The NFT market is making people rich. From Beeple’s $69 million sales of his artwork, Everdays, to simply flipping collectibles, monetizing NFTs is all about putting your investments to work, allowing the technology to increase your wealth. And, with the NFT market growing by 18,000% in just 12 months, the opportunities for monetization are expanding all the time. Choosing the right strategy can see you turn art, music, photography, even your own time into money, thanks to NFTs.
Below, we’ll discuss some of the tried and true methods of NFT monetization for NFT creators, as well as some more unconventional ways that shouldn’t be ruled out.
Perhaps the most obvious but tried and true method of generating income from NFTs is to create artwork that people want to buy. With platforms like OpenSea topping more than two million sales a month, finding yourself an audience for your painting, photograph, digital sketch, animation, or video is easier than ever.
Artists like Fewocious have gone from sketching in class and on their iPad to becoming multi-millionaires with companies knocking their door down to collaborate. NFT monetization here involves simply creating art that others feel confident in investing in. Early adopters of Fewocious’ artwork saw potential in his work and are now reaping the benefits. NFT investors are looking to do the same with other artists.
While the appeal of art and collectibles is largely subjective, there are some elements that all successful NFT creators share.
Firstly, they don’t over-create. By only minting truly excellent NFT art, you ensure your following associates you with quality. This scarcity should translate into limited runs, ensuring a hard cap on the supply. Investors want to feel they’ve found the next big thing. If your limited supply runs into the thousands, they’re less likely to purchase.
Instead, keep your NFT runs small, minting only a small amount. You can also create artificial rarity, pricing variations of an NFT differently. Describing these tiers in terms of scarcity will help investors understand their purchase, from common to unique to ultra-rare.
It’s important to also stick to one or two platforms. Followers want to know where they can find your work. By only minting and listing artwork on, say, OpenSea, you’ll not only improve your chances with the platform’s algorithm – pushing your work in front of people – but you’ll also find more traffic directed your way from other sites and social media.
There’s no point creating the next NFT masterpiece and not telling anyone about it. Use your social media channels to funnel people to your platforms of choice and initiate sales. Ensuring your posts have the relevant tags is important. Tags such as #nftcollectors and simply #nfts are used regularly by investors to discover new and upcoming art and collectibles.
To showcase your work, you can also use a service such as Lazy.com, which will allow you to easily link to a portfolio of your NFTs. These can be linked to wallet addresses to enable purchases.
When creating a traditional work of art, once the piece has been commissioned and the transaction is complete, the artist essentially gives up all rights to ownership. With NFTs, this all changes. Artists can sell a piece and still enjoy royalties from future sales in perpetuity.
This means that five, ten years down the line when the NFT has changed hands several times, the original artist can still profit from their creation. While ownership has been relinquished, NFTs still allow creators to benefit from a piece’s increase in value.
This is due to the nature of blockchain technology, keeping a permanent and immutable ledger of all transactions and ownership. Not only are the royalties something the artist can enjoy for the life of the NFT, but they are also automatic, meaning there is no issue of being unallocated, as in the music industry.
The royalty scheme is often opt-in with platforms like OpenSea and Rarible, allowing a customizable amount of kickback, up to 10%. Royalties are then distributed by the platforms to the original creator once a month, ready to be collected.
For example, an NFT creator mints a series of 10 collectibles with a 10% royalty that finds popularity in the investing community. The original sale has each NFT go for 0.5 ETH. Over time the NFTs grow in value, and one of the collectibles sells for 3 ETH. This translates to 0.3 ETH back to the creator. The same collectible sells six months later for 5 ETH. The creator, again, receives a 10% royalty, this time for 0.5 ETH.
Without royalties, the artist would have simply received a single sum of 0.5 ETH. By implementing the royalty system, NFT monetization creates a continued and sustained income from past creations.
For those who collect more than they create, flipping your investments is also a great way to monetize NFTs. Ten-fold profits are not unheard of if you have an eye for the next successful collectible.
Collectors like @notEezzy share flipping successes with their followers, showing how getting in early on NFT collections can pay off. Collections like PudgyPenguins, which are 8,888 unique penguin character tokens, have seen rapid appreciation in value in just a couple of months. Some tokens that were originally worth just 0.1 Eth now hold values ten times that, with more increases likely.
Spotting what’s hot in the NFT scene is more an art than a science. It involves a bit of guesswork, some leaps of faith, and an understanding of what makes NFTs valuable. Namely, scarcity and something that can trend.
The trick is to keep active in the NFT community, keep reading, keep discussing, and keep browsing the markets. CryptoPunks were originally offered free to the first 10,000 people. Some of those punks are now worth over $11 million, making those opportunity takers extremely wealthy.
One tried, and true strategy is to buy NFTs in bulk from marketplaces and then list them individually. This is more tedious, but regularly doing this practice can eke out considerable profits. Decentraland’s LAND plots, for example, are often bundled together on marketplaces. Unbundling these plots and listing them individually will often lead to profit.
A newer way to monetize a valuable NFT is to use platforms like Fractional.art to fractionalize it and let its popularity and interest increase its value.
When you fractionalize NFTs, you essentially split them into pieces in the form of ERC-20 tokens that can be used for other DeFi applications. This divided ownership makes it possible for multiple parties to own a single NFT, bringing liquidity to the market as a result.
For the creator or owner of an NFT, this is a particularly lucrative approach. The most famous example of NFT fractionalization is currently the original Doge meme, sold as an NFT for $4 million in June 2021.
The owner, PleasrDAO, decided to split the NFT into billions of tokens, allowing anyone to become part owner. The initial auction saw the value of the NFT skyrocket to $45 million, and now the entire project is worth over $302 million. For PleasrDAO, owning the lion’s share of the ERC-20 tokens and watching their value increase has been incredibly profitable.
One of the most innovative ways of NFT monetization involves the game Axie Infinity. In August 2021 alone, the game took $364 million in revenue, up 85% from July, demonstrating incredible growth.
Tapping into this source of revenue involves acquiring Axie NFTs and then loaning them out to players who will pay the owner back in tokens called Smooth Love Potions (SLP).
Axies, just like Pokemon, vary in strength and characteristics. You need a party of three just to get started, and some players cannot invest enough to get started. The Axie scholarship program, therefore, benefits both the player and the owner of Axie NFTs.
An Axie “scholar” is a player who is loaned a team from a scholarship manager and earns SLP on their behalf. The earnings are decided upon beforehand, e.g., 50/50 split, 60/40, and so on.
The SLP tokens can then be sold on exchanges and markets for fiat currency or held in a digital wallet for the price to increase.
The situation benefits not only the player and owner but the community as a whole. Through the scholarship program, the game grows ever more popular, with SLP’s price increasing as a result.
Axies can be acquired from the official Axie marketplace as well as platforms like OpenSea. Finding scholars to monetize your Axie NFTs involves other platforms such as Reddit or getting in touch with some of the biggest scholarship programs such as Newfound Nation, 4XIECHUN.