Airdrop is considered a popular form of rewarding users for a certain role in a Crypto project. In the NFT market, where collections are built on an economy of attention, airdrops are a more suitable way to attract community interest in your project. In this article, let’s learn with Weakhand about how the market reacts when an NFT collection airdrops to users.
Before jumping into the article, please refer to some of the following NFT collections to better understand the article.
- What is Azuki? Overview of the Azuki NFT collection
- What is Bored Ape Yacht Club (BAYC)? Overview of the BAYC NFT collection
- What is CloneX? Overview of the CloneX NFT collection
- What are Pudgy Penguins? Overview of the Pudgy Penguins NFT collection
NFT Collections Built Around the Attention Economy
The NFT segment is considered a new market and is much smaller than some large segments on the market at the moment such as: Defi, Layer 1,… Different from Defi projects which are defined as Success is based on many factors such as: Product, community,… then community NFT collections are the key factor to evaluate the success of a project.
Collections are built around community and collections that have a strong and quality community will definitely make a big difference compared to other collections. In addition, this is also directly reflected in the price of each NFT in the collection because simply having many fans will create a potential buying force that drives price growth.
NFT collections build around the economy of attention
We have seen many successful marketing models of NFT collections such as Azuki hiring a number of famous KOLs to develop a community on the social networking platform twitter or Pudgy Penguins making users remember them through their Pudgy GIFs or cute penguins on the Instagram platform,… Receiving a lot of community attention will create brand value and success for NFT projects in the market.
NFT Airdrop: Popular Form of NFT Collectibles
Airdrops are considered a popular way for NFT collections to create attention in the market. The newly created collection will provide many utilities and create diversity for the ecosystem that the development team is working hard to build. In addition, this also attracts a number of new users to the ecosystem because the price of NFTs in the child collection will usually be much cheaper than the original collection.
We have seen Case extremely successful in the Crypto market in this form, Bored Ape Yacht Club (BAYC). This is truly a position-changing bet when BAYC NFT owners, in addition to profiting from the NFT price increase, also receive a large profit from receiving an airdrop: Bored Ape Kennel Club (BAKC), Mutant Ape Yacht Club (MAYC) and especially receive the APE Token Airdrop. Each BAYC NFT holder can receive an airdrop of up to 10,950 APE which is equivalent to approximately 100,000 USD at the time.
The NFT Airdrop format was later adopted by many other NFT collections and has achieved countless successes. We can mention famous NFT collections such as: Azuki, CloneX, Degods,…
How the Market Reacts Every NFT Collection Airdrops
How the market reacts to the airdrop is different for each collection. Reaction is often determined by factors such as the quality of the development team, the quality of the community, the number of whale holdings, and many other metrics that traders use to evaluate the collection. Here we come to how the market reacted to some famous NFT collectibles:
Bored Ape Yacht Club Collection (BAYC)
Bored Ape Yacht Club (BAYC) is one of the most popular NFT collections in the NFT market and also the one that gives the most airdrops to its NFT holders. Obviously this is also a reason why they are still a powerhouse in the NFT market and make more and more people know about BAYC not only within the NFT market but also spreading to celebrities in the NFT market. the real world.
Below is the price statistics chart of Bored Ape Yacht Club (BAYC) provided by NFTGo after each Airdrop:
BAYC NFT price reaction after each Airdrop
As shown above, everyone can see that the price of BAYC NFT tends to grow before the Airdrop information is announced and tends to decrease after the Airdrop event takes place.
This can be explained by a number of reasons such as the fact that some whales close to the project or the project’s MM team tend to push the price up before releasing news to create hype for users. In addition, before the Airdrop event also attracted speculation from users in buying NFTs to receive Airdrops from the project. This also contributes to the strong growth in price of BAYC NFT.
As for the reason why BAYC NFT decreased in price after the Airdrop activity took place, there is a pretty good sentence that is considered a guideline for your NFT investment: “Sell The Hype” That means selling when Fomo users are the most. Looking at the above statistics, everyone can see that as the Airdrop volume becomes larger, the downward trend of BAYC NFT’s price will also be proportional.
This comes from the selling of NFTs by BAYC NFT speculators to receive airdrops, profit taking from previous NFT holders, and from the project’s MM team. All of this created a large selling force, causing the floor price of BAYC NFT to drop sharply after the Airdrop took place.
Azuki Collection
Despite the drama surrounding the launch of Azuki Elementals, it must be acknowledged that Azuki has successfully applied the NFT Airdrop strategy to attract and expand its community.
Price reaction of Azuki NFT after each Airdrop
In terms of Azuki’s price reaction after each Airdrop, the launch of Beanz has indeed brought great attraction to the Azuki collection as the floor price has continuously increased even after the beanz was launched and only decreased when its popularity increased. fomo cools down. The numbers in the second round of the launch of Azuki Twin Tigers NFT were really not impressive and also caused the floor price of Azuki to decrease slightly.
The reason for this comes from the founder Scandal Zagabond has developed 3 NFT Scam projects before. This caused the floor price to drop sharply and not many people believed in the launch of Azuki Twin Tiger NFT. Another reason comes from the fact that the NFT collection is not really a sub-collection that expands Azuki’s ecosystem, but only brings Azuki to the real world through the fact that users can exchange this NFT for a physical jacket that carries Azuki brand.
Therefore, the context of the project when launching a new collection and Airdrop for users is also an extremely important part to pay attention to if users are interested in speculating on buying and selling NFTs before the Airdrop event takes place. go out.
CloneX Collection
The third collection I want to mention is CloneX who conducted all of their Airdrops in just a period of one month.
Price reaction of CloneX NFT after each Airdrop
Looking at the image above, we can see that except for the first time the Airdrop caused the floor price of CloneX to decrease slightly, the following times all brought positive signals when the floor price witnessed good growth after each Airdrop.
But overall it seems that CloneX’s strategy is really inappropriate when the Airdrops take place so close together. This certainly created great excitement and hype at the time, but when looking at the longer term, the dilution creating more supply on the market will damage the CloneX ecosystem in general and CloneX NFT in particular. lack of growth motivation.
Not every Airdrop works well
Price reaction of the Karafuru NFT collection after the Airdrop event
Therefore, people also need to learn about the inside of the collection through a few different evaluation metrics such as: Activeness of the project, Activeness of the community,… because it is also a main factor. reflected in the price of the NFT collection before and after each Airdrop.
In general, most NFT collections often have an increasing price reaction before each Airdrop occurs and the floor price often decreases after the Airdrop event ends. Most Airdrops involve sending the original NFT holders a new NFT, which increases the supply of the NFT in the ecosystem. So the question is whether NFT Airdrop is really good for the project?
If a collection has a strong community and is building traction for the main collection, this is a good sign in the early going. It gives people cheaper access to the ecosystem the project is building. For example, users can buy MAYC NFT for 80% cheaper than BAYC NFT and can access cool things in the ecosystem that Yuga Labs is building.
But in the longer term, the development team needs to be skillful in building Use Cases to make a difference between the main collection and future child collections. This lesson was proven at Azuki with the launch of Azuki Elementals. Creating a Use Case to differentiate Azuki in the ecosystem is not really clear, while Azuki Elementals has an image that is too similar to the original Azuki. Therefore, there is no reason for users to have to spend dozens of ETH to buy Azuki. Instead, they can choose Azuki Elementals, which is much cheaper with similar benefits.
summary
NFT Airdrop is considered a popular and suitable strategy for NFT collectibles in building and engaging the community. However, the development team needs to map out appropriate strategies in creating the value of the main collection and the role of sub-collections in its ecosystem. This will help the original holders and new participants join hands to develop and build a stronger project.
