The era of the 10,000 piece, $500 PFP-style NFT collection is over.

Let’s start with some history. The “artificial scarcity” model of NFT drops originated from the early days of web3, when pioneering brands had to bootstrap their way to delivering product. Back then, the concept of an NFT was new. A 10,000 piece collection priced at 0.1 ETH apiece made sense. These companies were, by proxy, using the mint as a way to crowdfund their product.

During the NFT boom of 2021, the artificial scarcity model (with some variation in price and collection size) was widely adopted by tens of thousands of projects that launched with the hopes of becoming the next Bored Ape Yacht Club. There are many examples of early web3 companies who have delivered on what they promised and far more, but the more common outcome was rug pulls, delivery timeline issues, and customer dissatisfaction.

The typical NFT project model is both risky and unnecessary for a traditional business looking to break into web3. Businesses who already have strong customer-bases don’t need to crowdfund in the same way that early NFT companies needed to.

To create lasting value, building hype cannot be the sole purpose of any project a brand takes on. The purpose of a brand’s NFT must be to provide real utility for their customers.

Utility means that ownership of the token grants a customer access to privileges that they would not otherwise have access to. Depending on the individual goals of the brand, these customer privileges can be things like rewards, access to special experiences & events, voting rights, and more.

Consider a brand NFT as a customer’s loyalty token. The more the customer interacts with the brand and takes actions that the brand desires, the more privileges they are granted.

NFT collections of the past intentionally limited supply to create value through scarcity. For loyalty tokens, it doesn’t make sense for most brands to limit the number of customers who can join the program. Scarcity can now be replaced by status. While there can be an unlimited supply of loyalty tokens, value is created through tiered leveling systems that incentivize customers to “rank up” and increase the value of their token. Anyone can claim a base-level loyalty token for free, but only a small percentage of those who do will actually reach the platinum level (or whatever the highest tier might be).

By rewarding customers for taking desired actions, brands can align incentives with their customers more effectively. Customers will be willing to grow alongside your brand, as the loyalty token was originally free to claim and now provides utility, increasing in value the more they participate.

It’s clear that brands have a massive opportunity to onboard the next X-million users into web3. Reducing friction by eliminating upfront price brings them one step closer. Brands must also make NFTs easy to acquire. They should allow users to claim their loyalty tokens in more palatable methods than needing a crypto wallet (a hurdle that the typical consumer isn’t willing to cross). Instead, signing up to claim a brand’s NFT needs to be as easy as logging in with Google.

Hang’s user portal allows customers to sign in with an email address, no wallet required. Our no-code platform enables any brand to launch their own web3 loyalty program and build out a community of superfans.

Learn more and start building your own program with Hang here.