NFT collections are not inherently doomed to fail, but there are certain practices that can lead to their downfall. We’d love to live in a world where every crypto project is a raging success and the bull run goes on forever, but then we wake up and realize that the reality we live in is far more logical. There is no guarantee of success for any NFT project, but like with any business, there are best and worst practices to adhere to. In this article, we’ll look at the things to avoid.
How to Guarantee NFT Collection Failure
Lack of a clear value proposition: Without a clear value proposition, NFT collections can be difficult for collectors and investors to understand and get behind. This can lead to a lack of interest and low adoption (and almost-certain failure).
Poorly executed token economics: Poorly executed token economics, such as unsustainable inflation or lack of scarcity, can lead to a lack of trust in the NFTs and the overall collection. If the owners of the project are seen to be keeping too much of the collection for themselves, this might also raise red flags.
Poor design and user experience: Poor design and user experience can make NFT collections difficult to navigate and use, reducing the appeal to users and potentially leading to low adoption. This depends largely on what the NFT does (if it offers staking or access to a game), or if it is listed on a marketplace that has poor UX/UI.
Lack of utility: NFT collections that lack utility, such as the ability to trade, exchange or use the NFTs in decentralized applications, can lead to a lack of interest and low adoption. The utility should be one of the first, if not the first things that are discussed by any potential NFT collective or project. Is it upgradeable? Is it used as part of a game or metaverse? Can it be staked to generate yields? Does it represent digital real estate or infrastructure? What is it tokenizing? Answering these questions is key to success.
Market saturation: A saturated market, with too many NFT collections and limited demand, can lead to increased competition and lower prices, reducing the value of NFT collections and potentially leading to their failure. To combat this, consider moving away from the biggest marketplaces and engaging communities in up-and-coming NFT spaces.
Scams and fraud: Scams and fraudulent activities, such as fake NFTs or misleading information about the NFT collection, can erode trust in the market and lead to the downfall of NFT collections. Before taking on any advisors or working with external parties, do your due diligence to learn as much as possible about their background and if they have been involved previously in any questionable deals.
Verdict: Be Aware of the Challenges Ahead
By avoiding these practices and focusing on creating valuable, well-designed, and trustworthy NFT collections, you can succeed in the NFT space. Consider that you will face challenges along the way, many of which will be beyond your control (market conditions), but that if you do truly engage your community, provide utility, and are both transparent and honourable, there’s no reason to fear.
Zebu Digital has worked with a number of large NFT collections and ground-up projects, as well as NFT marketplaces, in order to support the growth and success of this industry. Digital art and all of the impressive functionalities that come with it have the power to change the world. To launch or grow your NFT project, get in touch with the Zebu team today and let’s put a plan into action.