Insights on Minting NFTs
An article discussing a few things I’ve learned about “minting” an NFT from the different perspectives of a creator, trader, and investor
Disclaimer: This is not financial advice, and I am not a financial advisor. This is for educational purposes only and all readers should do their own research and due diligence.
This guide breaks down minting into 3 different perspectives. From the lens of a creator of NFTs, the lens of a trader of NFTs, and the lens of a long-term investor in NFTs. I want to help you sharpen your blockchain skills and prepare you for the exciting journey ahead! This guide is broken down into 3 parts so feel free to skip around to what you need most but note that understanding each lens gives new meaning and insight to the others considered.
Ready, set, let’s go!
Creator Perspective
So you are here because you want to learn more about the process of creating a mintable generative art project? Or do you just want to curate your own artwork on the blockchain? One is easier than the other no doubt, but both require us to slow down and first consider the question:
What blockchain do we want to use???
From a popularity perspective, Ethereum is the most used by crypto natives on (CT) Crypto Twitter, and this user base itself could be a reason to use it over the others because as a creator you must consider the market that the blockchain you want to use is reaching. There are pros and cons to using Ethereum to mint your NFT that revolve around the gas wars and technical coding to optimize smart contracts for minimal gas that I won’t go into detail about in this article.
Before realizing that the “Blue-Chip” NFTs were created on Ethereum I first learned about NFTs on Algorand. Algorand and other blockchains like Solana are rapidly building out marketplaces and infrastructure as I type this to remove the hurdles for creators to create on those blockchains so creators may want to think about what blockchain they want to use from a context of what target audience will they reach on that chain. A similarity across all the blockchains is that they do appear to store the data on IPFS. Whether you choose to use Ethereum, Algorand, Solana, or some other blockchain, the IPFS upload is a required part of the process. As a creator of an NFT, you can use the cloud-hosted IPFS service, Pinata, or others, which simplifies the process of uploading to IPFS. Just create an account and they provide a user-friendly, minimal code, experience. Pinata takes care of the back-end code and provides a smooth platform for uploading images and other files.
After the Pinata step is complete and you have the digital assets that you want to turn into NFTs, you can then upload them into Pinata, and they will provide you with a URL that accesses the digital file. This URL will be what is placed inside of the Metadata within the smart contract upon minting. ***Important to note here that when you use OpenSea the option for “freezing metadata” refers to OpenSea placing the image/data onto the IPFS servers for you, so you do not need to create a Pinata account if you use this platform and option directly. On the other hand, if you want to use Pinata because you do not want to have your release on OpenSea then you will have to use the provided URL and insert that into whatever platform/blockchain smart contract transaction that you prefer.
Once the smart contract is deployed and the mint function is called, whether that be through Etherscan, or (insert blockchain name here) scan/explorer, or a third-party website “create” button like on OpenSea, you will have successfully minted your first NFT as a creator!
From a technical viewpoint as a creator, it is important to note that minting an NFT can be done on any blockchain and without using a marketplace like OpenSea, Foundation, or Rarible but the benefits of using such platforms are the ease/speed of deployment and the marketing capabilities of centralizing the market activates to an easy-to-use platform.
Minting (from a Trader’s perspective)
So you heard about printing digital jpegs where numba go up only and you want first dibs? Well, it’s a little more complicated than that but that is why we are here.
The decision to “mint” a new NFT project as a trader requires the trader to consider the market cap of the project on release (initial mint price * total supply minted) compared to what the expected market cap may be, the community of people interested around the project (frens), the team behind the project (more frens), the RoadMap, rarity of the NFT relative to the rest in the collection, the art is appealing and you like it, and the gas at the time of release and throughout the release.
The gas is an important consideration for a trader because it hits the profit margin on multiple points, the initial minting has a gas fee which is sometimes a sign is the project is popular, the gas fee to list the object for sale. Often these gas fees end up making minting unprofitable from a trader's point of view, so it is a risk. Careful consideration and timing regarding the gas and the popularity of the project are extremely important. Furthermore, even traders can benefit from the mantra of time in the market beats timing the market because we have seen incredible returns from those who hold onto the projects that are not initially in a profitable position, but the project gains popularity and the capped supply mechanics creates a shock effect and rapid upward price movement.
The decision to not mint but trade a project post mint is also viable. On this occasion, one needs to carefully consider the post-release metrics such as floor price, total # of unique owners, the volume traded, rarity score, and the distribution of the supply amongst wallet holders.
The floor price, the lowest last paid price, is important for us to consider because it is an indicator for the entry price a person can expect to pay to enter the project with an NFT whose rarity is on the lower side since it is priced at the floor. The spread between the floor price and the open offers can also be an indicator of the liquidity of the NFT that you are trading. Typically, the tighter the spread the more liquid the NFT is. Liquidity in NFT is also represented by the daily sales volume of the project and the total sales volume of the project. By navigating to the project “Activity”, the button that the blue arrow below points to, we can analyze the statistics that OpenSea provides us with:
What you see after clicking that button:
On top of this, we can also check out Dune Analytics dashboards which have been constructed to analyze a plethora of metrics on a variety of NFT projects so you can use the data to make data-driven decisions or even build your own Dune Dashboard to analyze smart contracts yourself!
Now utilizing Rarity Tools in a combination with analyzing the overall project technical and fundamentals is key! The link of rarity tools is below but this website ranks the rarity of each NFT in a collection. Hopefully, sellers are checking this before they list but on many occasions, the rarity tools do not have the project on their site to analyze within the first few hours or days of the trading of a project. This can create an opportunity for a trader to find the rarer NFTs in the collection that may be undervalued. I want to stress here that as a trader also understand the stark difference between trading an ongoing NFT that is capped, but not all items are yet released for sale, versus a 10k avatar project that is all released for sale on one day. The release up to the total supply threshold and the mechanics around have a large impact on how the project trades in the secondary market.
Lastly, as a trader remember to be kind to others in the Discord and be wary since many in the community in the general chat are not trading cats but holding cats for the long-term and are sensitive to price discussions, serious trading discussion can be found in the trading channel of the NFT projects discord. On that note, check Discord for trading channels that may have private sales. Be extremely careful to not conduct a private sale peer to peer without using OpenSea to facilitate the private sale (or another reputable private sale service provider). OpenSea has the ability for you to list an item privately for sale to an individual, so this is a safer route after negotiations in the DMs are finalized.
Minting (From a Long-Term Investor Perspective)
Long-term investing in an NFT project requires the investor to consider the same technical and fundamental analyses that we discussed earlier but if you are going to be investing in something for the long term it is vital that you like the piece of art you are investing in. There are reasons why NFT projects are priced differently and that boils down to differences in artist passion, style, personality, and the art’s appeal. Beauty is in the eye of the beholder, and I always ask myself if I love the art before I even consider investing in any art and I cannot stress this more. If you find a project that you want to invest in for the long-term then being a part of the initial minting may be good for you! Long-term investing also facilitates being a community member for the long-term and this has intangible benefits that far outweigh the monetary benefits! It’s called friendship and community and it’s clear that it’s a driving force behind this mania .
Thanks for reading I hope you guys have a safe and smooth journey through the minting aspect of NFTs ❤
Links and tools to useful things mentioned:
