nft incentives or bribes Incentives or Bribes?

When we think about the terms “incentive” and “bribe,” it’s easy to distinguish them at a surface level—bribes are generally seen as immediate, arbitrary payments made to sway behavior, whereas incentives are logical rewards given over time to encourage specific actions. However, the line between these concepts blurs when we delve into the business models of NFT projects, so let’s dive in.

The Conundrum of Initial Sales vs. Sustained Engagement

NFT projects typically generate the bulk of their revenue through the initial sale or minting of the NFTs. Beyond this, they mainly rely on secondary sales’ royalties, which often do not suffice to cover operational costs or sustain the project long-term, or in some cases they have some copya pasta tech that gets minimal use and generates another small trickle of revenue. This financial model means the team will have a strong focus on marketing to drive demand, hype and speculation on mint day as its their big pay day, but what happens after that?.

Post-Mint Incentives: Strategy or Desperation?

Given the limited revenue from secondary sales, why do projects offer post-mint incentives? The primary goal appears to be maintaining or increasing the NFT’s value, which in turn could boost trading volume and generate more royalties. However, this strategy comes into question when considering the market’s current expectations—holders often prioritize monetary gain above all else, showing little interest in non-financial value propositions.

Projects may distribute tokens via staking, WL giveaways or share revenue as “incentives”, which requires the team to continuously invest treasury resources to maintain token value or keep holders satisfied. This approach raises concerns about its sustainability and the real motivation behind these incentives—are they genuinely aimed at rewarding engagement, or are they essentially bribes to attract investment?

The Vicious Cycle of Monetary Incentives

This model not only puts strain on the project’s finances but also attracts a customer/holder base more interested in immediate profits than in supporting the project’s vision or receiving some non monetary value. If the financial rewards stop or slowly diminish, these profit-driven participants are likely to abandon the project, leading to a decline in the NFTs floor price. This drop in price also pushes them out of that narrow window of relevancy amongst other collections which in turn reduces trading volume and the ability to generate any meaningful revenue through royalties. In the end you’re left with a bunch of angry holders who where exit liquidity and a burnt reputation for being a “rug”.

Rethinking the Value Proposition

The current model’s shortcomings highlight the need for a shift in how NFT projects conceptualize value. The focus on financial incentives has proven to be a fragile foundation for building a lasting community or customer base. Projects need to innovate beyond monetary rewards, offering value that aligns with their vision and encourages genuine engagement for a symbiotic relationship between creators and consumers.

While the solution to this challenge remains elusive, it’s clear that for NFT projects to thrive, they must find new ways to offer value that resonates with their audience beyond just financial gain. This might involve creating more engaging, interactive experiences, building useful products or leveraging the unique capabilities of NFTs to foster a sense of ownership and participation in something greater than just an investment opportunity.

Summary

The distinction between incentives and bribes in the context of NFT projects is more than semantic—it’s a fundamental issue that goes to the heart of these projects’ business models and the irl experience of the teams running them. As the NFT space continues to mature, the longevity and success of projects will likely depend on their capacity to innovate and redefine the concept of value, ensuring it supports both the businesses viability and their community engagement.

The point of this article was to serve as a thought provoking piece not only for aspiring founders and entrepreneurs considering the launch of their NFT project, but also for consumers speculating in the current market. My goal was to provide both groups with a deeper understanding of the market’s present state and to offer a perspective on its potential trajectory. I hope you enjoyed it and would love to hear some feedback and thoughts on this topic.