Minting NFTs

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Or read some of my previous writings here. I’ll be using this report to source most of this document. 

When you go to amusement parks, you go to the rides with the largest drops, the longest twists, and that provide the most fun. I think we can agree that a roller coaster with a 200 ft drop is cooler than a roller coaster with a 50 ft drop. There is more fun in a longer/cooler ride. Comparing this to NFT’s or trading assets may seem like a stretch, but what many people make the mistake of doing is thinking that in trading you have to ride the whole ride. Whether that means getting on at the beginning of the ride or holding through the entire drop. For trading, you should ideally be enjoying the ride up, the view at the top, that first second of falling then hopping off. Everyone wants the ride up in trading, as they should. Which means being as early as possible, as this is mistakenly correlated with having a greater chance for a return. 

When watching an asset’s value rise, so many people immediately look to the far left and say “Oh if I had just bought the asset at the beginning, then I could have gotten X returns” but that’s not realistic.

What are the odds that you knew about the asset? Would you have even bought something if it was unproven? 

A big dilemma in NFTs is: how early should I be? Minting is the first chance for the NFT to hit the market and all sales go directly to the company/group minting. Leading up to the mint and even mint day is where a lot of the hype and attention comes to a project. Many people think that getting in early is their best option, so here’s what the numbers say:

Don’t mint…

28.5% of NFTs purchased during minting and then sold on the platform result in a profit. What this means is almost 3 out of 4 NFTs minted sell for a loss. Typically projects that don’t mint out are given a stigma or have immense pressure to fully mint out of the supply, not necessarily saying I agree with this, but with many failed and scam projects, it’s easy to see why people think like this. 

But why is ‘minting out’ important? 

It’s simple, it’s a great gauge for volume, interest, and hype. The faster a sellout, the greater the interest. The whole premise of minting is that you are getting the NFT straight from the producer in a sort of “presale”. 

The hope is that you mint an NFT from a collection for a pre-sale price, let’s say .05 ETH, then it mints out and the secondary sale prices start climbing and what you got early is now worth way more, like .3 ETH (Up 500%). The idea is novel and makes sense. You just need to hope that the interest is there to buy in or you’ll end up with some sweet JPEG mementos in your wallet.

If you can’t mint them, what should you do?

Buy off the secondary market.Somewhere around 65% of all buys from the secondary market result in profit, which seems like a good chance but I imagine that means flippers make up a good majority of the market since most prices are not going up, all the time. Flipper typically follows key statistics regarding NFTs. Like volume, or total sales or value being moved within the market for a certain collection. There are several key factors, which include but aren’t limited to: Total # number listed (supply), average buy price, and unique holders. Seemingly the data shows that if you want to make a steadier profit, buy off the secondary market and flip it for profit. There are great websites for tracking these like Icy Tools and Flips.Finance. More on this next time.

… Unless you have WL

I know I just explained why you shouldn’t mint but let’s add a caveat to this. If you get access to a project’s White List, you have a better shot at HIGH returns, frequently a 2x to 5x profit. 

White List (WL) is a VIP pre-sale. If a project is minting, they typically withhold x amount (typically 25-50%) for people with WL. WL comes with a few benefits: 

• It secures your ability to mint

• Has lower gas fees than a public mint

• Sometimes higher rarity chances and/or lower cost

These WL spots are valuable. 

As an aside, it's insanely rare for anyone who mints a project non on the WL to get more than a 50x return. It doesn't happen for two reasons. 1) >50X returns are rare. 2) Most people sell before it gets close to that, as they should.  If you hold through a 50x without taking profit you're likely overly committed.

Over half of non-WL minters sell for less than half of what they bought in for, while the highest column of WL sellers is in the 2x-5x range.

The “WL grind” is serious. NFTs are based on Twitter and Discord. The best way to get WL is often through those two avenues. People will spend hours a day talking in discord giving off ~good vibes~ and trying to earn a coveted WL spot. People have even taken to Fiverr and Upwork to get people to “grind WLs” for them and get paid for it… 

Looks nice and trustworthy right^If this sounds kind of messed up, it is. The NFT community has begun to shift away from this, but it’s still common practice. Now you’re seeing projects give away WL spots, if you can teach a class over a certain topic in Discord, create fan-art, provide some value to the project, or other times simply like a message quick enough. It’s convoluted and annoying, but the pay-off can be worth it.“Overall, 78% of sales by unwhitelisted buyers later result in a loss on resale, with 59% resulting in a loss equal to or below 0.5x their initial investment. 78% of sales by whitelisted buyers, on the other hand, result in a profit, with 51% resulting in a profit of 2x or more the initial investment. The data is clear: Whitelisting provides a significant financial reward for those who play a role in an NFT project’s success by seeding its early community growth efforts.”So when it comes to being early, you should mint a project if there is enough hype behind it and/or you have a WL spot. Always gauge community interest by checking Twitter and Discord, high following typically means high interest. Otherwise, I would avoid minting projects for the greatest return on profit. Minting could just become a new way for you to play the lottery. As always, NFA and DYOR. 

Thanks so much for reading, the next issue we’ll be discussing is: how to approach trading NFTs for profit.