How to prepare for an NFT drop
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How to prepare for an NFT drop
Getting it right on the backend matters. Here's how to nail your NFT drops.
Happy Thursday! đ
Welcome to our 20 new subscribers.
Our third edition is all about NFT dropsâŚ
While your dev and product teams are racing to hit the deadline to mint day, what can finance and operations teams do to get set up for success?
This Weekâs Topic
âď¸Â Preparing for your NFT drop
Wouldnât it be nice if your NFT mint could not only sell out, but your collaborators get paid on time and you donât have to scramble to get those sales reports together for your boss?
Pro tip: Donât be like this.^
Why it matters: So much energy is devoted to the art and utility of NFT drops. Itâs not a given that the back office will run smoothly. Financial reporting, buyer analytics, and royalty management are just three of the many operational tasks ahead of you. Are you ready?
The best way to avoid ops challenges is to get ahead of them. But often itâs a case of âI donât know what I donât knowâ â a lack of crypto experience makes it tricky for finance and ops leads to get involved before the project launches.
Thatâs why weâre sharing three steps to launch an NFT with confidence, informed by my talks with Zach Sokolski, Gildedâs head of NFT product development.
Step 1: Clarify your teamâs goals
Got a cute, compelling JPEG? Thatâs a start.
As an ops leader, donât be afraid to chime in with your own set of questions and requirements.
What does success look like for your project post-mint in terms of ROI?
Which NFT marketplaces do you want to launch on, and what steps do you need to take with each marketplace so you donât lose out on royalties later on?
When it comes to the utility for your project (i.e. IRL experiences, merchandise, airdrops, etc.), what sort of operational logistics do you need to have in place?
What are your reporting requirements (to your executive team, partners, and/or investors) and what tech stack do you need to deliver?
Step 2: Define the business relationships
Itâs important to ensure all stakeholders understand the business arrangement so you can fulfill any reporting or payment requirements.
For example, letâs say youâre launching with a brand partner and agreed to pay 50% of primary sales and 1% of secondary revenue to them on all future sales. What sort of items do you need to work through before launching?
How will the brand partners be paid after the mint?
Will payments be made automatically through a smart contract or will you receive the funds and pay them out manually later?
On what schedule will you pay out your brand partner? Remember that crypto is volatileâdo you need to mitigate the risk of your partnerâs funds dropping in USD value?
What are the licensing and IP rights conveyed to the buyers and stakeholders?
Step 3: Determine the economics of the drop
Itâs not only important to understand how much your target user is willing to pay but also how much you need to make in order to receive a desirable ROI. Just like in any business endeavor, financial analysis and reporting play a vital role in the success of your drop.
Here are some economic questions to ask yourself before the launch:
What is the initial sale price and what blockchain will you launch on?
What are the royalties (if any) that you and your partners will receive?
Do you want to launch on marketplaces with optional royalties or only launch where the royalties are guaranteed?
How are you auditing your secondary sales on the various marketplaces so nothing falls through the cracks?
How can users purchase the NFTs â will they be able to purchase with a credit card or just crypto?
Will you keep your revenue in cryptocurrency (i.e. ETH or SOL), convert to a stablecoin (i.e. USDC), or off-ramp to fiat?
Whatâs next? Launching your NFT project is just the beginning. After the launch, youâll have to monitor revenue and financial reporting mechanics, identify buying patterns to plan for future projects, and generally stay compliant to achieve your goals.
Bottom Line: As you can tell, NFT drops come with a ton of operational complexity. Itâs critical that you get involved in the key decisions and set up the necessary operational workflows as soon as possible.
From the DeOps World
đ What weâre reading
LooksRare wonât support creator royalties by default
LooksRare is now the latest NFT marketplace to move towards optional royalties as the race to the bottom continues. But they have a clear distinction from other marketplaces: collections can receive 25% of the LooksRare Protocol fee (which is 2%, so your collection would receive 0.5% of each sale).
Important note: you must set up a receiving address in order to receive this 0.5% fee, which you can adjust in the smart contract.
Learn more from the LooksRare docs
SBF vs. Erik Voorhees: The ongoing crypto regulation debate
Over the last few weeks, Sam Bankman-Fried has shared his thoughts on how crypto should be regulated and Erik Voorhees has fired back with a more politically decentralized mindset. In this debate on the Bankless podcast, they come head-to-head on how the industry could proceed. Should crypto be regulated in the first place? How could DeFi be regulated? Where do we draw the line on what should be regulated and what shouldnât?
The only crypto story you need
In this 40,000 word crypto story, prolific finance writer Matt Levine dives deep into the entire decentralized ecosystem. From the origins and intricacies of blockchain and digital scarcity to breaking down the crypto financial system, this is everything you need to know. A great share for new-to-crypto friends and colleagues â tell them to break it up over a few days (or weeks đ ).
Listen and Learn
đ§Â Decentralized Ops - The Podcast
Want to go deeper on NFT drop prep? Tune in to Zach Sokolskiâs episode on the Decentralized Ops podcast.
Zach is a Product Manager at Gilded and helped launch Nieux Society â a city-based NFT project designed to bring the creative energy of New Orleans to web3. Zach shares how operators can bulletproof their project for a successful drop with clear goals and financial preparation.
đ¤ Connect with Zach on LinkedIn
Decentralized Ops is now streaming on all major platforms.
đž Job Alert: ProfitLinq is hiring a Crypto Staff Accountant. ProfitLinq is one of the few women-owned outsourced CFO, Controller, and Accounting companies in the crypto/blockchain industry.
Thatâs all for now.
Got feedback or a topic youâd like me to cover? Leave a comment or slide into my DMs.
Cheers,
Gil
Connect with me on LinkedIn and Twitter.
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This newsletter is strictly for informational purposes only and does not constitute financial, investment, or tax advice. As always, do your own research.
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