How to Add Utility to NFTs
NFT creators can add some pizzazz to their projects by introducing utility
People like practicality. We drive practical cars, live in practical houses, and purchase practical clothing. We gravitate to objects that can streamline and perform tasks for us, and the scope of utility has grown alongside technology. Utility NFTs (non-fungible tokens) have made it possible for digital art to have practical benefits, and the result is a game changer for business and culture.
Organizations of all types can leverage utility NFTs to connect with their audience innovatively. A band can create a utility NFT that grants the owner access to commentary for an album’s best tracks, while a hotel owner could use a utility NFT as a virtual keycard. Here’s what it takes to add utility to an NFT and the best examples of utility NFTs so far.
What Are Utility NFTs?
Utility NFTs add additional layers of functionality to an NFT, either through digital or real-world benefits. For example, an NFT with digital utility could grant the owner access to a gated Discord community, while an NFT with real-world functionality could be an access pass to an exclusive restaurant. There are countless forms of utility NFT on the market, but here are some of the most common types:
Suppose you want to throw an exclusive party for a new product line launch, which will draw attention from fans looking for tickets. While old-fashioned stubs are adequate for an event, they don’t carry the same advantages as utility NFTs. Websites like Ticketmaster have brought to light how difficult it is to sell tickets on a large scale, especially if fans want to refund or resell their tickets.
Utility NFTs eliminate those issues. It’s easy for fans to trade and resell their tickets once they’ve purchased them through a variety of websites. The NFT creator benefits from the ease of trading too; they earn a royalty on each sale, including subsequent transactions. The NFT ticket can serve other functions if additional layers of utility are integrated. For instance, the ticket could get access to the event, then allow the NFT owner to see an exclusive recording of the event after the fact.
Want to sell exclusive merchandise to your most loyal customers? There’s a utility NFT for that. Utility NFTs can act like keys to locked purchasing portals, where fans can get priority access to new merchandise drops. The utility NFT could also include a digital twin of the purchase, which can be applied to an avatar in metaverse environments. Nike’s RTFKT shoes are a prominent example of how the system works — someone buys the actual shoe, then can sport a highly stylized version of it in digital realms.
Another form of utility NFT grants owners voting rights within an organization. These groups, called digital autonomous organizations (DAOs), give weighted votes to NFT owners based on the number of tokens they hold. Those owners then use their voting rights to resolve business matters, like whether to buy a piece of artwork and flip it for a profit. In time, DAOs may even become a mainstream investment opportunity.
While these are some of the most prominent forms of NFT utility, there are many others. Read our blog post “The 10 Types of Utility in NFTs” to learn more.
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What Are the Benefits of Utility NFTs?
Utility NFTs pack more benefits than their core functions. Both owners and the organizations that create them will find advantages to using utility NFTs that other kinds of merchandise, memorabilia, and tickets aren’t able to replicate.
Digital Proof of Ownership: All NFT purchases are recorded on the blockchain, a ledger of transactions that show when an NFT was bought, sold, and traded. The ledger is publicly available and makes it easy for organizations to determine who the legitimate owner of an NFT is in the event of a dispute.
Exclusive Rewards: NFT creators can give the holders exclusive rewards associated with the brand. The rewards can be digital or physical, but they’ll all enhance the NFT's value.
Community Engagement: NFTs are unique, so there’s an inherent element of scarcity to them. When fans own an NFT, they feel like they’re part of an exclusive club for something they’re passionate about. That feeling makes them more brand loyal, building a strong connection that can last a lifetime.
For more detailed breakdowns of how utility NFTs benefit organizations and their customers, check out our blog post “The Benefits of Utility in NFTs.”
Which Brands Have Benefited From Utility NFTs?
Plenty of brands are using utility NFTs to connect with their audience and have directly benefited by releasing them. Here are some of the most notable examples:
IMPT — Increase Brand Value
Consumers are more likely to purchase products that align with their own values. As society becomes more climate-conscious and aware of social issues, it’s more important for brands to clearly state their values. But talk is cheap; brands can’t just say they support something, they need to show it. Utility NFTs are an accessible way to do that, and IMPT is a perfect example of how.
IMPT mints carbon credits as tokens, which buyers can save, sell, or “burn” to regulate carbon emissions. It’s a functionality that any business can add to its NFT offering, helping them capture more business while also helping the planet.
Uptop — Encourage Repeat Business
Loyalty programs are essential to any business strategy, being a tried and true way to improve retention and profitability if they’re put to use correctly. Utility NFT project Uptop took that concept to the next level with its own rewards platform, which allows customers to earn memberships, discounts, sweepstakes entries, and more as they shop. Not only do the rewards keep customers coming back, but Uptop gets individual purchase data insights because each transaction is recorded on the blockchain.
Our blog post, “5 Ways Brands Have Benefitted From Utility in NFTs,” dives into the other major benefits of utility NFTs.
What Are the Best Utility NFTs?
Utility NFTs elevate the technology’s potential, pushing them beyond the limits of unique profile pictures. Emerging utility NFT projects are setting the standard for digital functionality, connecting their users with the experiences that mean the most to them, whether that’s a celebrity meet and greet, shopping, or anything else.
Autograph.io utility NFTs offer fans access to a bevy of content and features for some of the biggest names in sports, such as Q&A sessions and exclusive events. The platform also features Autograph Signature Experiences that allow fans to connect with their favorite sports stars in ways that aren’t so one-sided. The first was created for Tom Brady, who co-founded the project, and granted fans access to an end-of-season party in March 2023. Brady is far from the only athlete involved; high-profile stars like Wayne Gretzky, Tony Hawk, Simone Biles, and Usain Bolt sit on the Board of Advisors.
Flyfish Club is an experiment in utility NFT-backed fine dining. Entrepreneur Gary Vaynerchuck, who has been behind several prominent NFTs, co-founded the 11,000-square-foot restaurant in Manhattan. The restaurant draws influence from seafood dishes around the world, even having fresh fish flown in daily from Japan. The twist? You need a membership to get it, which is represented by a utility NFT.
The concept is brilliant in part because it's conducive to trades. NFT owners may not want to maintain their membership for any number of reasons. Instead of canceling, they’ll sell their NFT online, which generates a royalty payment to the Flyfish Club and ensures a constant level of membership.
For more information about the NFT world’s brightest, check out our blog post, “The Best Utility NFTs.”
How to Create Utility NFTs
Any organization can capture more business using Utility NFTs. However, it’s crucial to approach utility NFTs with an impeccable strategy, leveraging an organization’s unique appeal to find the utility with the largest benefits. Access to Q&A sessions is great for organizations that feature vibrant personalities but isn’t ideal for those without a public-facing image. For the best solution, turn to a partner that can help strategize and create utility NFTs that will resonate.
Dibbs has the expertise to connect organizations with an optimized NFT business strategy for their needs. We take your brand’s most notable physical assets and turn them into collectible-backed NFTs, which you can leverage to expand and enrich your audience. Interested in learning more? Schedule a demo.