Before I begin this report, I would like to thank all LUNAtics for taking their time to complete the survey. I was absolutely blown away by how quickly we reached the minimum quota, and I honestly can’t thank you enough for your support! This report will be long, I recommend taking a coffee/drink before kicking back and taking a read! Let’s dive:
Sample Size: n=1122*
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Let’s start easy, basics. What does a consumer of NFTs in Terra like?
On a base level, 2D Digital Art commands the highest % share of the market. With the core trio of 2D, 3D, and Pixel art taking a majority share of 80%. These stay within the norms of current trends within the market and are rather expected. Whilst observing an increasing proportion of users favoring unique and AI-generated artworks, indicative of the success of recent launches such as DystopAI and ArtsyApes.
To make sense of this, one must simply look at the general trends of the top-grossing NFTs across all ecosystems. Immediately, the top 10 market caps would be significantly skewed into one of these 3 buckets. Needless to say, you would see the likes of BAYC, Doodles, Punks, Galactic Punks, SMB, HellCats, CloneX, Azuki, and more. Due to the nature of this, consumers would tend to then lean towards sentiments that these forms of art are generally more “profitable” than others.
A large psychological barrier to NFTs constantly revolves around the topic of “profitability”, as a matter of fact majority of users within crypto came due to the potential of increased ROI in comparison to traditional investment methods. Yes, there are numerous individuals who are here for “tech” and “community”, but the fact remains that the retail market still revolves around the concept of “what do I get in return?” aka profits or at least benefits.
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Is having a PFP important?
Mascot PFPs are still the dominant art that is preferred. Not surprised. Digital identity has been a trending theme in the case of many communities. The concept of wearing a profile picture that depicts their membership or commitment towards the project’s community creates a sense of belonging and intrinsic utility. Your PFP acts like a brand, a connection to a label. In some cases, the value of your PFP, brings a social hierarchy of financial strength, a psychological comfort factor.
Humans are social creatures, we enjoy being part of a social group, and often thrive when we click well. This is further enhanced by the anonymity and digital presence that NFT gives, opening doorways for introverts (even like myself), to connect better, communicate clearer and express ourselves much more freely compared to how we would normally in the physical presence of others. This can be pointed to a similar way gaming culture can create online personas that differ greatly in comparison to how said user would behave in a real-life social situation. Emotions, decision making, honesty all elevates when one doesn’t need to be “doxxed” or face someone eye to eye. They can communicate their raw feelings and express themselves without ever feeling judged. And if they want to hide? A simple change of PFP or Discord/Twitter username does the trick (or a secondary wallet even).
The notion of the potential of digital identities and community culture brings about the sense of belonging. A sense of being able to express oneself freely. And that, is a huge psychological utility factor that resonates with individuals.
Why do other forms of art not resonate similarly? Well, it’s about the profile. An image to link to YOU. Humanoid, animal, mecha, whatever, psychologically a human brain is wired to link closer and find appeal towards emotional links when there is a “face” rather than an artwork. The same concept applies to Facebook and Instagram, more users use their own image as a profile picture to identify as themselves. It is far easier to create an identity with a “Face” than there is with “AI rendered art” or images that stray from portraits.
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Art? Utility? What else?
Unexpectedly, demand in the market has begun to mature beyond the subjectiveness of art and chasing quick hype flips. The community has begun to see the potential that yield-bearing, or utility housing NFTs can bring to the space. A form of investment that provides a benefit to oneself, rather than just a digital identity alone. A very positive sign, that encourages more project teams to innovate and develop real use cases and benefits towards their NFTs.
Begone to JPEG “art” that does nothing? Well… maybe not quite. But at least it might force the collectible scene to increase their effort on developing eye-catching art pieces.
Interestingly, art still holds a strong share when it comes to decision making even with the presence of utility. With only 29.5% of respondents willing to mint on utility alone. Demonstrating that emphasis on art and design still holds significant weight when it comes to consumer decision making (13.1% wouldn’t even consider the mint if the art isn’t appealing!).
A mixed response is denoted for projects’ 2nd mint. A split opinion between no and unsure results in a negative tone for projects attempting to launch a second collection if their first one leads to a poor impression. No surprises as the first impression leave the most lasting one. Projects cannot expect to generate added demand without strong internal and communicative developments prior to a second launch.
Projects with poor initial mints will face an uphill battle to encourage users to invest/reinvest into the next launch. Examples of projects that suffered this fate: UAPx and NIPTerra. However, Unstables through increased marketing and communicative efforts drove up demand for their 2nd launch, proving whilst difficult, it is possible to break the mold from a prior underwhelming mint.
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NFTs are a hedge.
NFTs a hedge against BTC/Market volatility? Half the community believes so. The resilience of popular or blue-chip NFTs during bearish swings has demonstrated some level of protection to consumers from market volatility. Albeit still minimal, Terra NFTs were observed to balance itself with its $UST value through bullish and bearish swings (post-panic sells). Projects such as Galactic Punks, HellCats, Luna Bulls, Levana Dragons experienced bullish movements through the months of February to March’22 despite the double top market downtrend in $BTC, and consolidation period of $LUNA. However, the strength of price action remains relative towards the project teams and community strength to drive demand, not many projects will be able to sustainably hedge against market conditions. Consumer opinion weighs strong here, blue chips will play a pivotal role in the ever-changing market sentiment.
With NFTs leading a charge in Terra, it’s no surprise that 70% of the Terra community has part of their portfolio in NFTs. The benefit for the scene can be attributed to the more stable and often bullish nature of NFT price action compared to the infamous Terra altcoin downtrend that is often discussed. Positive signs for NFTs developing in Terra, with the community more willing than not to explore new and upcoming launches.
One benefit may be the smaller community size of Terra resulting in an easier word of mouth and marketing structure to gain traction for projects. With informative websites like Speicherx’s web page and upcoming marketplaces like Luart and Messier pushing the status quo, users are gaining more and more accessibility to information and transparency within the market.
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73.1%, should be more.
Whilst high, only ¾ of the community actually engages in reading project roadmaps (and some of you may be lying, so this number may be even smaller!). It is highly encouraged for users to engage more with understanding projects and their details. This would add as a strong safeguard to rugs, scams, and cash grabs with little to no future post mint. Its basic due diligence here, nothing much to report, rather than a little bit of insight into consumer behavior when it comes to jumping into NFTs.
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The visual appeal factor remains a strong priority.
Almost 70% of users will read about utility, which gives projects a chance to break away from art. However, 30% loss in consumer interest is still a significant scale in any business model. Art is subjective but holds a heavy weight. It doesn’t matter even if art is arbitrary in NFTs. Your art presented is your biggest marketing tool. It will leave the largest lasting impression on consumer sentiment. If not, then you would require a strong utility factor. As shown by over 30% unwilling to even read a roadmap/utility/litepaper if the art is unappealing.
And there we go, supporting questions imply the same sentiment. Art plays a role. 42.5% stating utility such as yield, alone isn’t enough to push consumers to mint.
Projects need to combine both areas, art, and utility to maximize demand within the Terra ecosystem. Slip on one of the other and you lose a significant share from either direction. And if you don’t have either? Well, it gets very difficult.
Switching to Qual: 58% of qualitative responses (open ends) mentioned utility playing a key role that activates their engagement with NFTs, a strong consensus that a use case is highly important in the Terra ecosystem. Gone are the days of PFP domination without utility. However, more importantly, 52% of responses had themes that revolved around monetary gains or benefits. Think about it this way, if BAYC or Galactic Punks, etc. never did the 10x-100x+ narrative, would you honestly be that interested in NFTs? If you fail to deliver on that forefront, that’s when you begin to strain the levels of consumer loyalty that your project has gained. And trust me on this, humans by nature are cognitively built to get bored and lose interest very quickly. The qual responses depicted a hierarchy of needs, which goes in order of financial benefits, art, community, and then some. Diehard NFT community leaders may beg to differ, but never forget, you play to a retail market. Retailers never think the same way as degens. Greed drives many, and without it they would not be interested in the scene.
Greedy sentiment will always develop in a thriving ecosystem. Greed is then driven by the psychological impact of price action based on perceived demand. Dumping will always occur for “bad” mints because the impression provided is of low demand. This is the harsh nature of a profit-oriented mindset. Greed -> Profitability -> Dump/Flip -> Repeat. A cycle that we experience whenever we enter bullish sentiment in the market.
The community has significantly changed from the days of the blue-chip launches of GP, Bulls, Whales, etc. I dare say the community has easily quadrupled in size since then and is filled with people who don’t DYOR and just want to make a profit.
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Stealth Drops: hit or miss?
Now the controversial “stealth drops”. Data here may not be as simple as it suggests. Data suggests that a larger proportion of the community enjoys stealth drops, but in practice, stealth drop success has always been determined by the project team and its history. Observing recent stealth drops on the legacy marketplaces such as RandomEarth, Knowhere and Talis shows an overwhelmingly poor performance from many launches. RE averages <30% mint on its recent stealth launches, whereas Knowhere and Talis are often below that. Stealth drops are cool, but this is where it requires appealing art or innovative utility to capture an audience, and how clear your communication with the community can be once dropped.
Far too often projects are utilizing these instant stealth drops with no marketing to make quick cash. Observing revenues of 20–30k from stealth drops can be quick grabs from teams that may have a very low expenditure rate in the first place. Honestly not bad if you consider a 5x ROI if you are looking for a quick buck for a stealth drop.
Watch out and don’t get pulled into these. More often than not, stealth launches lead to projects that do not progress post-mint.
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Do launchpads play a factor? — YES
Marketplace matters. Luart? RandomEarth? Talis? Knowhere? Messier? Curio? OnePlanet? The lasting impression a marketplace/launchpad leaves you, will play a role in the sentiment development of your launches. Brand image. Launchpads are the secondary face of a project. Put it simply, a customer would be more willing to return to places of success or quality service, over one that leaves a bad impression. Trust in the team, UIUX, statistical performance history, due diligence, transparency, team engagement, everything contributes. How much effort is the marketplace putting into helping the launching project to be a success? That speaks volumes.
Think about it subjectively: Let’s use TerraBay as an example. TerraBay launched on Luart attaining >60% mint out, raising 745,000UST in a week. Would the community have minted more/less if it launched on RE/Knowhere/Talis/OP, etc.? This begs the point, the lasting impression that a brand imprints, plays a key role in developing consumer trust and belief in their products. Did the marketplace contribute positively or negatively to sentiment around the project prior to the mint?
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Btw:
I concur that 8% of you are the ones that don’t read or do any research and complain when you get rugged or the floor hits rock bottom.
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Supply and Pricing
Supply chain side looks to find a sweet spot between 2000 to 6000. Relatively speaking a strong quantity when factoring that Terra has a much smaller NFT community in comparison to ETH and SOL. The number is good, reducing the opportunity for oversupply.
Factoring supply and pricing would leave projects ranging around the 200k to 500k $UST marketcap. Reasonable targets to look towards. Although relatively speaking, it would be based on art and utility anyway. Data shows that LUNAtics don’t often focus on the overall marketcap, but rather price per mint and scarcity. Affordability without oversupply is a line that must be balanced. Projects take note, don’t be too greedy, but also don’t cut yourself too hard with low prices too. The community will appreciate and respect fair value price and supply ranges.
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Doxx to gain trust.
Project teams take notice, engagement is key, don’t just leave it to your community managers. People want to see and hear your “voice”. Psychologically, it resonates and connects better, it’s an emotional attachment. Show your presence, it gives a strong perception of your care about the community.
Doxxing provides mental security. It’s the basis of the entire enigma of “trust” in Crypto.
Having a face, a name, a verified piece of identification of team members brings significant clarity and credibility to the project. Just like any business in the real world, you would rather spend your money when there is a known face and visible liable party, over someone you only know by an alias.
Doxxing does not have to be fully public either. A significant majority believe that doxing with marketplaces is sufficient in bringing credibility towards the project. As of this date, only Luart and RandomEarth are taking measures to KYC project teams. Whilst not much is known about RE’s measures, Luart has published their details in a recent post, where every core team member must provide a form of valid identification which is verified by their KYC provider.
Marketplaces hold the majority of keys for NFTs to access the community, and therefore should be at the forefront of creating a secure environment for everyone to trade in. Failure to do so, would be ultimately a failure on the marketplace to do their basic due diligence, which not only negatively impacts the consumer, but their marketplace’s reputation, and inadvertently the entire NFT market sentiment in Terra. Every negative launch drives negative opinions. “Horns” effect in the “Horns and Halo” theory is often said to be a snowball effect that never disappears. It’s always easier to remember the bad things from a consumer perspective.
*Disclaimer: Luart has a stricter KYC policy as it is the only marketplace on Terra that operates as a legal entity.
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Engagement is important. More than a visual cue.
Twitter and Discord followers and engagement. What does this represent? It represents the true interest level in the product you are offering. Higher engagement levels tend to indicate a larger loyal fan base towards the project. Whilst as a project grows, the % engagement decreases (more floaters), but the quantity of engagement should remain on the uptrend, a low engagement, in general, is never received positively. Often rather than not, it gives the perception of the market being disinterested in the project. It’s a psychological barrier when it comes to consumer behavior.
Buying Twitter followers is a sure-fire way to be found out. Clear indication here that 81% dislike it. Particularly if no work is done by the team to market the project even legitimately. Cheap, lazy way to try and falsify demand.
However, interestingly the opinion is split on the sentiment if the project can grow their own following too far surpass the bought numbers.
What this indicates is that market sentiment can be reversed if a project continues to put the effort in despite a negative action undertaken. Whilst dividing opinion, it raised a 10.7% approval to a solid 43.3%, a near 50–50 split against negative opinion.
Again, this is very dangerous territory, I would advise projects not go the route of buying followers or engagements. Additionally, it is extremely easy to spot accounts with bought followers: Socks, Elephants, etc. Just don’t do it.
Influencer marketing does positively contribute towards a project’s initial impressions. Statistics show over half of the community will check out projects that influencers promote. Driving a decent route for projects to gain basic traction and consumer's eyes onto them and leverage their community development.
The larger focus should be on the quality of “influencer”. Followers don’t make the numbers; engagement does. Shilling any project sets out an influencer to be deemed as spam and less qualitative. One must also always monitor traffic flow of bots; it is well known that some influencers promote under the guise of buying RT + Likes. Commonly, I have caught a few on occasion that have unproportioned RT to likes/comments within minutes of their posts going up, clicking in, and easily spotting botted accounts. Remember to do your due diligence and research prior to engaging any marketing from anyone.
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You guys have no excuse on this one.
5.6%.. sigh.
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CT and Discord reign supreme.
No surprises here, Twitter and Discord remain the go to places to find information about projects. Project teams, keep things transparent and clear. Humans are lazy beings, the easier it is to find information, the easier it is to connect and create demand. Keep it simple, transparent, and easy to digest, focus on the USPs, niches, benefits, and key areas. Save the fillers for later. You need to communicate things in a way that will connect and resonate with your consumer base.
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Sub-communities, are great but must have a tangible benefit.
Sub-communities have helped to push greater interest onto projects, particularly towards specific traits. Quite often communities can create added value (1% Club, IO Bulls, Fraternity HC, etc.) however, needs to remain tangible to continue generating real meaningful interest. Sub-communities, driving interest or just a plain jane price pumping group? The majority of sub-communities will not add value to a project and are there in an attempt to drive up the dollar value of their attributes. Projects must be careful in endorsing sub-communities and ensure that they bring added value to the overall project. Anyone can create a sub-community, but few will innovate and develop. I am very keen to watch the next few weeks as they continually develop. The first to break the mold of basic giveaways and show niche benefits will be those that survive the culling once the market saturates.
Quality over quantity, don’t buy into a sub-community if they can’t provide you with added value, because at the end of the day, it does nothing.
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Final Words
The Terra community is a family-like culture that appreciates, and rewards true effort put into place by project teams. There are few easy routes in an ecosystem that is tiny in comparison to ETH and SOL. However, the results have shown a clear indication of the current sentiment, priorities, and hierarchy of needs that the community currently has. Utility is a large factor coming into play, art is subjective, and community development is key. NFTs are in fact a business, not just art, not just a community, not just anything else. You run it as a business because that’s the way to bring in customers: i.e., to grow your community. The failure rate of new businesses ranges around 90%. Why? Because they fail to deliver a product that encapsulates and drives penetration into the market. Innovation isn’t even the name of the game here. Stage 1 just must be delivering a “product” that people want.
Never discount the true disposable capital of consumers in the TERRA ecosystem. There are over a countless number of Terra wallets, but I would expect that over 50% won’t have more than a few LUNA. To compound the difficulty, even more, there are approximately 10k engaging with NFTs, and this isn’t even discounting multiple wallet holders or inactive wallets. Within a small ecosystem, lies a problem of limited disposable capital, which creates a cannibalistic culture between projects. Your fellow projects are direct competitors to your success, no matter how friendly you are between one another. Innovate or be left behind.
I highly recommend the community (consumers) to DYOR before getting involved in any NFTs, there are further good external resources like Rekt Wolf that also provide good community-driven analytics and insight, or the HellCats Fraternity sub-community. I highly recommend projects to use successful projects as case studies to help their product development and innovation processes. Implement a pricing strategy that fairly reflects your product’s true value. What is its true utility? Is there any utility? Be it now, or in 3–6 months’ time? You have your answer. Of course, do not neglect things such as art or community development. Develop a community sentiment that reflects what you desire your project to be.
Hope you’ve enjoyed this report.
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If you did enjoy this report and would like to assist in the financing of more large-scale (and small scale) studies and feel generous, there is a donation link below. All funds received will be utilized to ensure the quality of reports, assist with education expenditure + future rewards given will be continually improved!
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My Socials:
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Other threads and worthy reads:
Psychological Warfare when building NFTs: https://twitter.com/Aston_Tan/status/1501979679443595269
Financial Greed in NFTs:
https://twitter.com/Aston_Tan/status/1479307298484850688
