5 Ways to Clean Your Collection

Everyone has an NFT or two that they regret holding. This is simply the nature of the NFT ecosystem. Sometimes floor prices plummet, and collectors are left with few options. Or perhaps a creator is found to be a swindler, leaving those who bought their IP in limbo. Or worse yet, maybe an unsolicited NFT was airdropped into a user’s wallet without consent.

Whatever the case, these unwanted NFTs can exist as a hindrance, a shameful reminder of the unsavory parts of the NFT space that enthusiasts often prefer to keep under wraps. But sending them to junk wallets or using marketplace features to hide them from the public is only a band-aid fix. Surely, there are better ways for collectors to rid themselves of unwanted NFTs.

SEC became a defendant in the NFT classification lawsuit

30 July 2024

DraftKings Dumps NFT Business, Citing Legal Developments

30 July 2024

Fortunately for degens, there are. And we aren’t talking about simply burning (destroying) them. No, instead, various platforms are now offering holders unique rewards for dumping their NFTs.

[crypto-donation-box]

Getting rid of NFTs for tax purposes

So you want to get rid of some NFTs. Don’t worry; we won’t ask why, but just know you aren’t alone. There’s a multitude of reasons a collector might want to make an NFT vanish, with one of the most popular undoubtedly being for tax loss harvesting purposes.

In traditional tax loss harvesting, an investor would sell an underperforming asset at a loss, then use that loss to reduce their taxable capital gains, offsetting the gains they made on other investments. This can also be done with NFTs and is a considerably popular way to reduce taxes placed on digital collectibles.

Of course, there are all sorts of considerations to be made surrounding NFTs and taxes. This includes charitable giving, which you can read about in our full guide on the topic. But for those looking to simply offload and offset, there are a few services to choose from.

The NFT Loss Harvestooor

The NFT Loss Harvestooor is a free service created by the popular crypto tax software company CoinLedger. Essentially, the Harvestooor is a simple Ethereum smart contract that allows users to sell an NFT and receive a substantially small amount of ETH (0.00000001) in return. By doing so, traders can realize capital losses on NFTs and lower their taxable income.

What’s more, although the Harvestooor works well for collections that are still tradable, the makers of the service have been teasing a potential new service that would allow traders to rid themselves of even their “illiquid, worthless, rug-pulled” NFTs in the future.

Unsellable NFTs

Unsellable NFTs is another solid option for traders looking to harvest NFT losses. The platform acts quite similarly to the Loss Harvestooor but comes with the added functionality of being able to claim losses on hundreds of NFTs at a time (up to 1,000). Users can expect to receive around 0.000007 ETH for each NFT, only paying transaction fees (up to 0.08 ETH max) in the process.

Considering platforms like Blur have consumed a sizeable amount of the NFT market share in recent months — exemplifying the avid NFT trader’s affinity for zero-fee and high-volume trading — it makes sense that Unsellable has become a popular service for tax loss harvesting due to their high batch sizes.

Other ways to get rid of an NFT

Perhaps it isn’t saving money that you’re worried about, but rather saving face in getting rid of your terrible NFTs. Well, there are options that could be just as rewarding.

The Junkyard

The Junkyard is a service somewhat parallel to tax loss harvesting that offers users the opportunity to both dump their NFTs and win NFTs that have been dumped. By “dumping” an NFT into The Junkyard, a user will earn not ETH but Junkcoin, a platform native currency. That currency can then be used to “fish” for NFTs that have been dumped by others.

To date, a wide variety of blue-chip NFTs have been routed through The Junkyard, including pieces from Clone X, Doodles, Otherside, Cool Cats, and more.

Although the ecosystem could be used for tax loss harvesting, The Junkyard is more of a gamified trading experience. The platform also hosts a variety of in-development secondary and tertiary functionalities, like free-mint NFT collections, membership-based experiences, token staking, and more.

Liquidity Pool

Chances are, there are other collectors out there who are holding onto a piece from the same collection as you and would also like to relieve themself of their unsatisfactory NFT. So why not try a liquidity pool? With services like NFT20, a user can deposit any NFT into an available pool or create a pool themself (likely a necessity for pooling trash NFTs) and receive platform-native tokens in return.

Yes, this might be an unconventional way to “get rid” of an NFT, considering that liquidity pools are more often used to bolter trading and collector rewards. But it beats trying to hide a crap NFT for all eternity — even if it means losing out on profitability in return.

Band-aid fixes

If all else fails, even after you’ve considered or even made an attempt at the options listed above, you could always resort to the tried and true aforementioned band-aid fixes.

First, you could use the “hide” feature offered by OpenSea and other NFT marketplaces. These features are usually built directly into a marketplace’s interface and often only require a user to select which NFTs they want to hide, then submit and verify a transaction to hide them.

On the other hand, you could just opt to send an unsavory NFT to the universal Ethereum burn address. Doing so is as easy as it seems. Just select a token either in your wallet or marketplace profile, initiate a transfer, and send it to the 0x address associated with burning (0x00…dEaD).

HOW TO BURN A CRYPTOPUNK AND NOT FEEL A THING…….THE TUTORIAL.

🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥🔥#ETHEREUM #CRYPTOART #BITCOIN pic.twitter.com/5PLQOCBMDG

— ROBNESS V2 (@ROBNESSOFFICIAL) July 12, 2021

Of course, this specific burning option only works with Ethereum-based NFTs. Tezos and Solana-based NFTs must be burned through other methods.

Take the shame out of discarding

So you’re holding onto a garbage NFT. So what? There are countless other collectors out there who are still in possession of Bloot or some other sort of unsavory derivatives. The fact of the matter is that you don’t have to HODL for “historical significance” or for any other excuse.

It’s okay to let go. Better yet, why not use your unwanted NFT to harvest a loss, try out a gamified experience, or even meet others in the same boat as you? Community is the most important part of the NFT space, after all, right?

Credit: Source link