Why NFT Projects Are Issuing Tokens

Key Motivations of Token Issuance

Why are we seeing more NFT projects’ token issuance lately? It’s not just hype. Tokens are becoming a go-to strategy for NFT projects to grow, engage, and stay sustainable. Let’s unpack the potential big reasons behind this shift.

1. Strengthening Community Engagement

Tokens turn casual fans into invested participants. When you hold a project’s token, you’re not just on the sidelines; you’re in the game. This shared economic stake makes people more loyal and involved. Think of it like owning a piece of your favorite brand or sports team—wouldn’t you want to see it succeed? Tokens create deeper community engagement, where members feel connected and motivated to contribute.

2. Expanding Ecosystems

Tokens open up opportunities for more utilities. Airdrops? Definitely. Future rewards? Maybe. Exclusive perks? You bet. These features transform NFT projects from simple collectibles into dynamic ecosystems. Take Pudgy Penguins as an example—their token isn’t just a symbol; it’s a key to unlocking new levels of interaction and utility.

3. Attracting New Participants

Here’s an interesting twist: many newcomers see tokens as their entry point to NFTs. But it doesn’t stop there—some buyers may grab NFTs hoping for token airdrops down the line, and we already saw this hype during BAYC’s APE token launch. Airdrops have become a clever incentive, giving NFT holders extra rewards and encouraging more people to join. It’s a win-win: token issuance broadens access while creating opportunities for early adopters to benefit.

4. Monetizing and Diversifying Revenue Streams

Relying solely on NFT sales is risky. Tokens allow projects to create additional income streams, like staking rewards or fees from token activities. This diversification supports and ensures they can weather market downturns. It’s like adding extra legs to a chair—it makes the whole structure more stable.

5. Encouraging Long-term Commitment

Tokens incentivize sticking around. When your token’s value is tied to the success of an ecosystem, you’re more likely to engage and contribute to its growth. It’s a clever way for projects to align everyone’s interests and foster lasting relationships.

Spotlight on Recent NFT Projects Launching Tokens

NFT projects are stepping up their game by issuing tokens, blending NFT utility with cryptocurrency innovation. Let’s highlight some recent stories that align with NFT market trends.

1. Pudgy Penguins’ PENGU Token

Pudgy Penguins is making waves with PENGU, its cryptocurrency set to launch on the Solana blockchain. With a total supply of 88.88 billion tokens, the project’s thoughtful allocation reflects its commitment to inclusivity and long-term growth:

• 25.9% for the community
• 24.12% for other groups
• 17.8% for the team

This strategy has propelled Pudgy Penguins to surpass Bored Ape Yacht Club (BAYC) as the second-largest NFT collection. With a market cap of $772.5 million and a floor price of 22.1 ETH (around $86,922), they’ve seen a 44.8% weekly growth and a 155.3% surge over 30 days. While BAYC and CryptoPunks face declines, Pudgy Penguins is thriving, proving that strategic NFT project’s token issuance drives engagement and value.

2. Milady’s CULT Token

Milady NFT creators launched CULT with an initial valuation of $845 million, later stabilizing near $260 million. What makes CULT unique? Half of its 10 billion tokens go to a "Cult Fund," with airdrops rewarding NFT holders. Unlike standard meme coins, CULT embodies a "memetic tribe" culture that’s central to Milady’s community. It’s a creative take on blending token utility with community identity.

3. DeGods’ DEGOD Token

DeGods launched DEGOD on September 16, allowing NFT holders to redeem tokens:

• 550,000 for DeGod NFTs
• 120,000 for y00ts
• 36 for DUST holders

Amid the initial controversy, the project’s allocation gave 85% for holders, and smaller portions for the foundation, bonding curve, liquidity, and integrations like Sniper. Although DEGOD hit a peak market cap of $326 million, it saw a dramatic decline to $35 million within 48 hours, reflecting both the risks and opportunities in token launches.

4. Bored Ape Yacht Club’s APE Token

Let’s not forget one of the earliest examples: ApeCoin (APE). Launched on March 16, 2022, this governance token empowered the BAYC community through the ApeCoin DAO. With a supply of 1 billion tokens and 62% allocated to the community, APE allowed holders to vote on proposals and funding. It reached a peak market cap of $6.8 billion, showing the potential even as it now hovers around $1 billion.

The Future of NFTs: Tokens as Drivers of Innovation

Where are NFTs heading? Tokens are set to redefine their role, bringing NFT utility to new heights.

Interoperability and Gaming

Imagine your NFTs and tokens working seamlessly across multiple platforms. That’s the promise of interoperability—using a digital sword earned in one game in another. Gaming is a natural fit, with tokens enabling in-game economies that feel real and rewarding. Think of it as leveling up, but this time, it’s your wallet that benefits.

Governance and Community Power

Tokens also democratize projects through governance. Communities vote on decisions, from features to funding. It’s like having a say in your favorite club’s future while enjoying rewards for sticking around.

Mainstream Adoption

The real magic? Tokens could bridge the gap between NFTs and the mainstream. Lower entry barriers, better rewards, and practical use cases (like loyalty programs) make adoption inevitable.

Challenges Ahead

But it’s not all smooth sailing. Regulatory hurdles could slow progress, and sustainability concerns—like blockchain energy use—will need solutions. Still, with innovation driving the future of NFTs, the potential outweighs the risks.