The 2022 market meltdown resulted in one of the world's most bizarre NFT collections, Goblintown. They are Free-to-Mint NFT. And the crazy thing is, shortly after free minting in May, the floor price went to more than 2 ETH ($2,500) and today is more than 3.6 ETH ($4,400). Why can something free be sold for a couple of thousand bucks?
Free-to-Mint NFT - The hype is real
Recently, Free mint NFTs have become a popular way to launch a brand new project. Free-to-Mint NFT launches are brought out by both independent creators and product development teams to create a buzz in their name, bootstrap for their community, and mitigate the typical NFT launch pitfalls.
Opposite to famous NFT collections like BAYC or Azuki that require initial capital to start with, free-to-mint NFT is precisely what it says, Free to Mint. Of course, to create these NFTs, you will have to pay a little gas fee, but to enthusiasts, owning an NFT with little to no cost sure is a temptation.
If you are an NFT lover, you must be familiar with the term Free Mint NFT from CryptoPunk, We Are All Going Die to Goblintown. And if you are trying to get into the NFT world, free mint NFT is quite a treat as they offer a near-zero entry barrier.
Free-to-Mint NFT is not a new concept. They are dated all the way back to the beginning of NFTs. CryptoPunks, one of the most well-known NFT projects existing, was centered around this free-to-claim mechanism.
Back in 2017, Punks were given away to whoever wanted them, for free. And today, the Punks floor price is 66 ETH (~$800K). Who would expect that? CryptoPunks lives on as a shining example of free-to-mint NFT success, and others are now opting for these free-to-mint methods.
One of them is Loot, the brainchild of Dom Hofmann, one unique, text-based, adventure-themed NFT collection. Loot was launched on August 27, 2021, as a free-to-claim NFT on a first-come, first-serve basis, without any warning. From zero to 1.2 ETH, this initiative alone triggered a cascade of succeeding efforts that spread the free-mint strategy.
The 2022 NFT market crash gave birth to one of the strangest NFT collections the world has ever seen. It's known as Goblintown. They are Free-to-Mint NFT. And today's floor price for this "No roadmap - No Discord - No utility - CC0 - Contract written by goblins" NFT is around 3.6 ETH ($4,400).
Next is the We Are All Going To Die (Wagdie) NFT collection, a new face in town, and people are already calling it the next Goblintown. Although Wagdie NFTs were completely free to mint, they reached an All-Time-High of 1.6 ETH shortly after the public mint.
Yes, the hype is real. From Loot to Goblintown to Wagdie NFT collection, free mints are becoming a standard and desirable part of the NFT-verse. But is this type of NFT minting mechanic viable? Does it even work? And does it have any value?
From Zero to Hero, how does that works?
Four things that affect the Value of something are Rare Value, Aesthetic Value, Emotional Value, and Usable Value. Free mint NFT is not an exception.
Rare Value is a function of supply and demand. If something is rare, then we perceive it as being more valuable. NFTs are doing a great job at this. They create less supply and more demand, making it exclusive. If there are 10,000 pieces of NFTs (even with zero charges) and 10,001 people want to get their hand on them, the price goes up.
Aesthetic Value comes from its intrinsic beauty. And beauty is a perception, you can find something beautiful while others don't. Basically, anything can be made in an aesthetically pleasing way from text-based like Loot to goblin-based like Goblintown.
Emotional Value comes from our emotional attachment to things. With an NFT project, it is the power of community. Take Goblintown for an example, despite lacking a comprehensive marketing plan, partnerships with established brands, or affiliations with prominent members in the NFT sphere, it has made an enormous mark within the community itself. To increase the Emotional Value of something, people have to change how people think about it. Usually, this is done through effective marketing and brand building.
Usable Value pertains to the practicality of something. Essentially does this fill a physical need? Does this NFT have a very functional purpose? Yes, some have, and some don't. But who cares, we are in for the art, aren't we?
Free-to-mint NFT exists as a good combination of all that. It takes the characteristic of NFT, elevates them with the Aesthetic, combines the power of Community, adds more Utility, and minus all the entry barriers of a typical NFT. If this is done correctly, every NFT can be Punks NFT.
Do free-to-mint NFTs a viable option?
Free mint NFT seems to be working just fine. From CryptoPunks to Goblintown, these free-claim NFTs have been around for a long time, with some even providing the framework for many significant projects launched over the past few years.
Of course, things have changed tremendously since CryptoPunks were first released into the wild. Yes, free-to-mint NFTs work and function relatively well as a mechanism to launch a new project. However, when it comes to the secondary market for free mints, things become a little more difficult, leaving many to doubt if they're viable in the long run.
At the moment, it appears that free-to-mint NFTs are only successful for large-scale projects. In general, free-to-mine NFTs promote the idea of exclusivity. Free mints are an event that always generates a lot of organic attention. Who wouldn't want a free NFT from a project with tens of thousands of followers on Twitter? It's an NFT flipper's paradise.
While public sales or dutch auctions force collectors to strategize and time their buys, free-to-mint NFTs mimic all that, causing a free-for-all, generating widespread FOMO (fear of missing out) and frequently resulting in those horrible gas wars. In the end, paying something like 0.1 or even 0.4 ETH in gas to mint a single free-to-mint NFT isn't actually free.
These types of NFT mint are undeniably entertaining for those who partake and profit. They generate excitement in the larger NFT community but aren't a viable option for everyone.
The teams behind popular large-scale free-to-mint NFT collections will earn much more profit from a free-to-mint drop than independent artists.Free mint NFT creators profit primarily from royalty in every secondary market sale, and of course, the larger the project, the larger the liquidity.
Many artists, even ones with a large fanbase and big 1/1 sales in the past, still struggle to sell their NFTs independently. Minting their pieces for free is unlikely to generate much cash. Of course, this depends on the artists and supply vs. demand. I doubt that Beeple will struggle to sell a small batch of limited edition pieces anytime soon.
In my view, a collector's view, this juxtaposition is less indicative of free-to-mint NFTs. For an NFT enthusiast, Free Mint, Public Mint, NFT utility, and famous creators... mean nothing. At the end of the day, we only look at a beautiful piece of art sitting in our OpenSea and having a conversation with a stranger in our differentia NFT community.
Closing Thought
PFP projects continue to dominate the market, accruing millions of dollars in capital from their primary sales. And free-to-mint NFTs seem like a viable option for both creators and collectors/investors.
The fact that free-to-mint NFTs don't work for everyone could be the reason they have a bet on longevity. Free-to-mint NFTs might force creators to show what they can offer collectors rather than implementing complex roadmaps that will be completed once a collection sells out.
Do free-to-mint scams exist? Not exactly, since free mints are counterintuitive to those who would hope to take the NFT community for a ride with a farcical money grab. Of course, they can utilize malicious smart contracts to scam for your money, but they are pretty easy to sus out. Practicing double or triple check smart contract sources, storing your valuable asset in a cold wallet, and learning how to spot a scam project can help protect investors from free mint NFT scams as well as other scams.
Free-to-mint collections are designed to be a flash, then a slow burn; meaning the money really won't be pouring in for the collector until the hype comes to a head. In the grand scheme of the market, this may be one of the major upsides of free-to-mint NFTs and provide more evidence of their sustainability.
Free mint NFT is a fun and easy way to start your NFT journey. But does it last for a longer-term? I'm not so sure about it. Maybe time will give us the answer.
