The NFT market generated about $2 billion in revenue in transactions within the first quarter of 2021. The NBA top shot sold $500 million worth of NBA history. Concurrently, Elon Musk was offered $1 million for his NFT song. Both of these NFTs sold because of their reputation and scarcity. However, none of the two NFTs were bought for specific use. Not all NFTs can be tied to a celebrity or a famous event. For your NFT to gain sustainable value it needs to have utility. Well, how do you add utility to an NFT? This is the latest concern within the NFT market.
What is utility NFT
Utility NFTs are the NFTs that have an underlying valuable and practical application. One of the most common phrases associated with NFT utility meaning is ‘a real-world use case’. Utility NFTs are considered valuable depending on the opportunities and access that they provide the NFT collectors or holders.
Read also: How to Know If an NFT is Valuable?
Also referred to as NFT 2.0, utility NFTs are based on what the users need. Currently, there are five different categories of utility NFTs; fantasy sports NFTs, gambling NFTs, Social NFTs, community NFTs, and in-game NFTs. Holding the utility NFTs gives access to things like exclusive experiences, private events, airdrops, and new products. Utility NFTs provide value for artists, investors, brands, and gamers.
A Few Examples of Utility NFT
One of the most recent NFT projects with utility is the Coca-Cola NFTs. Coca-Cola has been selling its collectibles in the real world for a long time including the vintage German plastic cooler that goes for $500. Coca-cola was offering four NFTs; one of which was a wearable NFT jacket inspired by their old delivery uniforms. The wearable quality of the NFT jacket adds utility. Also, the winning bidder for the NFTs receives a physical Coca-cola refrigerator; the SMEG FAB28 retro made-in-Italy; a new product.
Utility-based NFT projects such as VeeFriends and BAYC are adding utility to their NFTs by making the NFTs a representation of VIP membership cards. For BAYC, when you purchase an NFT, you get a lifetime membership in the BAYC community. In addition, you get access to VIP parties, members-only games, and digital merch. In the case of VeeFriends by Gary Vaynerchuk, a popular entrepreneur, the NFTs enable the holders to access events, physical lectures, and members-only restaurants. Gary mentioned that the intention behind launching his NFTs is to give individuals, brands, and businesses NFT utility ideas.
Digital Art Utility to an NFT
“The utility of art was to make you feel and think,” answered an artist on the topic of NFT art utility. This could have been the case before because people have always bought art because of how they interpret them.
However, in the continuously competitive crypto world, utility-based NFT is one of the hottest topics among crypto artists. Many successful artists make it a habit to reward their collectors. It builds a loyal and strong collector base.
Having several NFT releases and rewarding collectors who have been holding your NFT tokens with less costly drawings or airdrops is the most suggested way of adding utility to your NFT token. Adding utility to your NFT token will help in maintaining a competitive edge and getting more value for your art.
Three Ways of Adding Utility to Your NFT
1. Make your NFT Redeemable
Some of the best NFT utility ideas are attached to having redeemable goods, physical or digital. As an artist, you may offer a particular painting redeemable when a person buys your NFT. You could ship the physical painting to them once they buy your NFT or you could send them a digital painting.
Read also: Can you print NFT art?
Another idea is having a competition where the person with the person holding the highest number of your NFT tokens receives a valuable product, for example an original hand drawn art from you. People love having access to original and rare art, therefore, this will make turn your NFTs into utility based NFTs.
2. Connecting the NFT to the Real World
Find a need in the real world and come up with a way to fit it into the NFT world. For example, in the stock market, when investors buy and hold shares, they get dividends according to the percentage of shares they are holding. In the same way, you can offer a percentage of dividends to be paid to the holders of your NFT after a particular period.
Additionally, you can look for real-world areas where you can add value using your NFT and your holders can enjoy. For example, binding your NFTs to specific content and providing transferable ownership rights. Let’s say your NFT is providing access to free online courses, when the holder sells it to another person, the new owner should be able to access the same benefits.
3. Make them Usable in the metaverse
RTFKT, a fashion platform, recently made about $3 million within seven minutes of putting up virtual sneakers NFT for sale. So where will these virtual sneakers be worn? The metaverse. A metaverse is a limitless virtual-reality space within which users can interact in a computer-generated universe. It’s considered the future of NFTs.
As the use cases of the NFTs grow within the metaverse, so will the utility of the NFTs designed to be used in it. In the case of NFTs build to be used within a particular game, the utility is still limited. Therefore, facing the problem of interoperability. Well, what if your NFT could be used outside of just one gaming context.
You can add qualities to your NFT that will make it applicable in the metaverse world. For example, if you have NFT sneakers, make them wearable so that the user character can wear them within the metaverse.
Read also: Where Can I Store my NFT Collectibles?
In conclusion, the discussion answers the question: how to add utility to an NFT. Whether you will be part of the sustainable NFT projects that are beyond just scarcity, depends on your attentiveness in adding utility. The scarce and popular NFTs are traded by a few hyper NFT users. However, adding utility to your NFTs widens your consumer base from a few collectors to actual users.