Future Tense

The NFT Ecosystem Is a Burnout Machine

A man looking at NFTs on a wall while a fire burns behind him.
Photo illustration by Slate. Photos by Devi Rahman/AFP via Getty Images and Ackun/iStock/Getty Images Plus.

When serial entrepreneur Wil Lee first heard about nonfungible tokens, after Mike Winkelmann (aka Beeple) sold one for more than $69 million at Christie’s in March 2021, he waved them off as a money-laundering scam. But after noticing that they were showing up on his radar again and again, he began to pay attention.

In June 2021, almost four years after he became involved in the crypto industry, Lee decided to buy his first NFT. Within a week, he had transferred his entire portfolio into the NFT ecosystem. Within a month, he had sold one of his real estate properties and moved all of the money from the sale into NFTs.

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After spending a few months investing, Lee decided to launch his own NFT project, the littles. Like many other NFT creators, Lee was in charge of his entire project: the tech, the community, the art, and the marketing. “Every day I’m just on Discord, making sure that it has not been hacked and that everything is performing and okay and on schedule,” he said.

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Despite taking as many precautions as possible, Lee found that it didn’t take long for his worst fears to become reality. During a giveaway, he realized that hackers had infiltrated his website: “I thought, is everything I’ve built for the past couple of months going to trash because of this exploit?” But the scariest part of this mishap wasn’t that he could lose everything—it was that it could hurt the people in his community who had put their faith and money in his project. “That was when I realized that this was going to be a rough ride,” Lee stated.

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Although NFTs have been around since 2014, when artist Kevin McCoy minted the first-known NFT, Quantum, on the NameCoin blockchain, most people had no idea they existed until the high-profile sale by Beeple in 2021. Since then, multiple major brands from Taco Bell to Gucci have jumped on the bandwagon and released their own NFTs.

For many observers, the entire NFT industry is a pointless joke that has gone on for far too long. Activists have also heavily criticized NFTs because most are minted using the energy-intensive proof-of-work method. In February, the World Wildlife Fund U.K. ended its NFT sale following backlash from environmentalists.

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For enthusiasts, though, the backlash is just noise—they believe NFTs offer major can’t-miss opportunities. The community, innovation, and investment market are seductive, but the space moves quickly, and watching other people rave about their success makes it easy to feel like time is running out and you’re being left behind. The pressure to move quickly (and the FOMO that comes with it), the way the ecosystem is set up, and the chance that the entire field of NFTs could all come crashing down at any moment is leading to collectors and creators pushing as hard as they can to succeed. But you can’t push yourself forever. Eventually, you begin to burn out.

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Being in the NFT world, of course, means competing to buy NFTs. But to get even a chance of acquiring some of the most-sought-after ones, you have to get onto a project’s whitelist: a list of the people who get first dibs on NFTs, often for a cheaper price and sometimes even for free.

Getting onto a whitelist isn’t always easy, and every project has its own set of instructions users must follow in order to get whitelisted, like filling out a Google form, inviting people to a Discord community, or signing up to a lottery system that picks addresses at random.

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Applying for a single whitelist can take anywhere from a couple of minutes to a few hours. While some people will only apply for projects they’re really excited about, other investors will apply for multiple whilelists per day. This process is referred to as “whitelist grinding,” and burnout often follows close behind.

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Rita is an NFT collector and creator who is known online as ​​ritanevermind. During the worst stages of her lead-up to burnout, Rita stopped taking breaks so she could be more productive, and even began skipping meals. “Last time I had FOMO [that] led me to burnout, I was trying to get on the whitelist on one of the new NFT projects that are launching soon,” she told me. “I was logged in their Discord literally 24/7 for a week. I got whitelisted, but the [psychological] price was tremendous. My free time, my time for making art, my family time, everything was replaced with my phone. I slept on average four hours per night because I had to stay active there.”

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Although Rita mostly enjoyed participating in the Discord channel and chatting with fellow community members, being on social media all day made her feel like she was missing out on real-life experiences. As a result, she ultimately decided to leave the channel: “I’m not there anymore because it’s not worth it. My life is not worth wasting on some Discord server to get a presale opportunity I’m not even sure I’ll buy.”

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Many investors come into the space trying to flip NFTs for profit after reading success stories about other investors becoming “instant millionaires” by investing in the right projects. But while the stock market includes a blueprint of how to evaluate investments, NFT projects have no such thing. As a result, many investors resort to “going with their gut” when it comes to deciding which projects to invest in. This means that even for experienced investors, figuring out which project to invest in can be difficult.

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Flur is a “whale investor” in the NFT space, which means he holds a large collection of NFTs. (“Whale investors” get their name because their movements within the NFT space can disturb the waters that smaller fish swim in.) Flur is well known within the community for having one of the best NFT collections; it currently includes more than 10,000 assets. His tweets have a reputation for driving people to new and upcoming projects.

However, despite his wealth of experience in the space, Flur still sometimes finds himself struggling with how quickly the space is moving. “The NFT community is experiencing exponential growth, which means nonstop new projects and information,” he said. “It’s very hard to keep up with, but the potential payout and the rewards are huge when it comes to catching the next big blue chip early.”

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Many people decide to enter the NFT space when market confidence is high because they see others making a profit and want to get in on it. When Beeple made headlines in March 2021, the NFT market skyrocketed, and it has been volatile since then. Prices rose again in January of this year following an influx of celebrity collaborations, then slumped again sharply, reaching a low in March. Now, it looks like sales are on the up again—but how long this will last is anyone’s guess. That doesn’t stop people from making speculations: Last weekend, OpenSea—the largest NFT marketplace—set a new daily trading record of $476 million in Ethereum. A couple of days later, the Wall Street Journal reported that “the NFT market is collapsing.”

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For founders bearing the weight of an entire community made up of thousands of new investors relying on their art to get rich, the responsibility can feel overwhelming. “The people and the investors within this space are very green, and they fall for anything and everything,” Lee said. “And once they buy into your project at a very high price and they don’t see action right away, or they see any type of misinformation, they panic and sell at a loss.”

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Loopify is an NFT artist–turned-collector who founded Treeverse, an open-world fantasy in the metaverse. He also owns Interleave, an NFT production team. Thanks to NFTs, Loopify has become a millionaire. But that doesn’t mean he is immune to the stressors that come with being an NFT creator and investor. “Around a year ago, the market was stale for quite a bit,” he said. “This happens quite often when the price is down. Because the market slowed down, it means engagement slowed down. People stopped responding to my posts and less things were happening. My art wasn’t selling, nor were some of the things I collected.”

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Loopify described this event as his “first burnout moment.” He began to question his involvement in the NFT community altogether. But just when he had begun to rethink his decisions, the market slowly began to recover, and engagement and sales returned.

Even when things are going well, it can be tricky to keep your investors and followers satisfied. Loopify said, “You have people that continuously ask questions on every social media [platform]. Even if you answer them a hundred times, they’ll keep coming.”

But not everyone chooses to return to the NFT space after taking some time away. For one anonymous NFT collector, it all became too much. “This space has become so toxic,” they told me. “People are saying WAGMI [“we are all gonna make it”—an acronym used widely within the crypto community] but that’s a baldfaced lie.”

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They tell me that the NFT industry has changed significantly over the past year—and not in a good way: “So many devs mint then make promises and never deliver.” In the NFT world, “minting” digital assets is the process of uniquely publishing a token on the blockchain so others can publish it. This allows creators to monetize their work. “Or they take forever to do so, which in this space is a death sentence,” they continued, seemingly confirming the fears of many creators who told me they feel like they’re falling behind.

When I asked if they had any advice for newbies in the space trying not to burn out, they emphasized the highs and lows of the market and encouraged people not to panic and sell when prices are low.

But their final piece of advice fell along the same lines as the advice from everyone else that I spoke to: “Always put in real life first.”

Future Tense is a partnership of Slate, New America, and Arizona State University that examines emerging technologies, public policy, and society.

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