For the average joe, understanding NFT terms and Web3 contexts can be a tedious task! Regardless, you need to familiarize yourself with a couple of words. For example, you’ll come across the words ‘NFT drop’ many times in your new-found journey as an NFT creator or collector. So, you better have an understanding of how this process works! So, what are NFT drops?
In simple terms, an NFT drop is the way you unveil your brand-new collection to the general public for sale or promotion purposes. Moreover, this process differs as per the project’s design, objective, and intended marketing strategy. And let me tell you this, there are tons of ways to go about it! In detail, a drop refers to the exact date, time, and generally the minting price of the NFT. If you desire to learn more about what NFTs are or how to mint one, we’ve got you covered! But in this article, we will exclusively discuss the several types of NFT drops.
Types of NFT Drops
1) Public Mint NFT Drop
Let’s start with Public Mint; the most havoc-wreaking NFT drop type yet. In order to publicly mint, the creator sets a date and time with a fixed minting price. Don’t be fooled by how simple it is, it is CHAOTIC! Basically, it operates on a first-come, first-serve basis. Once the minting begins, it’s survival of the fittest!
Some NFT projects limit the number of NFTs a single wallet owner can mint during the Public Mint. This gives other users a chance to cop an NFT. Moreover, every collection has a certain number of NFTs like the 10,000 CryptoPunk collection.
2) Standard Drops
A standard drops is a very common type of NFT drops, because it operates in the same way as an old-fashioned lottery. An announcement is made about when/where a token will be available for purchase by players. Then potential buyers will arrive at the location at specified time, pay for their chance to win one copy of that particular token (or additional copies if there are many available for minting), and wait until all winners have been drawn from those present.
3) Public Mint – Whitelist Edition
Next we have the very in-use Whitelist Public Mint. This type of NFT drop is similar to the FCFS method. If you intend to drive hype and demand, go for this launch type. In a nutshell, the collection uses whitelists to give people access to a super exclusive drop. For more info on how whitelists work, click here!
In detail, the public mint takes place around 1-2 days before the public sale. So, basically, it is a whitelist sale followed by an FCFS public mint. Call it elite privilege if you wish. This gives the whitelist users priority to snatch more exclusive and rare NFTs.
Another similar type of sale would be a ‘Token-Gated’ presale mint. Only the project’s token holders can join. In other words, if you’re a member of the NFT community, you get to be in on the hype!
4) Open Edition NFT Drops
Next we have Open Editions. Here, an artist will mint as many NFTs of a collection as they can within a set time limit (around 5 to 10 minutes). When the time ends, the final number is how many NFTs will be available in that collection. However, beware that this type of drop is an easy target for NFT bots and could potentially attract nasty floor sweepers AKA someone buys all the NFTs off a project’s floor! And this can be a bullish sign of good news incoming or that whales are circling around a project before it moons.
5) Free mint
And then, we have the crowd-pleaser type. This type of NFT release entails no cost other than the gas fees. So, not technically completely free. How do creators make profit then? Well, one word, royalties! This method drives demand and reaps in passive revenue. Fun Fact: The iconic Cryptopunks used this drop method! You better watch out for NFT scams though!
6) NFT Auctions
This type of auction is more than often reserved for special NFT marketplaces like SuperRare. In detail, the creator offers a limited edition 1/1 NFT. But unlike a traditional auction, the creator does not open by announcing a suggested opening bid. The bidders set the starting price or for the the item on sale. Then, the creator accepts increasingly higher bids from the set floor. Here, buyers compete for limited-supply items! Instead of eyeing one copy, they’re competing for a chance to win as many copies as possible.
Smart Batch Auction:
Next, we have a smart batch auction for NFT drops. The definition is kinda in the name. In detail, users submit bids to smart contracts with a set retail price and tokens within a bidding period. When the bidding period ends, the creator calculates a clearing price. If you are one of the lucky few who bid above the clearing price, you will win the NFT and will be refunded the difference. And of course, those who bid below are refunded in full.
In a nutshell, if the auction starts with NFT prices at 10 ETH, several buyers will wait for the price to go down to 5 ETH. It is the method of drop for several popular NFT collections. Often, the collections immediately sell out.
Dutch Auctions are very rare. And frankly, they are pretty anticlimactic. Imagine, the NFT price starts high and gets lower the longer it’s up for auction. However, if the NFT is worth it, it will sell out almost immediately.
NFT drops pioneered by NounsDAO. The creators generate and auction a new NFT every single day. Forever. Yes, you read that right. Each time an auction is settled, the settlement transaction will cause a new Noun to be minted and a new 24 hour auction to begin. It is a new method for NFT releases that a lot of NFT projects are using as well!
NFT drops come in different types, so we don’t blame you for not keeping track of them all. That’s why we are gifting you this guide! In brief, NFTs coupled with the knowledge of digital assets and blockchain networks are a recipe for a great investment. Stay tuned for more NFT and crypto related content.