Starting an NFT project is a risk, as only slightly more than one in four freshly minted tokens makes a profit, while more than 65 percent of NFTs make profits in the secondary markets.
Data from the NFT marketplace Opensea show that only 28.5 percent of freshly minted NFTs ( non-fungible tokens ) are sold for a profit. This fits in with a new report by the blockchain analysts at Chainalysis, who also come to the conclusion that NFTs are not a license to print money.
Whitelisting as a vital strategy for success
Rather, it is almost impossible for investors to generate disproportionate profits with newly minted NFTs without being on the whitelist, according to Chainalysis in its latest NFT market report, which the company published on Tuesday. Whitelisting is thus proving to be a veritable strategy for NFT enthusiasts.
As Chainalysis found from Opensea data, investors who are whitelisted achieve dramatically better returns than those who later bought the same NFTs in the secondary markets. Whitelist buyers then achieved a profit in 75.7 percent of the cases, while the unlisted was only successful in 20.8 percent of the cases.
Whitelisting is a marketing strategy that new NFT projects like to use to increase interest in their collections. As a rule, a selected group of early and committed fans is offered the purchase of the NFTs at a significantly lower price than other users during the imprinting phase – i.e. while the digital files are being converted into NFTs on the blockchain. Those who make it onto the whitelists have usually shown themselves to be particularly active followers and, for example, contributed to the project’s Discord servers or advertised the collections on Twitter.
“The data is clear,” said Chainalysis, “whitelisting is a significant financial reward for those who play a role in the success of an NFT project by promoting its early community growth.” Overall, 78 percent lost the non-whitelisted buyers received more than half of their original investment in reselling the NFTs. On the other hand, 78 percent of whitelisted members benefited from reselling, doubling their initial investment more than half of the time.
Chainalysis data also shows that high activity in NFT trading pays off massively. In secondary trading in NFTs, 85 percent of profits were made by the group of investors who made the most sales.
The important finding: The most successful NFT investors do not have a significantly higher hit rate than others. They just flipped significantly more NFTs and achieved a higher average price per trade thanks to their whitelisting advantage. Overall, however, the hit rate was similar to that of the less successful group.