So many newcomers make the mistake of thinking NFTs are nothing more than .jpeg files used to show off. That couldn’t be further from the truth.

Not only do these digital assets help you find a sense of community and enjoy the process of collecting rare items in a whole new way, but many offer practical, tangible NFT benefits. These are known as utility NFTs.

Whether you’re an NFT collector looking for the best utility NFTs or a creator/brand trying to learn how to add utility to NFTs, you’ve come to the right place. We’ll cover everything you need to know here in this guide.

And if you happen to be in the market wondering what NFTs to buy next, look no further than Pudgy Penguins. Our brand was born in 2021 when we minted 8,888 unique, adorable penguin characters. The project is packed with utility; find out more today!

What Are Utility NFTs?

Before we get into the best NFT utility ideas or our top tips on how to add utility to NFTs, let’s take a step back and discuss NFTs in general for those who are just discovering this emerging world.

Overview of NFTs in General

So, what is an NFT? Also known as non-fungible tokens, these are unique digital assets stored on the blockchain, representing ownership of a specific item - be it digital art, collectibles, music, or virtual real estate. There are more and more types of NFTs popping up regularly.

The hype was real when these were first introduced back in the early 2010s, but why are people still buying NFTs? It comes down to the fact that each is distinct and cannot be replaced with an identical token, unlike cryptocurrencies or traditional currencies, which are fungible and interchangeable. 

NFTs are created through a process called minting, where digital assets are encoded onto a blockchain. This is what gives them provenance and ensures authenticity. 

How Utility NFTs are Changing the Game

Now let’s quickly touch on how NFTs will change the world through their practical utility. So, why do people buy NFTs from a utility perspective - what’s the point? 

Simple - they offer real-world benefits that go beyond showing off your latest purchase on Twitter as your profile picture. But what are a few examples of NFTs from a utility POV?

These tokens might grant access to exclusive events, membership perks, virtual land ownership, or even voting rights in decentralized autonomous organizations (DAOs). 

For instance, in the gaming world, utility NFTs might unlock special in-game items or experiences. In the art sector, a utility NFT might allow the owner to collaborate directly with the artist or access exclusive content. There are so many NFT utility ideas you can consider!

We’ll share more tips on how to add utility to NFTs in just a moment, but let’s quickly set the record straight. Do all NFTs have utility?

Do All NFTs Have Utility?

No - not every NFT offers additional benefits or functional value beyond simple ownership. Many NFTs, especially in the early stages of their development, were primarily collectibles or digital art with intrinsic value based on their rarity, uniqueness, or the reputation of the creator. 

These types of NFTs are a unique spin on traditional art or collectibles, where the value is derived from ownership and the potential for future appreciation. These still offer utility in the sense that the owner can enjoy peace of mind knowing they own the real deal and it cannot be duplicated, though.

However, as the NFT space has evolved, there has been a growing trend toward creating utility-driven NFTs. That being said, let’s get into some of our top tips on how to add utility to NFTs.

How to Add Utility to NFTs: NFT Utility Ideas

Ready to discover the most practical NFT utility ideas? If you’re trying to create one of the best NFT projects that stands out from the rest, here are some directions you can take.

Exclusive Access

This is one of the most popular ways to add utility to a NFT. These digital collectibles can serve as keys to unlock exclusive content, events, or communities. For example, celebrities or brands will use NFTs as a way to grant entry to concerts, virtual events, or meet-and-greet sessions. 

Or, ownership of the NFT could include exclusive artwork, behind-the-scenes footage, or limited-edition releases that are not available to the general public.

In-Game Assets

Gaming NFTs present one of the most practical use cases for utility NFTs. Players can purchase or earn NFTs that represent rare or unique in-game items, which can then be traded on secondary markets.

NFTs can also be used to unlock new abilities or power-ups within a game, offering players a competitive edge or unique experiences. There are constantly new NFT utility ideas being released in this space specifically.

Membership and Subscription Models

NFTs can be utilized as a modern membership card or subscription key, granting holders ongoing benefits as long as they own the token. Bored Ape Yacht Club has been an example of this since the brand’s inception in 2021.

The membership could entail physical or digital access - or maybe both! Members could enjoy perks beyond simple social status, too, like early product releases, discounts, or exclusive content.

This is a great alternative to charging a monthly subscription fee for other types of services, too, like a streaming service or newsletter. 

Physical and Digital Hybrid Assets

NFTs can bridge the gap between the physical and digital worlds by representing ownership of both types of assets. Here at Pudgy Penguins, we’re on a mission to do just that with our physical penguins toys available in our penguin store.

There are other examples of this at play as well, though. For example, fashion brands could issue NFTs that correspond to limited-edition clothing or accessories, offering buyers both a digital and physical version of the product.

Governance and Voting Rights

Some decentralized organizations and communities use NFTs to give holders voting power or influence over decisions. 

This gives you the opportunity to shape the direction of a project, which is really fulfilling and exciting. From community rules to product features, future releases, and more, you get to play a pivotal role in pushing innovation in this digital space.

Royalties and Revenue Sharing

The most lucrative NFT utility ideas for creators are royalties and revenue sharing, which help you monetize your work in a way like never before. Every time an NFT is resold, a percentage of the sale price can automatically be sent back to the original creator or rights holder. 

Best Utility NFTs: Examples to Inspire Your Own Project

Maybe you’re still looking for inspiration on NFT utility ideas. Perhaps you’re trying to jumpstart or bolster your own collection with the best utility NFTs. Either way, here are 3 great examples.

Pudgy Penguins

Pudgy Penguins is an iconic brand in the NFT space for our emphasis on fostering connections among holders and spreading good vibes. These adorable characters radiate positivity and encourage a childlike sense of playfulness. 

One thing that really separates our brand from other utility NFTs at your disposal is the launch of our physical penguin toys, which we briefly touched on earlier. You can choose from penguin plushes, penguin figurines, and other types of penguin collectibles.

Each of these comes with its own digital adoption certificate which you can redeem at PudgyWorld, an exciting place to unlock special traits for your character and engage with the community through fun and games. All the while you can bring your physical penguin companion anywhere life takes you so that you’re never truly alone. 

Whether you want to buy a Pudgy Penguin NFT from the best NFT marketplace or you want to get in on the thrill of our physical toys, we can’t wait for you to join us here in the huddle! 

Decentraland

Decentraland is a virtual world built on the Ethereum blockchain, where users can buy, develop, and trade virtual land parcels represented by NFTs. 

The utility of these NFTs is that they serve as ownership deeds to plots of land within the Decentraland metaverse. Owners can create virtual stores, games, art galleries, or even social hubs where other users can interact and engage with their content. 

Doodles

The Doodles NFT project is primarily a PFP collection featuring vibrant, hand-drawn characters. While the core utility of Doodles centers around community engagement and art appreciation, the project has also introduced some elements of utility. 

For example, Doodles holders gain access to exclusive events and merchandise, and they also have the ability to vote on key community decisions and future developments within the project. 

Parting Thoughts on Utility NFT

That wraps up our guide to the best NFT utility ideas. If you’re a creator looking for guidance on how to add utility to NFTs, we hope you have a clear understanding of all the different options at your disposal now.

Whether it’s exclusive access, in-game assets, or membership benefits, a utility NFT offers tangible perks that make them more than just digital collectibles. This category of NFT is only going to evolve and become more popular in the road ahead, too.

Find additional resources like why are NFTs so expensive, how to transfer NFT to another wallet, how to buy NFT on OpenSea, where to sell NFT, are NFTs safe, and more in our blog.

Otherwise, take a few moments to learn more about the Pudgy Penguins brand, or explore our vast marketplace of characters ready for their next home. Join our community today and see what makes it so special!