Non-fungible tokens or NFTs are the new digital assets living on Ethereum blockchain and are one of the hottest topics in the digital market. Each NFT is unique and cannot be replaced. They also allow users to interact with smart contracts.
However, the price of NFTs is so high now. Therefore, almost all enthusiasts look for cheaper or even free NFTs. If you also look for ways to get NFTs at the lowest price, check this tutorial. One way to purchase NFTs at lower prices is to join an NFT drop. NFT drops are great opportunities for investors to buy NFTs from a collection at low prices. However, there are some points about buying NFTs in an NFT drop. In the following, we provide a full guide on what an NFT drop is and how it works. Besides, we study the ways to participate in such events.
What is an NFT Drop?
NFT drop is the term used to describe the method of token distribution. In an NFT drop, a blockchain project distributes its tokens to the public. NFT drop is often used in the gaming industry and a game developer distributes its gaming tokens to its holders and the public.
Simply put, an NFT drop is a way for non-fungible tokens to be distributed from an ERC-20 token’s smart contract. While the goal of a token sale is to raise funds for the project, an NFT drop is a tool for attracting new users and distributing value to existing users.
NFT drops and airdrops are similar in that they provide free tokens to users. The main difference is that you cannot send NFTs to other addresses or store them in contracts because they have unique ownership attributes that are not transferable. In an NFT drop, a limited number of NFTs in a collection are released at a low price and sometimes there are limitations on number of minting. After the sale, the prices usually raise. However, the developers prefer their holders to keep the NFT for a longer time.
Most of the NFT drops require participants to sign up for a new account on a website, play games on a platform, or purchase something from an online store. For example, CryptoKitties, one of the most popular NFT dApps, distributed a free CryptoKitty to every user that bought at least NFTs worth 0.015 ETH from the game’s online platform.
What are the Benefits of NFT Drop?
NFT Drops are fun and incentivize users to try new dApps. An NFT drop also creates a viral loop to retain users in the long run. Besides, it also brings more attention to dApps and can help them gain traction in an increasingly competitive market.
Another great advantage of an NFT drop is that the NFT will be used to pay for all of the fees for the token sale. Therefore, users who purchase tokens will not have to pay any additional fees and will receive the full amount of their purchase.
Furthermore, new developers in the world of NFT can use NFT drops as a way to build an initial user base and validate their idea before launching a full-scale product or service.
As well to the new NFT developers, new NFT projects may also use NFT drop to present themselves to existing communities and build relationships with them. The community that worked with the project via the NFT drop can help vote for the token to be listed on exchanges.
How does an NFT drop work?
An NFT drop works using the ERC721 standard on the Ethereum blockchain. This standard allows the production of ERC721 tokens that are unique and non-interchangeable. These tokens can then be used in various ways, including creating collectibles, games or even digital trading cards like cards on Rare Pepe Cards or CryptoPunks.
Developers drop these ERC721 tokens into a group of people who follow the previous projects of the developers or are new to a project. This method works because each token has a unique ID that can be tracked using blockchain technology, which allows each user to verify if they received the token from a reliable source.
Where to find NFT drops
The most important thing about an NFT drop is hearing about it in the first place. As the industry becomes more popular and more investors enter the space, it can be more difficult to get information on every single NFT drop. However, there are some ways to make sure you will not miss a drop.
Social medias
Social media usually proves to be the best place to source information quickly. Twitter, Instagram, YouTube, and Facebook are great places to hear about NFT drops before major publications report on them, so it’s a good idea to find a few reputable accounts and follow them. However, make sure you verify your sources, as the news on social media can be false and the potential for scams is high.
NFT communities
Join an NFT-related Discord server, or another similar platform if you want to connect with NFT investors. These are excellent places to hear about the upcoming drops.
NFT marketplaces
NFT marketplaces where drops are held usually advertise upcoming drops directly on their website. Markets like Opensea, SuperRare, Foundation, and NiftyGateway are some of the most popular, so make sure you regularly check for any drops that might catch your attention.
4. NFT news sites
It seems a must to follow some of the best NFT news sites to get the latest information on upcoming drops.
How to prepare for an NFT drop?
There are a few steps to take if you wish to attend an NFT drop.
Have a digital Wallet
Most NFTs are hosted on the Ethereum blockchain, which means you’re going to need some ETH and a compatible wallet. MetaMask is one of the best choices as it covers a wide range of exchanges and purchases.
Purchase ETH to cover gas fees
Load your wallet with enough ETH to cover the gas fees. Gas fees vary widely depending on how busy the network is, so always check the rate before going through a drop.
Research the NFT creator
Research is a critical aspect of any form of investment, but you need to be more careful in the NFT world. When you buy an NFT, you’re essentially buying the brand (or the brand’s public perception) since that is what will drive the value.
Always remember that there are thousands of new drops each week, so try to avoid any rush to buy an NFT that doesn’t match your criteria. There will always be another NFT drop to match your pocket and desire.
Things to Avoid When Buying NFT Drops
- Avoid buying NFTs from any non-verified source. There is always the danger of scammers.
- Before buying an NFT drop, check if the NFT is an ERC721 token. If it’s not, then you might lose all of your money on the wrong token.
- Don’t buy NFTs that are made by shady developers. Study the developer’s background and reputation before deciding whether or not to purchase their digital assets.
- Don’t buy NFTs in rush just for the sake of getting them. If you don’t have a specific use for an NFT, then it’s not worth buying.