he NFT market is like the art market. Every project that creates an NFT essentially creates a kind of story that should live on after the creation of the NFT. No history - no special value.

You can release just one picture, or you can release a collection, then the project creates from a few pieces to several thousand NFTs, and the process of their creation is semi-automated. That is, the basic elements of the image are drawn by the artist, and then they are programmatically assembled in various combinations according to a pre-programmed algorithm. The launch of such collections of NFT images is called Drop.

NFT market. How is it work?

The main stages of the implementation of Drop:

  • Concept development and product implementation — drawing pictures, writing a smart contract, creating a website, renting servers, etc.
  • Preparing the community — creating an informational story around the project
  • Creating a funnel: usually through twitter, the basic part of the audience is attracted to the project website - 5 -15 thousand people. Average user acquisition cost -1$. Then, from the project website, the audience is directed to the project server in Discord - there the main work related to the development of the community takes place, when the base number of attracted users grows by 3 times or more.
  • Minting — somewhat analogous to mining, but not quite... In fact, this is the sale of rights to purchase future NFTs, when no metadata is assigned to the pictures. At the minting stage, there is a sale only within the community - an analogue of the pre-ICO. At this stage, users do not have the ability to select images, they buy an image that they will see only after Reveal.

Successful minting is when the community buys out all NFTs of the project. One of the parameters of successful minting is that on average 1-2 NFTs are in the hands of one user. (This speaks of a large community and the right hype around the project)

NFT market. How is it work?
  • Reveal (start of the project) — the formation of the unique NFTs (images) After Reveal, minting participants start posting some of the images on the open market. Main resale site: Opensea

NFT pictures differ from each other by various elements (caps, glasses, earrings, etc.). The rarer the combinations of such elements in a particular NFT, the more rare and expensive it is. Since the image creation algorithm has an automated and controlled process only in a number of parameters, it turns out that a significant part of the pictures have a large number of unique features. For example, there is a collection of characters, all 10 thousand have earrings in their ears, but only five do not have them - these will be rare and significantly outperform the rest in price.

To make money on the NFT resale, you need to analyze the most promising projects (project description, team, development plans, the presence of a large number of subscribers in Discord and Twitter)

Also, there are services that monitor the rarity of certain NFTs for money, the use of such tools makes it more likely to make successful resales.

NFT market. How is it work?

NFT Speculation

A significant part of the audience of NFT buyers seeks to get a quick profit on the resale of tokens. To do this, most participants seek to be able to buy tokens at the MINT stage. On projects with a well promoted history, it is not uncommon that the price on the open market is 5-10 times higher than the price at the MINT stage. At the same time, if the NFT turns out to be rare, then its cost still increases by 3-10, and sometimes even more.

At the Mint stage, the price of the token is usually set in the region of 0.05ETH - 0.09ETH. And after Reveal, the founders announce the min price in the region of 0.5ETH-0.9ETH. This is how early participants can earn 10X or more profit.

Usually there is a limit on the purchase of tokens in one hand at the Mint stage - 1-2 NFT pictures and that's it. So one user cannot earn 10X on a large amount. In addition, there is a risk that the entire collection will not be sold out at the Mint stage. And if this does not happen, the price after Reveal may fall.

NFT market. How is it work?

Projects at the start make airdrops - distribution of NFT to early participants for active support of the project and PR, so sometimes NFT appears on Opensea at a price lower than the minimum announced. They are sold by those participants who did not buy tokens, but received them for their active participation in the promotion of the project.

The Opensea platform allows you to see for each NFT, at what price and when it was purchased (this is data from the NFT blockchain), so, on the one hand, you can see that some NFT token is growing in price, on the other hand, you can run into a situation where someone artificially resells a picture, inflating its value. There is an important limitation - the price of gas (ether network commission) during the sale is often extremely high, so such a price increase is not a cheap pleasure, so there are not many manipulators.

Game projects

There are game projects based on NFTs — where users who store NFTs receive in-game currency for storage (approximately 70-100% per annum). Some of these cryptocurrencies are traded on the exchange, and their capitalization reaches hundreds of millions of dollars. Launching game projects is different from launching NFT-Drop. Often projects are launched on Launchpads - platforms that provide projects with the technical implementation of fundraising. Such sites have a large traffic of crypto-investors, due to this, start-up projects have a chance to sell the required number of tokens of their project.

NFT market. How is it work?

Market size

In the second quarter of 2021, the NFT market turnover was $2.4 billion, which is slightly more than in the first quarter - $2.3 billion. These figures do not take into account off-market sales, i.e. sales that are made through auction houses. Sales increased by 111.46% compared to the first quarter, and the number of active wallets increased by 151.89% over the same time period.

Major players are emerging on the market, and unlike the ICO hype, the NFT industry is more integrated with the real world.

Global brands that have entered the NFT market: Gucci, McDonald's, Time magazine, etc. Coinbase announced the launch of its own marketplace (NFT), in the first week the number of registrations increased the total number of registrations on the most popular platform Opensea. In my opinion, the market still has to grow rapidly in this direction, the market has passed less than 10% of the way..