By Eran Elhanani, Co-Founder of GamesPad.io
We’ve all seen the way that multimillion dollar NFT sales have transformed the creative economy. Today, NFTs are proliferating throughout creative fields, physical assets, identity, gaming, and beyond. New potential use cases for this technology are being conceptualized all the time – each of them capitalizing on NFTs’ ability to generate systems of scarcity-based economic exchange. These systems have already revolutionized the ways that people and businesses create value, and will surely continue to evolve human perceptions of worth.
This is why NFTs are playing a growing role in fundraising. Initial NFT offerings – or INOs,as we at GamesPad call them – are emerging as an important new fundraising tool. An INO involves offering a set of first-generation NFTs (also known as genesis NFTs) for a specific period of time. This fundraising method can be particularly effective for projects with a presence in the metaverse. Here’s how.
Strategy #1: Use INOs as a Complement – Not a Replacement – For Your Fundraising Strategy
INOs are incredibly accessible, as it is inclusive to investors of all sizes and geographical locations – anyone with an appropriate cryptocurrency wallet can purchase NFTs sold during an INO, and can choose to sell them whenever they wish. INOs are also less costly, more efficient, and easier than many other types of token-based fundraising models.
However, INOs are not a replacement for other kinds of token-based fundraising methods. Because fewer NFTs are sold in an INO than fungible tokens in a traditional token sale, they don’t necessarily have the scaling capacity to bring in the number of investors that other kinds of token sales do.
Therefore, INOs should be used as a complementary strategy to other kinds of token-based fundraising. By combining traditional token sales with INOs, you get the best of both worlds. Traditional token sales generate the kind of buzz needed to build large, robust communities, and serve to distribute your token into many different wallets – an essential factor in getting it listed on exchanges.
Strategy #2: Designing INOs to Promote Healthier Tokenomics
One of the most common problems associated with traditional types of blockchain-based fundraising methods is token dumping. After the mandatory holding period that follows an Initial DEX Offering (IDO), Initial Coin Offering (ICO), Security Token Offering (STO), or Initial Exchange Offering (IEO), many investors will inevitably liquidate their holdings – tanking your project’s token market in the process.
By combining INOs with other types of token sales, projects have the opportunity to minimize the effects of this token-dumping behavior.
Therefore, used correctly, INOs do promote healthier token economics over the long-term. By integrating them into fundraising strategies, projects need to raise less among the other kinds of token-based fundraising methods being utilized. This mitigates the effect of token “dumping” in the future, and therefore keeps token metrics tighter.
Strategy #3: Optimize Your NFTs for Your Platform and Target Users
In order to maximize both the amount of capital raised and the positive economic effects of an INO on your project’s tokenomics, it’s important to make sure the NFTs sold in an INO are well-integrated into the functionality of your platform. In other words, they should have practical use cases and benefits within the platform that incentivize long-term hodling.
Therefore, INOs can be held in the form of IGOs (Initial Game Offering), which are appropriate for gaming projects that are based on NFTs as their in-game currency and rewards. IMOs (Initial Metaverse Offering) are useful for other types of metaverse-based projects, as they give investors the ability to crowdfund projects with metaverse integrations and solutions.
To the Metaverse and Beyond!
Even if your project has nothing to do with blockchain gaming or the metaverse, INOs may still be a wise option for fundraising. Because NFTs are so versatile, they can have use cases across many different industry verticals, and can be used as a tool by creators and organizations of any size – the only limit is our imaginations. Let’s get creative!
