BRAZIL – 2021/06/16: In this photo illustration, a NFT (Non-fungible token) logo seen displayed on a … [+] smartphone. (Photo Illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images)SOPA Images/LightRocket via Getty Images
Non-fungible tokens, or NFTs, were the hottest thing in the cryptocurrency space in 2021. The NFT market generated more than $23 billion in trading volume during the year—rendering the $100 million from 2020 a drop in the ocean. With the continuous emergence of new use cases, 2022 is shaping up to be another exciting year for this growing class of crypto assets. One of such use cases is the incorporation of raffles with NFTs.
Gaming and collectibles were the biggest benefactors of the NFT boom of 2021. The use of NFT in gaming introduced the possibility for gamers to become the undisputable owners of in-game items, which would previously have been lost at the end of a game. In addition, artists are now able to sell their creations in digital form without having to go through the traditional gatekeepers like auctions houses and galleries. The upside is that they can sell to a global market while keeping a meaningfully larger portion of the profits.
However, given that NFT collectibles are vastly sentimental in value (at least in the pre-metaverse world), every successful project needs one or a mix of three ingredients — influencer/celebrity involvement, a strong community and utilities for holders. The earliest projects including the CryptoPunk and the Bored Ape Yacht Club (BAYC) had strong celebrity involvement. For instance, Jimmy Fallon, host of The Tonight Show brought a BAYC for $145,000. Several popular people have gone one step further to mint their own NFT. For projects with a heavy celebrity or influencer involvement, community build inherently comes easily. Other projects, however, must look for more creative ways to build and grow their communities.
Open Head NFT, which launches on January 12, is one of the projects that is creatively growing a community. It’s offering collectors who mint or buy its NFTs the opportunity to win ETH prizes via periodic on-chain raffles.
Open Head NFTs are a collection of digital arts that portray what it means to have a limitless mind or a literal open head without boundaries of thoughts.
“There are many NFTs out there today, and new ones launch every day, but many of them are more of the same. Nowadays, there are 100, if not 1000s of different apes, and animals [NFTs],” said Quim Roca, Open Head’s chief executive.
For Roca, bringing something unique to the market begins with offering a new class of collectibles before following it up with a different kind of utility.
“I think that the creative art that we have is very unique; there is nothing out there like the Open Head concept,” Roca added. “Then, I wanted to go one step [further] and not only make an art project; I wanted to Open Head to be something that brings value to a holder in the long-term, so you always have a real reason to keep one Open Head in your possession.”
Roca and his team are hoping that the raffle feature of their project will be a sufficient reason to want to buy and hold an Open Head artwork.
Raffles aren’t a new concept in the crypto space, though. OlympusDAO integrated the provably-fair and verifiable random number protocol Chainlink VRF for its no-loss lottery. The NFT space is also seeing an increasing number of lottery-type use cases. However, Open Head differs in that it is first an art project that wants to use raffles to grow its community. Although competing projects such as the Mystery Mint claim to use Chainlink VRF to conduct raffles for transparency purposes, Roca insists that none of them are fully on-chain, introducing different single points of failure.
“There are other projects out there that do NFT raffles, but none of them is fully on-chain; they have some off-chain operations that are required for the raffle itself to actually work,” said Roca. “This means that the owners of the project can decide to stop running them [the raffles] at will, and that’s what makes us different; we are a fully on-chain raffles system.”
For Open Head, being fully on-chain means that, upon the deployment of its smart contract, the logic for minting the NFTs, conducting the raffles, deciding winners and ultimately crediting the winners’ wallets will occur automatically on-chain.
The design of the Open Head NFT raffle is such that once all its 10,000 digital arts have been minted, there will be an inaugural raffle that will see an Open Head holder win 100ETH. That’s just over 14% of the anticipated 700ETH in proceeds. Minting an NFT will cost 0.07ETH.
The project has also earmarked 60% of the royalties generated toward periodical raffles — 50% for monthly lotteries and 10% for weekly draws. The remaining 40% of the royalties generated will go to the team and project growth initiatives.
While the potential for winning large ETH sums is attractive, it’s yet to be seen if that would be enough to entice NFT collectors. First, the Open Head project doesn’t have the influencer-backing of the CryptoPunks or BAYCs. That can make it difficult for collectors to attach any social or sentimental value. That said, the project may be an easier sell to people who already play lotteries.
There’s also an important clause in the project’s publicly available manifesto, which states that the raffle occurs only when all the 10,000 NFTs have been minted. There’s no crystal ball to tell if or when the project will sell out for the raffle part to commence. That’s something to consider given the heightening competition in the space.
Roca, however, insists that the project will continue to run even if it doesn’t sell out.
“We have a fallback system that would allow the raffle system to begin if the project doesn’t sell out after three months. Without this, we risk losing the raffle money locked in the smart contract forever.”