RANKING-UTILITY

How do we evaluate the best NFT utility projects?

Since our ranking table has a limited number of spots in it, we had to come up with a way to evaluate each project. Our team has chosen the most important aspects of each project and gave points based on them.

Our criteria are:

1. Impact – Does the project provide something unique and interesting for the end-users? Did it change the way people use NFTs? It doesn’t matter if the impact is related to something in the real or digital world, everything counts.
2. Use-case – What type of use case this project has? Is it a single use-case or the users can get multiple benefits from it? We prefer projects that provide as much utility as possible, but we also rank them by complexity and usability.
3. Team – Who is behind the project? Is it a reputable company or anonymous individuals? We prefer reputable companies as they have a higher chance of creating a successful project. As you know, fundings are very important aspect when we talk about utility, and big companies always have more funding. Surely, it doesn’t mean that quality solely depends on funding, but it helps a lot.
4. Price – Is this project accessible to just anybody or it’s expensive for most of us? We prefer projects that benefit the whole community, that means the more people can use it, the better.
5. Type – What is the project about? Utility can be as simple as allowing people to chat to each other. However, it can be as complex as allowing them to lend money. The more complex the utility, the better.
6. Marketplace – Where can you get into this project? We favour projects that are on multiple marketplaces and have a token of their own. Nobody likes high gas fees, and having multiple tokens helps bypass that.

What are utility NFTs?

Utility NFTs add extra value to the art, such as special access, the possibility of using your owned NFTs in a game, passive income, and more.

Basically, utility NFTs are those NFTs that will provide the users with something other than the art. One of the arguments the criticizers of NFT often say is that there is no real use case in NFT.

However, that’s quite wrong as there are plenty of projects that provide utility for their holders. Surely, there are projects that are very simple and will provide utility such as “Access to a private Discord server”. However, there are also quite complex projects like yInsure which provides insurance on smart contracts.

As we always mention through our articles, NFT is a relatively new thing on the internet. Each day someone comes up with a new idea of how to use this technology in a new way. Of course, everything has its limits, and so does NFT, but we are nowhere near that limit yet.

NFT Utility comes in different shapes and forms, but we’ll go through the types later on.

The easiest way to explain NFT utility is through blockchain games like Axie Infinity or F1 Delta Time. F1 Delta Time uses NFT in several different ways.

The first way people can use their NFTs in F1 Delta Time is through owning the race cars. For example, if you purchase a racing car on the OpenSea marketplace, you can use it in-game. Players can use it to race against other players.

You’ll both have the image of the racing car in your digital wallet, and the actual racing car in-game. This is the most basic example of NFT utility, players purchase the NFT and then use it in-game.

Types of NFT utility

As we have previously mentioned, there are a bunch of different NFT utility use-cases. Now we’ll go through some of the most popular ones, so you can finally understand what utility actually means.

• Games – As previously mentioned with the F1 Delta Time example, games are currently one of the most common utilities for NFT. Basically, NFTs serve as a verification of items owned in the game. Each NFT is unique, meaning that only you can have that specific in-game item.
• Insurance – As seen with the yInsure example in our ranking, insurance is a complex, but useful NFT utility. You would choose a contract on a supported platform that you want to insure, and for how long. You would then have to pay for the insurance cost, and you would be insured up to a total of X amount of crypto.
• Music – Famous artists such as 3LAU and Kings of Leon have sold their music albums as an NFT. The owners of this NFT have also got a physical copy of the album on a vinyl. This way of selling music allows the artists to sell directly to the fans. Fans can get unique, limited items in return and a proof of ownership if they ever want to re-sell the NFT.
• Virtual land –Even though this belongs in the gaming section, we believe it deserves a special mention. Games like Decentraland and The Sandbox allow owners of their land to build anything they like. Atari has created a casino in the Decentraland where players can gamble with their real money. This serves as an investment opportunity as well.

There are many other NFT utilities out there, but you get the point. Basically, as long as you can “use” the NFT for something, it becomes a utility.

How does NFT utility work?

If you are wondering how these companies implement NFTs, we’ll break it down for you. We’ll keep it on a simple level without using complex technical terms, so you can get a basic understanding.

First, let’s explain what do you need to own an NFT. You need a digital wallet that supports it, if you don’t have one, take a look at our best NFT wallets ranking.

These companies also have their own wallets where they hold all the NFTs. Each NFT has a smart contract defining how it works in the background, whether the marketplace has defined it or the user. A smart contract is basically a programmed agreement between the users.

If you are a buyer, you don’t have to worry about a smart contract (unless you want to know exactly how the system works). On the other hand, if you are a creator and you want to create an NFT utility, you’ll need to write the contract.

Basically, a smart contract is programmed to automatically do stuff once the predefined conditions are met. For example, you can program the maximum amount of collectibles for a collection, royalty fees, etc.

The companies will then combine the smart contracts, the NFT, and their website/game.

They usually have some sort of a system that verifies the ownership of items (NFTs) through your wallet. Once you connect with your wallet, all the eligible items from your wallet will show up in your game inventory.

The developers who implement such things for these companies are called blockchain developers. Smart Contracts can be very complex, but the beauty of them is that they are always public.

Is every smart contract public?

Yes, every smart contract is public.

This is both good and bad. The good thing is that the smart contract is fully transparent so the buyers know exactly what’s going on. However, it’s also bad because if you have a bug inside of the contract, it will be visible to everyone on the blockchain.

Smart Contracts are permanent, once you publish them, they stay on the blockchain forever. There are ways to “update” the contract by using a new one, but that’s far too technical for this article.

To sum it up, smart contracts define how NFTs act. Most of the collections that don’t have any utility will have the smart contract generated by the marketplace they are selling on, for example, OpenSea.

You can also take a look at this simplified video to learn more about smart contracts:

So, if you wonder can a contract own an NFT? Yes, NFTs can be a part of the smart contract.

For more complex projects, these smart contracts can get pretty complicated and you might need to hire a blockchain developer.

In case you are wondering, yes, there are some fees related to the smart contract. In order to deploy a smart contract, you’ll have to pay “gas fees”. These fees depend on which blockchain you are on.

For example, Ethereum gas fees for deploying a smart contract can be as high as 500$. On the other hand, Polygon gas fees are close to zero. This is a one-time fee that you have to pay in order to have the contract posted on the blockchain.

Why people invest in NFT utility?

People invest in NFT utility either because they want to make money, or because they are getting something else out of it. For example, gamers are investing because they want to play blockchain games that use NFT for the in-game items.

One such example is the previously mentioned F1 Delta Time where the players can race against each other. Fans of Formula 1 will gladly play the game without thinking about the whole NFT aspect.

However, there are also players who will play the game because they want to earn some money. In this particular game, players can stake their racing car to earn rewards. The car cannot be used after it’s locked, but you’ll receive rewards in REVV tokens which can be sold on exchanges for real money.

Blockchain games are not the only NFT utility, but currently, they are the most widely used. The gaming industry is on the big rise for the last 10 years, so it’s not really a surprise.

Some people will invest in Music NFT utility because they are either big fans of the artist, or they plan on re-selling the NFT later on. Since most musicians also provide physical items with the NFT, owners can sell that as well.

Ether Cards are an example where the artist can get different utilities such as discounts, access to somewhere, unlock features, etc. Obviously, the people who invest in this NFT utility are doing it for the perks of owning it.

Whatever the reason for investing, NFT utility can have a good use case for the owner. As the NFT world grows, we will surely see more complex utilities.

Tips for selling NFT utility

If you plan on creating an NFT utility, or you already have one, you need to know how to sell it. We will tell you a few tips for easier selling. Our research team is in the NFT space since the beginning.

• Work on your marketing – We can’t stress this enough. Even if you have the best NFT utility on the market, if you marketing is not good, you won’t make money. Lower quality products with great marketing almost always outperform higher quality with terrible marketing. The same goes with NFT utility.
• Use all social media channels – Which social media to use for promotion? All of them. It’s equally important to promote on Twitter, Instagram and YouTube. There are also unexplored social media platforms like Pinterest. You can play around and slowly build the community.
• Hire a good designer – Design is what attracts us in the first place. Functionallity should come later. If you have a great design, it acts like a free marketing tool. People will see your art and go to your website to learn more about it.
• Paid promotion is great – If you can get an influencer to promote your project within your budget, go for it. However, it’s hard to find reputable influencers in the NFT space. We can help you list you NFT, but more about that later on.
• Put the utility in the first place – There are many NFT projects with zero utility. Use this fact to your advantage. Make sure you let people know that you have an NFT utility project that can help them with something.

You can think of your NFT utility project as it was a company or a product. Make sure the marketing is on point, the design is great, and the explanation is as simple as possible.

Why you should create an NFT utility project?

You might be wondering what’s in it for you and why you should create an NFT utility project. First of all, NFTs are relatively new in the blockchain world.

Basically, you can be amongst the first people that use this cutting-edge technology. NFTs are definitely the future and big companies like Nike are already looking for ways to use them.

Nike has also filed a patent that involves NFTs to verify their limited edition sneakers. If big companies can use NFTs for their projects, why shouldn’t you as well?

In case you are thinking that the fees to implement NFT must be high, think again. Almost anyone can afford to create NFT utility nowadays. We’ll go through the fees later on.

Other than that, you can use NFTs to provide something unique and special for your customers or fans. Take the Kings of Leonexample, their fans got a limited edition vinyl and a digital asset all in one.

Since Kings of Leon is a worldwide known music band, this NFT and vinyl will probably increase in price over time. So, you can actually look at NFTs as if they are an investment.

There are million other ways how you can combine your business or project with NFT. It doesn’t matter if you are usually selling exclusively physical products or digital. Artists from both worlds can both benefit.

It’s a bit unrealistic to take the 3LAU example where he sold his music album for $11.7 Million, however, there are many anonymous users that sold art for several hundreds of thousands of dollars.

Obviously, everything in this world has its pros and cons, NFTs as well. We’ll go through both the pros and cons, so we can help you decide if it’s worth the hassle.

Pros

First, let’s talk about the pros. There are plenty of good reasons why you should create your own NFT utility project.

• Cutting-edge technology – You can be amongst the first ones to implement NFTs. In most cases those who are the first ones to implement new technology get a bonus. In this case, the bonus are the people who will follow your project and purchase from you. It will be much harder to compete once there are million of other projects around.
• Sell directly to the fans – Doesn’t matter if they are your fans or buyers, you can sell to them without middle parties. There are many different marketplaces where you can register and start selling right away. Most of the best NFT marketplaces have a small commission fee of 2.5%, which is much lower than what phyiscal agencies charge usually.
• Remain anonymous – If you have a great project that doesn’t need you to expose your identity, you can remain anonymous. All you need is a pseudonym and you are good to go. Since the purchase of NFTs take place through digital wallets, they won’t see your name on the wallet either.
• Extra value – Just as we have previously mentioned, you can provide something unique and special for the buyers and fans. Buyers will have the proof of purchase stored on the blockchain forever. However, it’s not just the proof of purchase but the art or whatever your NFT is about, as well.
• Get paid in crypto – Instant transactions, no more delays from the banks or high transaction fees. Get paid in cryptocurrency and you’ll instantly receive your funds. There are different blockchains you can sell your NFT on, so the cryptocurrency depends on the blockchain you choose.

Cons

Now let’s talk about the cons. As with everything, there are cons to using NFT.

• Wallet security – As opposed to a bank account, you are solely responsible for the security of your digital wallet. That means if something happens to your funds, for example if you are hacked, there is nobody to refund you money. That being said, blockchain is almost impossible to hack, but your computer is. Beware what programs you download.
• Transaction fees – Some blockchains like Ethereum can experience high gas prices during certain times. However, other blockchains like Polygon or Tezos have super low transaction fees. If you want to minimize the fees, choose blockchains with lower transaction fees.
• Digital wallet – You need a digital wallet that supports NFTs in order to hold your NFT utility collectibles. Even if you are just a seller, you’ll need a digital wallet to receive a payment from all the sales you do. If you are unsure which wallet to get, take a look at our best NFT wallets ranking.
• Convert to fiat – If you want to get fiat currency such as USD, you’ll need to convert your cryptocurrency. In order to do that, you’ll need to find a reputable cryptocurrency exchange. Such exchanges have a wide variety of cryptocurrency you can deposit and they charge a trading fee and withdrawal fee.
• Smart contract fees – If your project is really complex, you’ll need to hire a blockchain developer to write the smart contract. These developers can charge a high fee for their work.

Are there any fees to create NFT utility project?

In case you are wondering how much it costs to publish your NFT project, let’s break down the fees.

There are two different types of fees:

• Blockchain fees – Trading, Minting, Deploying a smart contract
• Marketplace fees – Comission, Listing

Blockchain fees are related to the transactional fees that take place on the specific blockchain that powers your NFT marketplace. In case you decide to sell your NFTs directly on your website, fees will depend on the blockchain you solely decide to use.

As we have previously mentioned, if you want lower transaction fees, choose such blockchains. For example, OpenSea, the largest NFT marketplace supports Ethereum, Polygon, and Klaytn.

Ethereum has had high transaction fees ever since the NFT marketplace has exploded because it’s not scalable enough. They might fix it once the ETH 2.0 gets released. Most bigger NFT marketplaces operate on ETH, so this represents a big problem both for the buyers and sellers.

To battle this, certain marketplaces like OpenSea have enabled support for other blockchains like Polygon and Klaytn. Both of these blockchains have low transaction fees, however, Polygon has a wider usage.

The transaction fee is necessary both for the trading of NFTs, minting NFT, and deploying a smart contract. Smart Contract spends a little more “gas”, so the transaction price is a bit more expensive for it as well.

Another type of fee that you must account for is the marketplace fee. There are two different fees that take place on the marketplace, the listing fee and the commission fee.

Commission fees are paid on a successful sale of your NFT. These range from 0% to 15% of the sale price. They are automatically paid for when you sell your NFT.

Not every NFT marketplace charges listing fees, but some do.

How much does it cost to list an NFT?

Listing fees depend on the NFT marketplace you decide to sell on. These fees are usually not high but serve as protection against spammers and low-quality projects.

For example, DigitalEyes charges a listing fee of 0.01 SOL which is a super low price. However, some marketplaces in the future might charge a higher price so make sure you check their FAQ before you decide to list your project.

Why are NFT gas fees so high?

Gas fees depend on the blockchain and the complexity of the transaction, if the transaction is complex, the gas fees are higher. Still, the fees majorly depend on the blockchain you have chosen.

If you want to reduce the gas fees, choose blockchains that have lower gas fees. Such blockchains are Polygon, Klaytn, WAX, EOS, XTZ, and more.

You can compare ETH transaction fees to Polygon or some else, and you’ll quickly see that the transaction fees cost are even higher than 10:1. Still, Ethereum is powering many more projects, so that plays a big part in it as well.

Can you sell NFT for free?

Yes, you can list your NFT for free on marketplaces such as OpenSea. The trick is to use a different blockchain like Polygon instead of ETH.

OpenSea does something they call “lazy minting”. Basically, lazy minting is a method they have developed to allow people to post their “NFTs” without paying any gas fees.

The thing is, the things you put on the marketplace are not actually NFTs unless sold. When someone buys it, the buyer will pay for the minting (gas) fees and your art will become an NFT.

If you want to sell on the OpenSea marketplace, you’ll have to sign your wallet. Signing the wallet with Polygon is free. Combine lazy minting and polygon, and you got yourself a free minting.

Still, you have to pay the commission fees to the marketplace.

Can you earn royalty fees from NFT utility project?

Yes, you can set up royalty fees and earn money from your creations forever.

Certain marketplaces have royalty fees percentages already predefine. This percentage is usually around 10 to 15% per sale. Basically, each time someone sells an NFT you have created, you’ll get that percentage from the sale.

Other marketplaces will allow you to set the percentage yourself. What if you want to sell the NFTs on your own website instead of a marketplace?

Well, you can always define the royalty fees in the smart contract. Remember the smart contract we were talking about? You can specify the royalty fees in it to define what percentage you will get on each sale.

List your NFT utility project

Every successful NFT utility project had a great marketing strategy behind it. If you are looking to get the maximum out of your project, this is something you have to work on.

Even if you are a marketing guru with plenty of social media channels to promote your project on, direct promotion is always the best. Our team on BestNFTs is researching new NFT projects and companies every day.

We know how the marketplace works and what they want to see. In case you have an NFT utility project that you want to promote, we can work together.

Our team of experts will first analyze and research your project, and if it’s quality enough we will gladly promote you. You can get a spot in our rankings which gets seen by plenty of people from this industry.

These are all your potential buyers and all of our visitors are high-converting. The reason why people visit our website is that we are the best independent authority on NFTs.

Also, we have our NFT University section that provides a different guide for those of you looking to learn something new.

Why work with us?

We are invested in the NFT space since the beginning. If there is an ongoing trend in the NFT space, better believe we are on it.

Our team of experts consists of researchers, investors, and even creators. NFTs are a part of our daily life and we know what has to be done to get the best out of your project.

Even if your project is not approved for the listing on our website, we’ll let you know what to improve on. You can then fix those things and re-apply.

Our service is much more affordable than paying for a social media influencer with a questionable amount of real followers. Other than that, our visitors are coming directly from the NFT niche.

Don’t miss out on this opportunity, contact us right away.

Kresimir Ilicic, Author

This part of the minting process cost is related to the blockchain, and not the marketplace. That being said, NFT Marketplaces cannot profit from gas fees, if anything, it hurts them in the long run.