NFTs (non-fungible tokens) were all the rage in 2021 and are continuing to grow today. You may have heard of NFT creators such as Pak, who took home millions selling a seemingly simple design and want to get into the action.
Whether you are an artist who wants to share your work or someone who simply wants a piece of the pie, NFT minting may be for you.
But before you jump in head first, there are several things to consider. Take Note, At Million Dollar Token Page, we will help you understand all the various factors that play into the cost of minting an NFT and teach you how to get started.
What is an NFT?
An example from one of the most expensive and well-known NFT collections, Bored Ape Yacht Club, one of which sold for $2.8 million, sourced from OpenSea.
If you are here, it's probably safe to assume you have some understanding of what NFTs are and how they work. But for those still confused, an NFT or non-fungible token is a digital file encrypted through the blockchain. What makes NFTs unique from other blockchain currencies such as Bitcoin or Etherium is that each piece of digital content is unique and can only be owned by one person.
While there can be multiple NFTs that exist for the same file, there can only be one individual owner for each NFT. So, for example, if you decide you want to mint a drawing of your dog, you can create either one or several NFTs. The latter case would allow for multiple owners of your picture, although each NFT, or encrypted version of the file, would be unique to its respective owner. However, generally speaking, the more NFTs you create for a given file, the lesser the value will be.
What is NFT Minting?
So you're excited about the concept of selling your dog drawing, now it's time to convert your file into an NFT on the blockchain—this process is called minting.
How Much Does it Cost to Mint an NFT?
While turning your art into an NFT is as simple as uploading a picture to Facebook, there are fees associated with this process that you should be aware of before starting.
The cost to mint an NFT depends on many factors, including the blockchain you decide to mint it on and the marketplace you choose to sell on. For all intents and purposes, we will assume you are selling your NFT on OpenSea and minting into the Ethereum blockchain because these are the most popular mediums to date. However, we will discuss alternatives later in this article.
Generally, you can expect to pay between $1 and $500 to mint your NFT depending on the various factors that we will discuss later in this article.
Calculating the Cost to Mint an NFT
The following formula can calculate the total cost of minting an NFT:
Total cost to mint = account initialization fees + gas fees + listing fees.
While the upfront minting cost can be reduced by deferring to lazy minting and opting for marketplaces and blockchains with small initialization and listing fees, the total price paid to sell your NFT ends up being about the same.
Total cost to sell = Nft cost - gas fees - account initialization fees - listing fee - selling fee.
Gas fees are costs that you will encounter in any Ethereum transaction. "Gas" refers to fees that are paid to miners during every blockchain transaction. These fees will fluctuate heavily based on the type of transaction and the number of people transacting at that time. While "gas" is specific to the Ethereum network, other blockchains have a comparable computational fee.
While the gas costs are somewhat complex, we will break them down in layman's terms. Gas fees are denoted as GWEI, one of which equates to one-millionth of Etherium. So the USD conversion is also contingent on the current ETH value. Each transaction has a gas limit, base fee, and tip, so these are the main factors to consider when estimating gas fees.
The gas limit is the amount you are willing to pay on a given transaction. For example, 21,000 GWEI is the recommended gas limit, as this will cover most transactions.
The base fee is the minimum fee or reserve price associated with your transaction.
Users are expected to set a tip that will be paid to the miner and prioritize their transaction. Most wallets will automatically set this for you.
The calculation for the total transaction fee is as follows: Gas limit * (Base fee + tip). Let's say you set the gas limit at the recommended 21,000 GWEI, the base fee is 100 GWEI, and you set a tip of 10 GWEI. The total gas fees would look like: 21,000 * (100 + 10) = 2,310,000 GWEI or .00231 ETH.
How to Avoid Gas Fees When Minting:
If you're feeling discouraged, fear not! What if we told you there was a way to bypass gas fees when minting your NFT? Well, there is. Lazy minting is a way to avoid paying gas fees upfront by simply uploading the file without converting it to an NFT.
When someone buys your art, the buyer will cover the gas fees at the time of purchase, at which time your art will be converted to an NFT.
This eliminates the risk of paying gas fees to mint an NFT that nobody ends up buying. But keep in mind that when lazy minting, the gas fees are baked into the cost of the NFT, so while a buyer may pay $1000 for your NFT, your creator profit will come down to $1000 - gas fees - 2.5% listing fee - initial account fee. So your net profit will end up being the same, the difference being that with lazy minting, you don't pay until someone buys.
While lazy minting sounds like a great way to bypass gas fees, many marketplaces have account fees that you must pay to set up your account and start selling. For OpenSea, this cost is generally around $50 to $70. However, other marketplaces, such as Rarible, have initiation fees as low as $15. You can also pay smaller account fees when choosing to mint through other blockchains such as Flow or Polygon, but because these currencies have a much smaller adoption than Ethereum, you may have a more challenging time selling your NFT.
Listing and Service Fees
Some platforms are free to mint on; others charge a listing fee. Most marketplaces will also charge a service fee (usually 2.5%) when the artwork is purchased, which comes directly out of your take-home profit.
Choosing a BlockChain
Because Ethereum is the most popular blockchain for NFTs to date, it is the most expensive one to mint. However, because it is the most widely-adopted currency for NFT exchanges, you may have an easier time finding buyers for your NFT when it is minted on the ETH blockchain.
Because Ethereum is the most widely used blockchain, this is where you will find all of your well-known NFTs such as Bored Ape Yacht Club, and Crypto Punks
A popular NFT, CryptoPunks, Sourced from OpenSea
If you want to opt for a more affordable option, Solona and Polygon are other networks that are growing in popularity. However, while both alternative options are more affordable, they are less secure and familiar than the leading Ethereum network.
While these blockchains are lesser-known, they are growing in popularity.
Solona Monkey Business is a popular NFT mined through Solana, Sourced from Magicden
Choosing Where to List
Now that you've decided which blockchain to mint your NFT on, you must decide which marketplace to use. The marketplace you choose will be somewhat contingent on your desired blockchain because different marketplaces support different networks. While many marketplaces are available for minting your NFT, OpenSea and Rarible are the most well-known and used platforms.
Listing on OpenSea
Regardless of what blockchain you choose, OpenSea can most likely accommodate. The marketplace has the largest number of accepted currencies, with around 150 to date. The most significant advantage of choosing OpenSea to list your NFT is its large user base, with over half a million monthly users.
Notably, initiation fees are highest on the OpenSea platform, and the original creator royalty is fixed at 10%, meaning that this will be the royalty you earn every time your NFT is sold. While this is smaller than the 50% royalty that Rarible allows, the greater transaction volume on OpenSea is likely to overcompensate the royalty difference.
Sourced from OpenSea blog
Listing on Rarible
Rarible is much smaller than OpenSea, with only around 10,000 monthly users and potential buyers. The platform also only supports ETH, FLO, and XTZ. However, the marketplace does have considerably lower fees, and creators can set up a 50% royalty that they will earn over the lifetime of the NFT.
Sourced from Michael Johnson on Medium.com
Other Things to Consider
While the upfront cost of actually minting the NFT on your desired platform can be somewhat minimal, if you are looking to launch a robust NFT project and maximize your chances for success, there may be additional costs to consider.
If you want to take your NFT launch seriously, you are best to invest in some marketing to build a community and anticipation around your project. In this case, you will want to invest in maintaining and growing a Discord and Twitter community and having a respective website, which can incur additional costs.
Million Dollar Token Page offers alternative, creative solutions for advertising your NFT. For more details on how to build your NFT community and successfully launch your project, check out our site.