NFTs and Crowdfunding
NFTs are shaking up the crowdfunding market.
You may have supported a project on crowdfunding sites like GoFundMe or Kickstarter. You’ve probably long forgotten the T-shirt you received in return for your contribution.
Traditional Crowdfunding Weaknesses
In traditional crowdfunding the relationship between the project and supporter is typically short-lived and one-way. Supporters don’t share in the success of the project so they aren’t incentivized to continually contribute to that success.
Step 1: Contribute to project
Step 2: Receive coupon, ticket or disposable item
Step 3: Forget about the project
NFT Crowdfunding Creates Engaged Communities
Crowdfunding with NFTs (non-fungible tokens) changes that dynamic. Instead of receiving a disposable item, supporters receive a unique NFT which will exist forever on the blockchain, and may even increase in value. Supporters now have a vested interest in the project and community.
NFTs can be designed to give holders unique benefits and utility such as:
- Access to an online community to keep holders connected to the team and updated on the project
- Entrance to in-person or virtual events
- Access to exclusive online content
- Voting rights in the project DAO to give holders a voice in the development of the project
- Early access or discounts on future products and services
In the gaming industry projects are fundraising by selling NFTs which can be used inside of the games once they are released. And if the game is successful, these virtual assets can become very valuable. (See Axie Infinity)
Community Powered Marketing
This is one of the biggest benefits to crowdfunding using NFTs. If the project is successful it is likely that the NFTs will increase in value, therefore rewarding the project’s early supporters. This gives those early supporters an incentive to share the project with others and grow the community.
People love to share the NFTs they buy on social media, and are increasingly using them as profile pictures. This creates a viral marketing engine for your project, meaning you are likely to attract more supporters.
NFTs also allow projects to capture royalties when they are sold, creating an ongoing source of income.
Best Kinds of Projects to Crowdfund with NFTs
- Gaming/Metaverse: The model of NFTs that can be used in virtual worlds is well established. Investors are buying $millions worth of NFTs representing real estate in virtual worlds like The Sandbox and Decentraland.
- Social Causes / Impact Projects: NFTs are already making a huge splash in this segment. DoinGud has created an entire platform focused on NFT projects funding positive social impact.
- Communities/Clubs: Any kind of in-person or virtual community is a great candidate for crowdfunding via NFTs. (Ex: Friends With Benefits)
- Music: NFTs allow musicians to deepen their relationships with fans and monetize their fan communities. Oneof is a platform focused on connecting musicians and their fans.
- Large scale art projects: Look out for lots of NFT projects associated with Burning Man art projects this year
- Software: dAaps (decentralized apps) are selling NFTs as access keys to their SaaS solutions
I can’t wait to see all the creative ways people will use this technology to bring innovative projects to life.
