Newsletter #157: What Every Collector Should Know
Plus, cute birds!
This week’s featured collector is Jorart
Jorart is a digital artist with a knack for depicting cute birds. Wonderful and whimsical! Check it out at at lazy.com/jorart
The results of last week’s poll: You can add one of these to your NFT collection. Which do you choose?
Last week’s poll provides insights into the priorities of today's NFT collectors. The clear favorite, selected by nearly half of respondents at 48%, is an "NFT with $10K passive annual income". This reveals that financial considerations and the potential for ongoing revenue are a top motivator for many NFT buyers.
The second most popular choice at 19% is "1/1 NFT by your favorite artist", indicating that for a sizable minority, the allure of a unique digital artwork by an admired creator outweighs pragmatic financial concerns.
Interestingly, just 5% chose an "NFT of the 1st internet meme", suggesting that most collectors prioritize other factors over the historical significance of owning an iconic piece of internet history. Overall, the poll sheds light on the often competing drives of financial gain, artistic appreciation, and cultural clout in the NFT collector community.
NFT Economics 101: What Every Collector Should Know About Market Dynamics
In the fast-evolving world of on-chain non-fungible tokens, understanding the economic and social forces that shape NFT markets is essential for collectors looking to make smart decisions. A study by researchers Sebeom Oh, Samuel Rosen, and Anthony Lee Zhang offers valuable insights into the unique dynamics at play in the NFT space. By drawing parallels between NFTs and traditional luxury goods, their analysis sheds light on the strategic underpricing and supply limitation that characterize successful NFT collections. For collectors seeking to navigate this complex landscape, taking the time to understand these key market behaviors can provide a significant edge. Let's dive into the main findings of the research and explore why they matter for anyone passionate about NFT collecting.
Key insights include:
NFT demand is often bimodal - collections either sell out quickly or struggle to sell 20% of their inventory. This "in or out" dynamic resembles luxury goods where social factors heavily influence demand.
NFT creators must strategically underprice and limit supply, even for highly sought-after collections. Attempting to raise prices could paradoxically reduce demand and doom a collection to becoming "out".
The deliberate underpricing enables a small group of "scalpers" (2.4% of wallets driving 50% of secondary market sales) to profit by flipping NFTs bought at initial low prices. However, the creators who underprice are still the biggest winners overall.
Why it matters for NFT collectors:
Understanding these market dynamics can inform smarter buying and selling decisions. Recognizing the "in or out" nature of collections and the widespread underpricing explains key behaviors like fast sellouts and high-profit flipping.
Ultimately, while NFT prices have fallen since the highs of the NFT bull market, insights like these help collectors navigate the space more knowledgeably. Studying the economic and social forces shaping NFT markets is time well-spent for anyone serious about collecting in this evolving space.
Learn more Chicago Book Review or read the original study here.
This week’s poll: Which of these art styles would you most like to see represented in an NFT collection?
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