How does the NFT market work?

HOW THE NFT MARKET WORKS

Welcome to the third chapter of the NFT creation course! In this chapter, we will talk about the NFT Market, going in depth about it, how it works and all the details that you should know to develop yourself in the right way in this complex sector.

To follow any order, we will divide the chapter into "4 sections": the types of NFTprojects that exist, the blockchains that support NFT, the types of NFT audiences and finally the most importantly, how the NFT Marketplace works for a successful NFT collection.

WHAT TYPES OF NFT PROJECTS EXIST

Although we all knowNFTcollections such as "Bored Ape Yatch Club" or "Crypto Punks", thousands of projects have been and continue being verysuccessful. But broadly speaking we can establish in 4 types of collections: PFPs, Utility, Games and Art.

PFP COLLECTIONS

PFPcollections are those that are based on the artofthecollection for their use in profile pictures and their main utility is their community. It creates a sense of belonging and brings some value to it in differentways.

NFT WITH UTILITY

Utility-based NFTs are those that offer a specific use to their holders or to the community in general. When they do it to the community, they usually derive a benefit for the holders, it is very common that they do revenue sharing, that is, they share the benefits with the holders.

NFT GAMES

The NFT projects of games, which are usually called p2e (play to earn). Basically they are projects based on a game, the NFT are usually characters of the game or at least they are part of the game. Once the collection is done, a professional game designer is contacted and a release date is set.

NFT ART

Finally, we have the art NFTs. They tend to have a much moreniche audience, collections with less trading volume and focused on collecting.

IN WHICH blockchainS THERE ARE NFTs

Almost all known blockchains supportNFT, but this does not mean that they are the best choice to create your NFT collection. We are going to rely on statistics of top 10 blockchains based on Sales Volume with NFT to stay with the most attractive ones.

TOP 10 blockchainS BY NFT TRADING VOLUME

In first position we have Ethereum, known to all. It was the blockchain that gave life to the NFT (although it was not the network where the first NFT was created). It has always been unbeatable and still is, only surpassed in punctual days by Bitcoin or Solana.

Right after that, we have the Bitcoin NFTs, called Ordinal are very recent and have undoubtedly made a big gap in the market, we have to watch their evolution and see where they go.

In third place, we have Solana, its core business is NFTs and the network's success has been based on them since 2021. Since its disruption in the market, it has always remained in the top 3.

We continue with Mythos. It also is a very recent and successful network focused on NFT gaming projects. They have reached the top thanks to "Blankos lock Party" and their collaboration with the NFL.

Polygon is next, being in fifth place it has had great growth and it continues growing. It has been the go-to place for ETH buyers who can't or don't want to pay transaction fees of $50-150.

ImmutableX is much lessknown for the general public. It is also focused on gaming; it has remained at the top with such great games as "God's Unchained".

BNB is the Binance network. It is not such a widespread market, but it has had quite an impact with NFT Games such as Plants vs Undead or Cryptomines. These are decent numbers but a bit behind those already mentioned.

The last 3, Cardano, Arbitrum and Flow are much lower in volume, although Cardano is a much better-known blockchain than others we have already mentioned. 

It is worth noting that Flow, surprising as it may seem to us, is in the historical top 4 in NFT sales volume (it has been the network of choice for Zuckerberg's Meta, the NBA, NFL, UFC and even La Liga).

Special mention should be made to Wax, very successful in terms of NFT Games. Also Hedera, very popular among Hispanic NFT collections.

NFT INVESTORS TYPES

With what you've read, you've probably got an idea of which options best fit you. But you can't forget to know well the types of investors you will have in your NFT collection. In this case, we are going to separate into 4 types of NFT audiences: the "gamers", the "artcollectors ", the "speculators" and the "real investors ".

Gamers are the type of audience that invests primarily and in many cases solely in p2e, i.e. game-based NFT.

Art collectors are investorswhobuyNFT simply because of the value they find in the art in it.

I call speculators those investors who only want to buy and sell when they consider that they have made a enough profit. In other words, they do not invest because they believe in the project but simply to speculate on its price.

Finally, we have what I like to call "real" investors. Although they alsospeculate, they are investors more focused on the utility or value offered by the project and invest based on that. We can say that they go for the medium to long term. 

The last two arealso "subtypes" of gamers and collectors. But they frequent more these "pure" NFT projects focused on PFPs or utilities.

HOW THE NFT MARKET WORKS

We should keep in mind that all blockchain and NFT project types have identical operation as far as the market is concerned.

The NFT market is driven by speculation. People speculate based on hype and FOMO (Fear Of Missing Out). And this hype iscreated by influencers and especially by DAOs (referring to NFT communities and already minted projects). Investors will buy your NFTs if they believe their investment will be profitable.

DAOs make collabs, partnerships and "Alpha Calls" of emerging collections, giving them unique reach and importance. If we talk about influencers, they have a great impact on Twitter, although they also stand out on Youtube, especially talking about p2e.

In short, the market relies on people talking about us, but talking about us as a great investment opportunity.

CONCLUSION

To conclude I want to highlight again the most important message I want you to understand in this chapter: Investors will buy your NFTs if they believe their investment will be profitable. That's how the market works, you have to adapt to it and create a collection with the rightstrategies to be very successful.

Thanks for reading,see you in the next chapter!