Real opportunities for some big gains
So now you’re familiar with buying and selling Cardano NFTs (CNFTs) on marketplaces. Next, we want to talk about the second main way to acquire CNFTs — Minting. Minting is important as it can be one of the most profitable things you do when trading CNFTs.
Minting is the process of buying the CNFT from the project team when it is first issued. This is usually the point at which the NFT is first created on the Cardano blockchain.
Minting is different to buying from secondary (e.g. JPG Store). In that case, you are paying most of your ADA to another CNFT collector/investor. (NB: The project may, in most cases, still enjoy royalties associated with the sale).
Think of minting a little bit like a capital raise for a startup firm. Or an Initial Public Offering (IPO) when a company lists itself for the first time. It’s a funding vehicle for the project, but it comes with unique benefits for the investor too.
It’s all about Supply vs. Demand
The key benefit of minting is you have the opportunity to buy a CNFT at what might be a significant discount to the true market value. And in doing so, the potential to make a near-immediate return. Think of it as a premium you can earn for being early and trusting in the founders of the project.
When you mint a CNFT from a project, the price is set by the project team. If a project is in high demand (relative to available supply) you may witness a floor price on the secondary market that is much higher than the mint price.
Because of this many people will mint CNFTs and flip (sell) almost immediately to make an instant profit. This minimizes their risk of holding. But clearly, they may also be forgoing future potential upside if they held. A decision everyone needs to make for themselves.
You get to take a punt on rarity
The other major advantage of minting is you get to make a rarity gamble. Let me explain.
Most CNFT projects have an element of rarity built into their tokens. Often CNFTs with a particular trait (e.g. wings) will be much rarer and thus more valuable.
When you mint, you pay a fixed price but the CNFT you receive back is usually random. Thus you have an opportunity to mint something rare which may be several multiples (e.g. 10–20x) of the floor price.
Now, you won’t always mint something rare (I certainly don’t!). But when it does happen it can be very profitable. Often you can pay for your entire mint by selling a rare “pull” and still be able to hold a portion of the remaining CNFTs to await a bigger run-up.
Sounds great, what’s the catch?
Well, the main drawback is that until a project mints out, you are taking a gamble that the demand is there.
If the project doesn’t sell out, or even if it does, there may not be enough demand to maintain a decent floor price. In this case, you may find your investment quickly underwater.
This is why it pays to do good due diligence and research. Only mint projects you believe have a strong future and/or are in high demand. This is not actually as hard as it sounds. There are key indicators to look for which I’ll cover in a future article.
Minting of CNFTs does vary a little bit from project to project. Key factors are how they structure the mint (in terms of phases) and the actual mechanics of sending ADA in return for your NFTs.
There is some key information you’ll want to get your head around well before the mint, such as:
- The mint price — to ensure you have enough ADA.
- The mint date and time — so you can make sure you’re available. Mint times are usually specified in UST so get used to that! Be aware that as CNFTs are global, some mints may occur during unsociable hours…
- The mint supply — to understand how many in total are available relative to your perception of demand.
- Whether the mint is mobile compatible — in case you need to mint whilst out and about.
- The number you can mint per transaction — projects will usually cap the number of CNFTS you can buy per transaction. This is to give more people a chance of getting something.
- The mint phases (e.g. pre-sale vs. public sale) — see below.
On this final point, most projects will have some sort of pre-sale time slot. This is a time when whitelisted people can mint a certain number of CNFTs, sometimes at a discount too.
The public sale is then the time when it becomes free for anyone to mint at the full price. You often have to be fast during the public sale slot if a project is in high demand.
The amount you can mint, discount and length of the whitelist varies a lot from project to project. Sometimes projects will have no whitelist. Or some will only do a whitelist mint. This is why it’s important to research and get in early for projects you’re interested in to maximise whitelist opportunities. I’ll do a future article on ways you can get whitelists.
There are various different ways that mints are processed mechanically. I’ll go over a couple of the main ones here.
Old school “Address Drop”
This is a less common method but was one of the only methods back in the day. Effectively, at a given time the project team would drop a Cardano address in their Announcements channel.
You would then need to send the correct amount of ADA to the address and wait. If you were successful you’ll get your CNFTs back to your wallet in a separate transaction. If unsuccessful you’ll get your ADA back, minus any transaction fees.
I’ll admit, it feels intuitively like quite a “scammy” method of minting. The first time I did it I was very nervous waiting patiently to receive something back. But in reality, it is a valid method particularly if you trust the project. It also works from mobile devices if you have a mobile-enabled wallet (like Eternl).
It is however prone to scammers who drop their own addresses into general chat posing as a member of the team. As a result, it has more or less disappeared as a method but you do occasionally witness it.
It’s worth noting for this type of mint you will always see two transactions:
- One for the ADA you are sending.
- One for the CNFTs (or ADA if unsuccessful) that you receive back.
Minting service
These days, most projects opt to run their mint via one of a small (but growing) number of third-party minting services:
Some examples of popular services include:
- Peppermint
- ADA Anvil
- NMKR
- Secret Goats Society
Peppermint and ADA Anvil and two of my personal favourites right now.
Some projects also have their own in-house developed minting application. Cornucopias and CryptoRaggies are good examples of this.
Most of these will involve you heading to the minting website at the specified time, doing some kind of ReCaptcha and then registering to mint. Then you select the number you want to mint and it builds a wallet transaction for you to sign (a bit like buying a CNFT).
These services all operate slightly differently in terms of the user interface. However, the majority now offer some kind of mobile minting option.
Most of these services also employ “multi-sig” technology. This means that the operation occurs in a single transaction. Your ADA is both sent and your CNFTs received at the same time.
Multi-sig minting is a neater process and avoids the stress of waiting whilst your ADA is out of your wallet. It also avoids the hassle of projects having to process (and collectors having to wait for) refunds.
- “Minting” is the process of buying a Cardano NFT directly from the project as it is first created on the blockchain.
- Minting provides a good opportunity to buy at a discount for high-demand projects. You also have the opportunity to try your luck for a rare CNFT.
- You’ll want to ascertain key information before the mint occurs. In particular — price, supply, mint date/time and minting process.
- Older mints used to involve sending your ADA to a Cardano address and waiting for the CNFT to be returned. Most projects these days now use a third-party minting service and multi-sig transactions.
If you want to access my other content about getting started in CNFTs then head over here.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice.
