May 25, 2022 | Will, Dino, Hans
Pricing NFTs for a project’s mint is difficult. Talking with many project owners, the mental model for picking a price spans from looking at projects of similar size and quality (e.g., do what others have done) to back calculating price from the total potential sales revenue.
Technically, there have been different mechanisms that attempt to do better price discovery. The most popular approach as of late has been the Dutch Auction. In theory, this allows better discovery of the price since the price decreases over time to meet consumer demand. However, this effectively turns into a flat mint with a considerable gas war for high demand mints.
Azuki cofounder, @locationtba on the mint.
Similarly, several prominent projects began with using a dutch auction but moved away from it because of these shortcomings.
Moonbirds moves to a raffle. Yuga Lab project, OthersideMeta does a flat mint.
The most recent example of this was OthersideMeta. They moved to a flat mint because of their concerns with demand and it caused one of the largest gas wars to date, burning well over $100mm of ETH. Now that’s a problem!
At Yoz Labs, we’ve been thinking a lot about this space and this problem. Projects are in a precarious situation — if they price too low, they risk attracting flippers and/or causing a gas war that diverts revenue from the team to miners. If they price too high, they might not mint out (potentially fatal), or generate too much value for the team and punish minters who are are left selling at a loss.