It's not easy launching a new NFT project, so we're here to share one strategy that has been used successfully by many NFT campaigns: network effects. To better understand how to leverage network effects for an NFT campaign first we will define Web 3.0.
Web 3.0 is the new generation of the internet, it uses updated user-centric data models and improves decentralisation and privacy to make the web a more democratic, secure, and transparent platform. Users now have a lot more control over their data thanks to Web 3.0, making data transmission and sharing safer.
What are Network Effects?
Network effects occur when the value of a good or service rises as more people use it. This implies that a good or service grows more valuable the more people are using it. Network effects can be either direct or indirect.
Direct and Indirect Network Effects
Direct network effects occur when the value of the product or service increases as the number of users in the network increases. On the other hand, indirect network effects are when more users join the network, and the value of the goods or services for those who currently use it rises.
Given that NFTs are a relatively new technology and grow in value as more users join the network, network effects are especially crucial for NFTs.
Community Network Effects
Community network effects are the most powerful network effects of all. They take place when the worth of a good or service rises as more people use it and engage with one another. This implies that a product or service gains value as more people use it, not just for the individual consumer but also for the entire community.
There are a few tactics that fall under network effects, but here are 3 of our favourites that will soon be yours too!
Bounties are incentives usually in the form of tokens given by NFT creators to people as a reward for specialised work they do for them. This can be like helping them find and/or report a specific issue or bug related to their NFT project.
Bounties are important in the NFT space because they encourage community participation and help maintain the integrity and security of NFT projects. With bounties, creators can encourage community members to actively search for and report bugs, which can help to improve the overall functionality and user experience of their NFT projects.
Additionally, bounties can help to build trust between creators and the community, as they show a willingness to invest in the security and success of their projects. This can boost participation and engagement from community members who will feel valued and included in the project’s growth. This will ultimately lead to the growth and success of an NFT project.
An NFT airdrop is a gift or reward that holders get as a sign of appreciation for being in a project or community. Airdrops are not only limited to NFTs but also other forms of tokens, crypto, and even access to something exclusive. Sometimes, the airdrops are rare and valuable which gives benefits to the holder and the whole community.
Who doesn’t love free stuff? By giving free rewards, airdrops can make the holder feel appreciated, encourage participation, and help promote community building and engagement. This is a smart tactic to promote their NFT which can lead to a successful NFT project.
- Proof of Attendance Protocol (PoaP)
As the name suggests, Proof of Attendance Protocol (POAP) is a type of NFT that is designed to reward individuals for attending and participating in events such as conferences, meetups, and hackathons.
POAPs are important in the NFT space because they provide a way for event organisers to create a digital proof of attendance that is verifiable and transferable. This can be useful for event organisers who want to encourage participation and engagement from attendees, as well as for attendees who want to show proof of their participation in an event.
POAPs are also beneficial because they can foster community engagement and building. By creating a unique NFT for each event, organizers can incentivise attendees to participate in future events and become more active members of the community.
In the NFT ecosystem, POAPs can also be used to create a sense of exclusivity and scarcity. Because each POAP is unique and only given to individuals who attended a specific event, they can become highly sought after by collectors and enthusiasts, creating a thriving secondary market for these tokens.
The Axie Infinity campaign was one of the most effective NFT initiatives in the last five years. Players could buy, sell, and engage in combat with other players' Axies in the blockchain-based virtual pet game Axie Infinity. Players could employ a variety of NFTs in the game to battle and upgrade their Axies. Because the campaign allowed users to own their virtual pets, it was far more engaging and personal for players.
CryptoKitties is another effective NFT project where players may buy, sell, and breed virtual cats known as "CryptoKitties" in the blockchain-based game. Players may use a number of NFTs that the game launched to breed and upgrade their CryptoKitties. The fact that participants could personalise and acquire their very own digital kittens contributed to the campaign's success.
These are some of the top strategies that many successful projects have been utilising as they are an effective method for incentivising users to join the NFT network and increase the value of NFTs - increasing the opportunity for a successful NFT project.
If you are planning to launch an NFT project, it is imperative to consider network effects and the strategies that can be used to incentivise users to join the community. For expert advice on how to launch a successful NFT project, contact Mo Works today.