With the rapidly rising popularity and proliferation of NFTs (non-fungible tokens), there has been a sharp rise in global NFT users and investors since 2021. And owing to the large number of NFT users, many NFT projects use a technique known as “whitelisting”, which limits presale minting access to only pre-approved crypto addresses. While the requirements for whitelisting certification vary from platform to platform, it benefits both projects and users in a variety of ways. Users that make the whitelist and then sell their newly-minted NFT profit 75.7 percent of the time, compared to just 20.8 percent for users who do so without being whitelisted, according to reports by OpenSea. However, it is crucial to remember that being whitelisted does not always guarantee profits, as NFTs are still a developing asset class.
The world of NFTs is evolving and transforming in more and more ways every day, offering proof-of-ownership for assets as diverse as digital art, metaverse land transactions, NFT game products, and even real items. Several NFT projects also have vibrant communities eager to get their hands on the most recent NFT drop from their favourite projects. For some projects, it’s critical that the most recent version is accessible by everybody, and whitelisting is one of the most equitable ways to do this.
Whitelisting enables NFT initiatives to provide their communities the ability to mint and sell NFTs before they are released to the general public.
Whitelisting NFTs can be beneficial for both the projects as well as the buyers:
1. Rewarding early supporters
Whitelisting is a way for a select number of people in the community to gain early access to a new NFT version. Some projects may provide NFTs and exclusive content free-of-cost to whitelisted users, while some may offer discounted presale access. The prerequisites for whitelist registration and all whitelist offers differ from project to project, and there is no set process for whitelisting. Some may require the completion of a set of tasks or a minimum wallet hold of the project’s asset, while some may even provide pre-approval without requiring a formal submission if you are actively engaging in community events and discussions.
Additionally, while a large number of users might be a sign of a successful NFT project, it also indicates that minting NFTs will be more difficult. Whitelisted users frequently have preferential access to minting NFTs, helping avoid competition, on-chain traffic, and skyrocketing gas expenses. For instance, a project might enable only users who have been whitelisted to mint NFTs at any point within a 48-hour period, or even provide early backers with special NFTs as a symbol of appreciation.
2. Avoiding gas wars
As public NFT sales do not require whitelisting, a large number of users accessing the smart contract at the same time can drastically increase transaction fees, or gas fees. This occurs when users compete to have their minting approved first, causing gas prices to rise and resulting in “gas wars.” Whitelist registration, on the other hand, permits only a limited number of wallet addresses to mint NFTs prior to the public sale, reducing the likelihood of network congestion and gas wars. Another efficient technique for whitelists to avoid gas difficulties is to set a specified timeframe for the production of NFTs. It’s worth mentioning that the gas price will fluctuate depending on the overall activity on the blockchain network, as well as other minting sales or external events. Whitelisting also creates interest and attention about the release, project, and any subsequent releases coming up, if there is a large demand to join the whitelist.
3. Preventing spam and fraud
Projects can avoid spam from non-whitelisted addresses by creating whitelisted users. Whitelisting also prevents mass account registration, especially from spam accounts, since they slow down network efficiency and raise gas expenses for customers. When someone buys and sells their assets repeatedly to artificially raise prices, it is known as wash trading, one of many market manipulation strategies used by unscrupulous individuals. The likelihood of fraudulent conduct is also reduced because users must normally pass whitelist requirements before being permitted access to the NFT presale. Fraudsters are also prevented from monopolising the project’s NFT market by limiting the mint time.
Here is how you can get whitelisted in three easy steps:
1. Look for projects that are about to go live
The NFT market is bursting at the seams with potential projects vying for new consumers. Before their official public launch, many such NFT projects such as Orbis86, offer whitelist spots, and you’ll need to be early to get whitelisted. However, this can come with several risks, as you are ultimately putting your faith in a new project which hasn’t proven its worth yet. Hence, it is always a good idea to conduct your own, in-depth research before joining a whitelist, to avoid falling into a scam.
2. Join chat groups
After you’ve completed your research and chosen a project, you should try to become a part of the community by joining the project’s chat group. Discord is the most popularly used communication tool for NFT projects, followed by Twitter. Although the whitelisting procedure varies from project to project, information about it is usually released in the Announcements channel. If it doesn’t yield any results, look through the rest of the Discord group’s channels. It’s possible you missed the whitelist time or the project doesn’t have one. Alternatively, on the community chatting channel, ask other members of the group. Most projects have a general channel where people can talk about the project and everything else.
3. Apply to be whitelisted
Whitelist applications can range from completing a simple Google Form to being an active referrer of their project to win a seat. In some cases, the whitelisting procedure is based on a lottery mechanism. Each project is distinct, with its own set of regulations that govern the whitelisting process. Because requirements vary, there is no standard fool-proof way of getting on an NFT whitelist. Creator-focused projects, for example, may only include winners of an art contest on their whitelist. This is how users looking to be whitelisted can benefit from being connected and informed about new developments in Discord groups. The selection procedure may not always be completely transparent, so you should only complete the tasks that you’re comfortable with. After all, there are countless other options on the market that can also provide a host of opportunities.
While the thought of gaining priority or early access may sound appealing, users should also keep in mind that being on a whitelist and minting presale NFTs does not guarantee profits. If you mint unpopular NFTs, you may face stiff challenges trying to sell them on the secondary market, turning them into illiquid assets. As NFTs become more popular, competition for minting may also become fierce, depending on how popular the project is. Hence, before you start minting, always make sure to check out an NFT project’s reputation and conduct your own in-depth research, and only invest once you’re certain about the amount that you’re willing to invest, and potentially part with.