GM PRO DOers!
The first person to respond to this email will win a CryptoPunk 🚨
Actually…
That’s not true. But I bet I got your attention 😉
In today's crazy, busy world, that’s the most valuable thing brands are fighting for.
Your attention!
Gary Vee calls himself a day trader of attention. He has built a business empire by being a master at grabbing attention.
Over the last decade, most of his attention-grabbing tactics have been focused on social media and Google ads.
But in 2021, a new tech came along in the form of NFTs and Gary Vee’s spidey sense went crazy.
Why?
Because Gary saw a new way to grab attention like never before.
Today, the most common ways we engage and give our attention are by following, viewing, liking, commenting, and sharing. These are the pillars of engagement that every marketer sets their KPIs on and likely loses sleep over.
In an onchain world, the most engaging social metrics will be minting, burning, and collecting. But because we’ve focused a lot on collecting in our previous issues here and here, today I’ll just touch on the first two: minting and burning.
These actions are supercharged engagements and a far greater signal for where we should give our attention.
Therefore, minting and burning will become the most important tools in a marketer’s toolbox (along with buying/selling, collecting, airdropping, and token-gating).
The brands and businesses that master these tools will be the most successful brands of the next decade.
I want you to be successful!
Not just a little bit successful. But crazy, to the moon successful! 🚀
So in today’s report, I’m diving deep into burning.
Using VeeFriends’ Burn Island as a case study, we’re going to discuss the following:
What the heck is Burn Island?
What have been the impact and results of Burn Island?
What’s the cost to VeeFriends
What is the deflationary impact of Burn Island?
What’s the playbook? How do brands make burning part of their web3 toolkit?
What The Heck Is Burn Island?
In February, VeeFriends, the leading NFT project by Gary Vee, announced Burn Island.
Since then, 6257 tokens have been burnt! Gone forever.
The total estimated value of these burnt tokens is $840,759! 🤯
Yes, you read that correctly.
But before we get into why over $800k in NFTs have been burned, let's first make sure we all understand Burn Island.
Here’s VeeFriends explaining Burn Island…
“Burn Island gives VeeFriends NFT holders the chance to unlock rare and valuable NFT collectibles, access to unique events, and physical or virtual rewards through its deflationary technology.
By burning their NFTs on Burn Island, VeeFriends holders will embark on a journey to uncover a world of new possibilities.”
In other words, Burn Island is onchain gamified sweepstakes. Each month, there’s a new sweepstake (called eruptions).
The price of entry is an NFT from the VeeFriends Collection. Those who burn and enter each eruption have a chance to win prizes such as CryptoPunks, Chromie Squiggles, and Bored Apes.
Now… Gary really focuses on the deflationary technology of burning (aka lowering the supply of VeeFriends NFTs), but that’s not why I’m excited about Burn Island.
Burning is fun. It’s an absolute thrill. Way more entertaining than any current form of brand engagement we have in web2.
The web2 equivalent of this would be a social media contest where a brand tells you to like, share and comment the handles of 3 of your friends in order for a chance to win. This is a win-lose.
The brand wins with this form of engagement farming as it’s a simple (often free) way to hit the algorithm and make a post go viral.
The consumer loses. There’s no emotion or connection to the brand. The consumer has no idea who wins. Most of the time it feels like a scam where no one wins. Consumers are left feeling used rather than rewarded for their valuable attention.
Burn Island is a totally new way to do sweepstakes. One that is fully transparent, where it’s easy to see who entered, how many people entered, and who won.
Furthermore, burning is a much higher level of commitment. It involves risk as you are burning something of value. Even if the token you are burning has $0 value it’s still something you own.
And we all know how hard it is to get rid of things we own even if they have very little value. Just look in your closet, storage room, or your desk drawer. You probably have a bunch of stuff you don’t need but still keep around. We all do. 😉
And when you burn it. It’s gone forever. You can’t get it back. The commitment is eternal!
This makes the whole experience of Burn Island fun AF. It’s addictive. It’s something you tell your friends about and you can’t wait to do it again.
Let me be clear that the application of the burn mechanism within blockchain goes way beyond sweepstakes. But regardless of the application, here’s what you need to know.
Burning a token is a form of engagement that is far superior to every form of engagement offered by web2.
Right now, the only way to enter a Burn Island eruption is by burning an NFT from the VeeFriends collections. However, I wonder if, in the future, they will open the door to other collections. 🤔
The interoperability of blockchain means that Burn Island could enable any collection to be burnt in order to enter. And it would be as simple as adding the smart contract address, which would legit take 2 seconds.
What Has Been The Impact And Results Of Burn Island?
Here’s a simple table to show the results of the 7 eruptions so far in Burn Island.
The first obvious thing that stands out about this is that people are burning hundreds and sometimes thousands of dollars in NFTs in order to get a chance to win.
It’s like a slot machine. Your chances may be small but it’s fun to play! 🎰
And people are willing to bet a lot in order to play. In Eruption 5, someone burnt a VeeFriends Series 2 in order to play. They previously paid $4,407 for that NFT. 🤯
Sadly, they did not win the Punk 😭
What’s amazing is that Burn Island isn’t just bringing out current VeeFriends holders. More want to get in on this party…
Eruption 4: 67.3% of those who entered bought their entry token the same day they burnt it.
Eruption 5: 33.1% of those who entered bought their entry token the same day they burnt it.
Eruption 6: 15.9% of those who entered bought their entry token the same day they burnt it.
This is an incredible stat as this means that Burn Island isn’t only attracting engagement from the existing community. It’s attracting new community members into the ecosystem, giving more utility to the current VeeFriends holders.
Remember when I said Gary Vee is a master of grabbing attention??
In Eruption 7, which happened at the beginning of June, it appears that some degens were Burn Trading (a new term I just made up). 🤷
Of the 317 tokens burnt in Eruption 7, 69 were from 3 owners. In this eruption, you were allowed to enter as many times as you wanted so long as you had a token to burn each time.
But as we can see from the stats above, you can just go onto secondary markets and keep buying tokens and then burning them.
And it’s paying off big time for one degen!!
Take a look at the leaderboard below to see the top 10 contenders from Eruption 7.
Keep in mind: in Eruption 7, participants had to engage in a trivia game after their entry burn, and their performance in the game determined their final placement.
Notice that the first 8 finishers are the same wallet!! That’s right!
This degen took home the top 8 prizes, which were:
1st Place: Bored Ape Yacht Club #1452 (Estimated Value: $125,000+)
2nd Place: Mutant Ape Yacht Club #12904 (Estimated Value: $20k+)
3rd Place: Koda Otherdeed for Otherside #28379 (Estimated Value: $20k)
4th Place: Bored Kennel Club #1452 (Estimated Value: $10k)
5th — 11th Place: 1,000 ApeCoin Each ($APE) (Estimated Value: $4k)
Talk about a nice payday!! 💸
What’s The Cost To VeeFriends?
What about the costs? Aren’t VeeFriends crazy to be giving away Punks and Apes?!
Not at all. I’d say they’re pioneers!
Consider this…
👉 The total cost of all rewards to date is approximately $700,000.
👉 With 6257 tokens burned, that’s a cost/burn of $112.
If we compare that to typical cost/click or even cost/lead (giving an email) standards in web2, which can range from $<1-$100 depending on the audience, product, and channel, we start to see that Gary Vee might not be so crazy to give away hundreds of thousands of dollars.
In your business, $112/click or lead might be high but right now, there are less than 100m active users in web3. When we have billions and the UX is 1000x easier then the cost/burn will decrease drastically.
Not to mention the fact that comparing a burn to a click or lead is kind of like comparing apples to oranges.
A burn is a way more valuable form of engagement than a simple click or providing an email, we do those two engagements daily!
What Is The Deflationary Impact Of Burn Island?
Is Burn Island deflationary? Of course, it is.
There’s less supply now than there was before.
However, its impact on the overall deflationary trend within VeeFriends collections isn't immediately clear just yet.
Consider this: the combined total of all burnable NFTs within the VeeFriends collection (including Book Games, Series 2, and VeeCon 2022) surpasses 160,000 tokens.
So far, a tad over 6,000 tokens have been burnt, which amounts to less than 4% of the total.
Add the fact that these are speculative assets which are completely unstable, especially in these market conditions and there’s no way to see any deflationary impact on the price of VeeFriends collections.
But let’s do some math…
At the current pace, approximately 0.5% of the total collection gets reduced with each monthly eruption. Sounds minimal, right? But let's see what it means in the long run.
Imagine the eruptions continuing to happen monthly - each one nibbling away at 0.5% of the remaining collection. Over time, these small deductions start making a serious dent.
Fast forward 16 years, and if the rhythm continues, we'd see the entire collection burnt to a crisp. Not quite a 100% reduction, because that’s mathematically impossible, but still, a significant amount of NFTs would be gone forever.
It's like watching sand slowly trickle out of an hourglass. At first, the changes seem small and insignificant, but over time, these fractions add up, and suddenly you realize - the hourglass is empty.
Rarity is king in the world of NFTs. So, picture a future where the VeeFriends collection is a scarce artifact - almost a completely burnt collection.
Think of the potentially skyrocketing value of VeeFriends under such circumstances… 👀
We're simply crunching numbers here. The real implications? I’ll let you make your own conclusions.
What’s The Playbook? How Do Brands Make Burning A Part Of Their Web3 Toolkit?
At this point, I hope I’ve convinced you that burning must be part of your web3 toolkit.
If you’re reading this, you know something the rest of the world doesn’t.
This is like being the first shoe company to sell shoes online. Remember Zappos? Everyone thought they were crazy in 1999 when they started selling shoes online. 10 years later, they sold to Amazon for $1.2 Billion.
As we navigate this new digital landscape, there isn't a definitive playbook to follow yet.
However, I can share some key takeaways to help you effectively integrate burning into your strategy:
Put NFTs into the Hands of Your Audience: Without NFTs, your audience can't participate in burning.
Let me emphasize, this doesn't mean you should hastily launch a 10k NFT collection.
Instead, consider gifting free NFTs to your fans as a 'Proof of Attendance Protocol' (POAP) token for attending an event or to commemorate a special occasion. As our friends at Zora like to say, "Fuck it! We mint."
P.S. - We talked more about how to put NFTs into the hands of your audience here
Offer Rewards for Burning: Incentivize your fans to burn their NFTs by offering something in return. This doesn't necessarily have to be a CryptoPunk - not everyone is as well-funded as Gary Vee.
Consider the approach of Adidas, who rewarded fans with a hoodie, hat, and tracksuit in exchange for burning an NFT. The key is to use burning as a mechanism for rewarding your audience.
Unlike airdropping, burning encourages active participation and immediate reward - your fans are more likely to notice and appreciate this.
Participate in the Burn Ecosystem: Engage in a real-world burning experience by purchasing a VeeFriends NFT and participating in a future eruption.
This isn't an advertisement - I'm not a VeeFriends holder.
However, learning by doing is often the most effective method. You can get involved for as little as $70 with a 'Please Take a Step Back' NFT, giving you entry to the July eruption.
You never know, you could end up hanging out with Gary Vee at a Snoop Dogg concert!
Use Burning as a Second Chance: If your brand's first mint doesn't go as planned or you encounter issues with the smart contract, burning can provide an opportunity for redemption.
Offer your fans a chance to burn their NFT in exchange for something new.
Empower Developers to Leverage Burning: If you're a developer, mastering the burn mechanic can be a game-changer. Offer your services to brands operating in web3 or better yet, create a Software-as-a-Service (SaaS) version of Burn Island.
The potential for burning within sweepstakes or contests is immense - before long, it's likely every brand will be integrating it into their strategy, so why not pioneer the tool they'll use?
Define Your Unique Goals and Strategy: Recognize that each business is unique with its own specific set of needs and objectives.
Your approach to NFTs, including burning, should be guided by your individual business goals and not by industry hype or trends.
It's crucial to first clearly define what you aim to achieve with your NFT strategy - be it increased brand visibility, consumer engagement, revenue growth, or something else.
Remember, while burning has gained attention as an innovative tool in the NFT world, it is not a one-size-fits-all solution and may not necessarily be the right strategy for your brand (though you still need to experiment with it).
Use it if it aligns with your objectives and can help you reach your goals, but avoid rushing into it simply because it's the latest trend.
Start small, see how it works, and then make your decision on whether or not you should go all in.
Your actionable step here is to conduct a thorough strategic review. Outline your business goals, assess your audience's preferences and behavior, and evaluate the benefits and risks associated with burning and other NFT-related tactics.
Then, based on these insights, develop a tailored NFT strategy that is best suited to your brand.
Always be guided by your unique business needs and objectives rather than the industry buzz.
It’s how you stay away from the hype cycle, my friends. 😉
Take this knowledge and march forward, my fellow DOers! Approach minting and burning with conviction.
The early adopters of today will become the attention economy's masters of tomorrow.
ABOUT THE AUTHOR
Jay Hamilton
Founder of Web3 Academy and Impact3
Find him on Twitter
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Disclaimer: This article is for informational purposes only and not financial advice. Conduct your own research and consult a financial advisor before making investment decisions or taking any action based on the content.
