are not going to take the time and trouble to #FreeMint the NFTs. And the desired community will never coalesce.
Community members may be required to give their email addresses or join some social media channels to participate in the #FreeMint.
The Bottom Line
As you can see, most of the benefits of a #FreeMint go to the community members who mint the tokens.
Most of the costs and drawbacks are borne by the NFT developers.
NFT developers can receive some benefits from a #FreeMint. But it remains to be seen how many projects will use this method.
In the next day or two, I will publish a list of some of the NFT projects that are doing #FreeMints soon. If you would like to see that list, you might want to follow my writing here on Medium.
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About the Author
Richard Crites is the founder and artist at AvatArt NFT Studios. He is also CEO and Founder of OmniBazaar, Inc. He has 40+ years of entrepreneurial success and exits in four separate industries. Rick earned a Master’s degree in Aerospace Engineering from Stanford University. He has been active in cryptocurrency and blockchain since 2013. Rick’s writings are his opinions, not financial advice.
Follow Rick’s writing on Medium.
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About AvatArt NFT Studios
AvatArt Studios is the creator of collections of original and unique ART NFTs. We create our NFTs with the help of artificial intelligence (AI). This is completely different from the “generative” process used by all the apes, punks, cats, dogs, birds, bears, pandas, frogs, warriors, aliens, robots, dragons, goblins, unicorns, and so on. It produces NFTs that are unusual, attractive, and distinctive.
See more samples of our “Artistic Collectibles”.
