Last updated on February 24th, 2022 at 09:42 am
The term ‘whitelist’ has become quite common in the NFT space, with people using the term on Twitter, Telegram, and Discord. Whitelist is a list that contains a certain number of community members that benefit from perks from being on the list. Usually, the list can only be joined by carrying out some designated tasks earmarked by the project. It could be as simple as inviting a few friends to the Project’s Discord or Telegram group or it may be more complex.
The concept was created to reduce the occurrence of gas wars. When an NFT project opens its minting window, people tend to use the upper limit of the gas fee option to mint their NFTs faster than others. Congestion usually occurs during that period, and those that prefer to stick to the regular gas fee range may not have their transactions verified. In the minting frenzy, people fight over the number of tokens that they are ready to pay as gas fees, excluding the value of the underlying NFT. Some people end up paying hundreds of dollars and even thousands of dollars in gas fees to be one of those to mint the NFTs before the window ends.
These whitelists are created by projects to allow community members to win free NFTs, mint them before others, or access them at a discounted price. Usually, this system aims to improve the visibility of the project by community members promoting the platform on social media and inviting potential users. Joining a whitelist provides access to a VIP list, whose members enjoy perks that are not available to the public and other community members.
Those that make it to the whitelists may have to input their wallet address into the form created for the purpose, which is used by the team to add those wallet addresses to the project. This process allows the holders of the addresses to mint the project’s NFTs before others, at a discounted value or for free. Projects give their community members a specific timeframe to opt-in for this benefit.
Why do NFT projects create Whitelists?
Whitelisting involves getting a wallet address pre-approved by the team for a future NFT mint. If the project is built on Solana, the address used is a Solana address. NFT creators incorporate this strategy into their operations, for marketing purposes or to ensure that the minting process is seamless.
• Creating a buzz
New NFT projects are developed regularly, and many of them are based on similar concepts utilized by their predecessors. To differentiate themselves from their competitors, they devise a scheme that rewards community members who write about them on popular social media platforms such as Twitter, Discord, Reddit, and Telegram.
Sometimes, they encourage people to utilize the ‘word of mouth marketing strategy, which is called Shilling in the crypto space, to propagate the features of the platform. To do this, users may have to leave comments on popular NFT influencers’ postings.
These members end up shilling these projects and proceed to upload evidence of their engagement activities to the Project’s Whitelist Discord channel. To draw public attention to a whitelist event, the team may employ the services of an influencer.
• Spreading out NFT sales
For different reasons, a project team may decide to spread out the sales of NFTs. It could be to ensure that the project does not have potential buyers crowding the sales. Spreading out the sales may also provide the project with a sense of worth. When the minting process is open to everyone at the same time, it could negatively impact the network’s effectiveness, making minting a Herculean task.
Projects use whitelists to achieve this by giving participants access to the sales or minting process before others.
• Transaction or gas fees
When a network becomes congested, it becomes a problem for those using it at the time. Gas fees skyrocket. The transaction speed slows down, and transactions may not be completed.
Minting on Ethereum is now expensive due to the usual network congestion that it suffers. When an NFT project allows everyone to mint NFTs on Ethereum at the same time, it may significantly raise gas fees, which may be frustrating to community members. To combat this, designers developed the concept of a whitelist, which allowed people to mint NFTs at different stages. Some teams are opting to build their projects on less expensive networks such as Solana and Near.
Low transaction speeds and failed transactions are typical characteristics of a congested network. During a sales rush, the project’s website interface, which users use to interact with the blockchain, may also fail to work effectively, necessitating the creation of Whitelists.
• Smart marketing
NFT teams use a whitelist system as a smart marketing tool, passing the grunt work of convincing people to join the project to their potential buyers and early community members. The would-be buyers view this strategy as a way to earn NFTs that they can flip for a profit without paying the full price or getting it for free. Though this benefits both parties, the creators have a better advantage compared to the potential buyers. Early community members are not guaranteed to make the whitelist, not minding that they carried out every task and fulfilled every obligation attached to the competition. Typically, the creators have the discretionary power to select those who will join the list or may have hidden criteria that they apply in judging.
• Driving up the value of the NFTs
Whitelist activities are designed to increase the amount of attention an NFT project receives. When a project draws public attention, there is a good chance that demand will outweigh supply, increasing the price of the NFT. The Bored Ape Yacht Club NFT project, for example, has a floor price of 100 ETH, which means that the least value of any of the ten thousand BAYC NFT currently in existence is worth at least 100 ETH.
How to join a whitelist?
Whitelists are often only valid for a limited time. NFT enthusiasts who do not make the list may have to wait till the general minting process is open to the public.
To join a whitelist,
Look for a project still in the pre-launch phase: This can be done by checking the NFT Topics section on Twitter regularly.
When a whitelist event is about to begin, projects make an announcement.
Once a new project has been discovered, the next step is to join the project’s Discord group. Whitelist activity instructions are frequently published in the Discord channel.
Typically, projects that announce whitelist events are either new projects that have yet to debut or current projects considering launching a new NFT series.
What is the state of the Whitelist at the moment?
Whitelist activities are usually designed to foster community building, interaction, and even create a buzz around the project.
Some NFT projects assign responsibilities to their community members, such as promoting the project through shilling, inviting people to join, solving riddles, dropping messages in the group, and a variety of other activities.
As days go by, the number of whitelist tasks that people have to do to benefit from the perks attached to the system continues to increase. Usually, people have to spend long hours daily carrying out these activities, which may not be sustainable.
In the NFT scene on Twitter, people have complained about the unsustainability of this model, as some feel that it is strenuous and may negate the core purpose, which is community building.
Douglas Boneparth, a CNBC Advisor, is one of those that share this thought, and he made this known in a tweet where he jokingly poked holes in the strategy of grinding that is currently visible in the whitelist system,
“I finally got on the whitelist for an NFT project I’ve been following. All I had to do was join 5 discord servers, tag 18 friends in a tweet, provide a sample of blood, pat my head and rub my tummy. Worth it.”
In Conclusion,
- Whitelists were created to reduce the occurrence of gas wars.
- Projects use Whitelists to improve their marketing strategies.
- Whitelists are smart tools to shift a part of one’s marketing needs to potential buyers.
- People participate in Whitelists as a way to earn NFTs free, at a discounted value, or mint them before others.
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