The NFT drop.
You may have heard of the term while browsing posts on Twitter, lingering in your Discord group, or listening to a message from your favorite artist. It is the key, according to some, to buy NFTs early from a collection. But the term might have raised some questions:
- What is an NFT drop?
- What are the different kinds of NFT drops?
- How do you prepare for an NFT drop?
If you’re unfamiliar with the term or looking to broaden your NFT knowledge, you’ve come to the right place. This article will cover all those questions and many more, providing you with all the information you need to identify the correct NFT drops before they happen.
Let’s start with the most basic question: What is an NFT drop?
What is an NFT drop?
To get the first clear definition of an “NFT drop,” we must look at a similar phrase: the “limited edition drop.” These drops are common for various merchandise, such as clothing, gaming, and specialty electronics. They are successful because they tap into a mixture of FOMO (fear of missing out) and hype. News about them often spread through word of mouth.
Take a hypothetical example: the streetwear clothing brand Supreme decides to release a line of limited edition clothing at a set price for just one day. People line up at stores the morning before to get their hands on the merchandise. Because there are more buyers than articles of clothing, the merchandise sells out quickly, and the owners have bragging rights that they own the line of limited edition clothing.
NFT drops work similarly, both in terms of mechanics and marketing. They usually:
- Have a start time when the NFTs go for sale
- There is a set price or price format that buyers know
- There is hype on social media or other channels, which creates FOMO
- Early buyers have “bragging rights” to the NFT
There are plusses to this type of format, including predictability, fair distribution, and transparency. These plusses help increase buyer confidence that they are getting something of value for their hard-earned money.
Now, let’s jump to the next section: What are the different kinds of NFT drops?
What are the different kinds of NFT drops?
Although NFT drops generally follow the same format, there are some slight differences depending on the type of NFT you’re minting or the pricing strategies of the team. Here, we’ll cover five different types of NFT drops, starting with the one we’ve already glanced over:
Set price: This NFT drop involves a set price, a start time, and a fixed number of NFTs for sale. Usually, the team puts the price in Ethereum, Solana, or another crypto. Sometimes, for larger providers, the team will list the price in fiat currency. Although there is a start time for the drop, there usually isn’t an end time, and users can purchase the NFTs until they are sold out.
Open edition: This drop often occurs with NFT artwork. Here, there is a set price, a start and end time, and no limit to the number of NFTs users can mint. For this type of mint, the digital artist is generally popular and will set a lower price for this NFT than their other works. Because there is a window for purchasing, there can be a rush on the NFTs, and there’s no telling how many ultimately will get sold.
English auction: The most common auction format where people will bid on an NFT until the highest bid wins. In the case of this drop, there is usually a start time and end time, along with a “reserve bid,” which is similar to the minimum price a user can buy the NFT. This format is also prevalent on NFT art platforms, where 1/1 NFTs sometimes have a high final bid price.
Dutch auction: A lesser-known auction format where the price decreases for every elapsed period that there are no bids. An NFT might start at a 3 ETH price, then reduce 0.5 ETH for every hour that no one has bid. Sometimes, the team will create a “reserve bid” by placing a floor on the Dutch auction rather than letting the price decrease forever. Many in the NFT community view Dutch auctions as bad practice because they can take advantage of FOMO.
Stealth drop: Stealth drops are similar to the “set price” drop. There is a set price, a start time, and a limited number of NFTs for sale. The big difference is that the team does not advertise a stealth drop ahead of time. It simply creates the website, has it go live, and waits. One of the most prominent examples of a stealth drop is Gremplin’s CrypToadz collection. Very few people knew about it beforehand, which led to a slow but successful minting process.
Now, let’s head to the next section: What do you need to participate in an NFT drop?
What do you need to participate in an NFT drop?
Now that you know the basics of an NFT drop and the different types, you might wonder, “What do I need to participate in an NFT drop?” And the good news is that the requirements are simple. You’ll need four separate things: a Web3 wallet, currency, a computer, and an internet connection.
First, the Web3 wallet. Because NFTs are assets, you’ll need a way to store them. Like you would keep cash in a billfold wallet or purse, you put NFTs (the digital tokens) in Web3 wallets. These wallets often correspond to specific blockchains. For instance, the MetaMask wallet serves the Ethereum blockchain, while the Phantom Wallet serves the Solana blockchain.
Wallets are also either non-custodial or custodial. You have complete control of a non-custodial wallet, including having its private key or seed phrase. A marketplace or the issuer has control of a custodial wallet and operates it for you. Independent NFT drops typically require a non-custodial wallet. Drops made through proprietary marketplaces like NBA Top Shot often use a custodial wallet.
For more information about the top NFT wallets, visit our article here.
Second, cryptocurrency or cash. To buy an NFT, you’ll need the funds to pay for it. Even “free” NFTs usually require that you pay the gas fees. This arrangement means you’ll need to purchase the relevant cryptocurrency onto your wallet. Ethereum blockchain NFT drops would require Ether, Solana blockchain drops would require Solana, and so forth.
For independent NFT drops, you’ll almost always pay in cryptocurrency. But some proprietary marketplace drops are different. For them, you can often pay for the NFT using a debit or credit card. In this case, you’d link your card to the marketplace and then pay for the NFT with it at checkout, using cash.
Third, the technical requirements needed to participate in an NFT drop. The two most notable are a computer and an internet connection. Because you’ll be interacting with a blockchain during the drop, having both is required for participating, regardless if you’re taking part in an independent NFT drop or one on a proprietary marketplace.
How do you find NFT drops?
The next step to participating in an NFT drop is finding one. And fortunately, there are many sources where you can find exciting NFT drops from dynamic projects. In this section, we’ll cover four.
The first place to find an NFT drop is through an NFT Drops Calendar. Many different websites host these, which work by having project creators submit their drops to a list. There, you can find pertinent details on upcoming drops like the NFT drop’s blockchain, the set price, the date and time, and the project’s links, such as its website and Discord. As an example, check out Rarity Sniper’s NFT Drops Calendar.
The second place to locate an NFT drop is through social media. Instagram, Facebook, and YouTube all have ads or posts from projects that are hosting NFT drops.
Probably the best social media channel to find a drop is Twitter, the unofficial home of the NFT community. There, you can discover allowlist opportunities, dates from drops, how much a drop will cost, and more. Plus, the accounts often post pictures of their art before a drop, giving you a sneak peek of the pieces.
If you’ve learned about Web3, you’ve probably heard about Discord. It is the unofficial chatting hub of NFT projects. That’s what makes it our third choice to find an NFT drop. There, you can find official links to the drop site, the date and time of mint, the blockchain, and more.
Team announcements are available for perusal and can give you more information. There are additional allowlist opportunities sometimes in the team’s official Discord channels, and it’s a chance to check out the project’s community, which often determines the project’s long-term success or short-term disaster.
Finally, you can learn about NFT drops by simply checking out different project websites. There, you can find all the pertinent details like blockchain, the date and time of mint, and the price per NFT. In addition, you can also see the project’s roadmap, the team’s long-term ambitions, and whether they promise any of the mint proceeds to charity.
However, this method should be used in conjunction with others, as it is easy to fall prey to a fake website scam. We’ll cover avoiding these in the next section.
Those are the four most widely used methods for finding NFT drops. There are others, such as being a part of an alpha group, that require a little bit more legwork and time in the community. Now, about those scams.
What are some common NFT drop scams?
If you’ve followed NFT news, you know the space is ripe with scams. And they can range from the basic — a Discord message saying you’ve won a giveaway — to the complex. There are a few types of NFT drop scams, some that involve the drop itself and those that occur after the mint is complete. Here are two NFT scams that involve the drop itself:
- The fake website. When an NFT drop is about to commence, especially if it is popular, scammers will set up fake websites to lure people to mint from the wrong smart contract. They sometimes even try to trick followers of established projects by saying there is a “surprise mint.” Sometimes, hackers will gain control of a team’s official communication channels to deceive people. The goal of this scam is to steal your assets — NFTs or cryptocurrency.
- The corrupt smart contract. In this scam, the fraudsters will lure people into interacting with a corrupt smart contract. From there, the smart contract will execute a function designed to transfer assets from your wallet to the scammers’. Although this is entirely preventable, often people overlook the warning signs due to FOMO or a “surprise drop” at 5 AM when people are still groggy.
To avoid these types of scams, always:
- Receive information solely from official team channels
- Double-check across channels in case one channel is compromised
- If it seems too good to be true, it generally is
- Invest in a hardware wallet
- Become familiar with smart contract language
Now, let’s take a look at two “softer” scams:
- Buying social media followers or Discord members. Often, a team will buy social media followers and Discord members. Why? They do this to give the impression that the project is popular, which may lure more people to mint through FOMO. A good way to combat this is to check on the account’s engagement or run a tool that looks for fake followers. Take a look in Discord and see if the responses feel like bots or actual people.
- Rug pulls. Rug pulls occur when a team promises various initiatives in their roadmap and later abandons the project without completing them. This practice leaves NFT holders in a lurch as their NFTs decline in value or become unsellable. It’s difficult to predict a rug pull, but certain factors like a doxxed team (where you know team member identities) or a multi-sig on the project’s vault can help.
Finally, it’s important to reemphasize the Dutch auction format, which some in the NFT community see as a red flag. Teams have often used that tool to get people to spend as much money as people, often simply based on FOMO. It’s a dangerous tool that has ripped millions of dollars out of the ecosystem. It’s not an automatic disqualifier, but it should be a warning.
How do you prepare for an NFT drop?
Down to the final two sections. First, let’s look at an all-important question — “How do you prepare for an NFT drop?” We’ll break the answer into four parts, starting with a process that should take place long before drop day.
- Try for allowlist spots. Allowlists were NFT projects’ answer to the dreaded gas wars of 2021. And they represent an opportunity for NFT enthusiasts: a guaranteed spot of minting an NFT that might be worth thousands just a day later. NFT project teams give out allowlist spots in various ways: NFT Twitter giveaways, meme contests, grinding in the team’s Discord server, and more. While you don’t have to try for an allowlist spot, it is often the only sure-fire way to mint a popular collection of NFTs.
- DYOR. That acronym stands for Do Your Own Research, and the practice has never been more critical than today. With many projects dropping daily, finding the diamond in the rough has never been tougher, and doing your own research betters your chances of discovering one. Look for the NFT characteristics that appeal to you personally and what fits your general investment strategy.
- Know all the NFT drop specifics. Drop date, time, number of allowed mints, and even the smart contract address are important to know well before an NFT drop. The more knowledge you have, the less chance there is of an error — and a disappointment. If you plan on minting several NFTs per week, staying organized with a spreadsheet may be helpful. The space moves at lightning speed, and any burden you can remove will help you as a collector or investor.
- Have the right amount of cryptocurrency prepared. There’s nothing quite as disappointing during an NFT mint as getting ready to go, only to realize you don’t have enough cryptocurrency. The dangers of not having enough cryptocurrency are especially important on blockchains with occasionally high gas fees. Being short just $10 or less on gas and not being able to mint can be a deflating experience. Remember that gas fees can spike during minting times, so be sure to account for that.
Those tips will hopefully help with a smooth minting experience and a successful drop for you. Now, for the final section: What are some general tips for buying NFTs?
What are some general tips for buying NFTs?
If you’re beginning your NFT journey, you might be surprised at the number of NFT buying options available. Moreover, you might be wondering if there are clues or tips on getting started. The following three guidelines cover some of the basics of NFT purchasing. They are not meant to be financial or investment advice. Instead, they are signposts in the wild west of NFTs.
Buy what you like. This is perhaps a good general rule for purchasing. Buy the NFTs that capture your interest in some way. It could have great artwork, interesting utility, access to a good club or community, or another perk. But the general principle remains. The opposite — buying because other people like it but you don’t — can lead to regret.
Don’t invest any more than you can afford to lose. This rule is perhaps the case with all investments, especially within NFTs. The space is still volatile, prone to swings, and leading minds believe most of the projects will “go to zero.” Not investing more than you can afford to lose helps you sleep at night, ride out the swings, and behave less emotionally.
Avoid FOMO. Fear of Missing Out is a huge driver in the space, accounting for large spikes in floor prices for projects that seemingly don’t merit them. Most projects that see such quick, high rises fall, sometimes just as fast. If you give in to FOMO, you could be left, as they say, “holding the bag.”
Final Thoughts on NFT Drops
There it is — your guide to NFT drops. If you’re starting and are a little nervous, don’t fret. Everyone starts at the same place with this Web3 technology, and it’s normal to feel intimidated at the start of your NFT journey.
One thing is for sure — nothing substitutes for practical experience. And once you have a few drops under your belt, you’ll likely feel more confident and probably already have started to carve out your place in Web3.
If you’re looking to broaden your NFT knowledge, check out our top NFT marketplaces article.
That’s it for now. Happy minting!