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Can NFT-based private clubs disrupt a centuries-old model?

In Asia, becoming a member of a private members’ club has long been a distinctive symbol of money and power.

Now, a new type of private members’ club has emerged that addresses the need for culture and community among various demographics. These places aspire to be conduits for creativity through programs that center around the arts, current affairs, and networking – coupled with exclusive, private encounters.

Photo credit: Mandala Club

Similar to traditional membership models, these NFT-based counterparts offer holders a variety of benefits.

The twist here is the ease in which NFTs can be used to unlock not just physical but also digital perks.

For example, owners of tokens from the Bored Ape Yacht Club (BAYC) aren’t just gaining entry to private meetups within the community; they can also gain first dibs on new NFT drops and upgrades.

BAYC holders have access to free NFTs like Bored Ape Kennel Club and were also airdropped ApeCoin tokens. Additionally, holders at BAYC received a free mutant serum that created a Mutant Ape Yacht Club NFT.

NFT memberships 101

NFT memberships are exclusive programs that use the tokens as access passes to provide a range of benefits and services to holders.

For instance, Mandala Club, which is owned by Singapore-based real estate and events company Mandala Group, grants members early access to online and in-person events as well as access to an exclusive Discord server, among other benefits. It offers this NFT membership alongside the old-school club membership.

Mandala Club plans a wide range of events such as talks, dance lessons, art tours, and wellness sessions. The four-story establishment has a variety of gathering places for its members, including a dining room and bar, a fully-stocked gym, a private terrace, and the Straits Parlour, where cultural events are hosted.

Photo credit: Mandala Club

“I feel we’re just slightly ahead of the curve. In two to three years, every traditional membership club will offer a digital membership,” Gustin Mahtani, community manager at Mandala Club, tells Tech in Asia.

Given their digital nature and the infrastructure being built to support them, NFTs will provide access to all kinds of gated services.

For example, edtech platform Nas Academy has built a tool for content creators to manage their communities, and one of its features enables content that’s only accessible by NFT holders.

It’s possible that NFT membership clubs will give access to all kinds of digital perks offered by their partners.

Entry into a crypto social club

Like their traditional counterparts, NFT clubs cater to a range of niches and have different criteria for entry.

Arc, an NFT club co-founded by popstar JJ Lin and Singapore scions Kiat Lim and Elroy Cheo, focuses on diversity in selection, seeking members who can contribute to the community with their skills and expertise.

(From left) Arc founders Kiat Lim, JJ Lin, and Elroy Cheo / Photo credit: Arc

A typical Arc membership is token-gated, with access to benefits differentiated by the NFTs owned. The first tier of membership is gained upon the completion of an application and being allowlisted to mint Pyxis, an account-bound token, for free. To gain access to Arc Stellars, the most valuable membership tier, users will have to own both the Pyxis and Stellars tokens. The latter can be purchased for 3 ether (around US$3,800).

If an Arc project requires a UI or UX designer, the club is more likely to pick up members with experience in the subject from the community. Currently, members in the NFT club include Web3 and Web2 venture capitalists, builders, founders, and celebrities.

“One metric that we need to track at Arc is that we need to always raise the percentage of members who are active contributors in our community,” Cheo tells Tech in Asia.

Meanwhile, Mandala Club lays more emphasis on privacy and security of its members, with a selection process where selected working professions are admitted into the club. Mandala members include C-suites from traditional banking firms and tech sectors as well as musicians.

While a traditional Mandala Club membership costs S$5,500 (US$4,000), its NFT-based counterpart is priced at S$15,000 (US$11,000), which also includes a club membership. Additionally, members are required to pay S$198 (US$146) every month for working capital costs to keep the club running.

Photo credit: Mandala Club

While executives from Arc and Mandala agree that the upfront cost for a membership is high, club members have various methods of gaining their return on investment.

“Exclusive clubs like Mandala have limited intake, and once they reach capacity, the memberships become more and more expensive,” says Varun Panjwani, CEO of Web3 healthtech firm MetaCare, who owns a Mandala Club membership.

Panjwani is looking at a return on his investment by attending events hosted by Mandala, which he would have otherwise paid an attendance fee for.

“The original cost of events hosted by Mandala has been offset by my membership,” he adds.

On the other hand, Cheo believes that members who see “intrinsic value” in the club will choose to stay, while the others could merely look at the membership as an investment for “life-changing” money.

Photo credit: Arc Community

There are also NFT clubs built around specific interests. LinksDAO, a collective of golf enthusiasts and crypto collectors, is backed by NBA star Stephen Curry. He purchased a LinksDAO Leisure Membership for 0.29 ether (around US$900) and a LinksDAO Global Membership for 1.1299 ether (about US$3,400).

“NFT memberships help us change the relationship from a transactional one in traditional private members’ clubs to a more emotional one,” Cheo says. “This would incentivize members to actually contribute in order to elevate the community as a whole.”

Liquidity in NFT membership tokens

The ability of membership NFTs to be traded on the open market is a significant distinction between regular and token-based memberships.

If consumers try to terminate a standard membership early in traditional clubs, they are charged fees worth several months. Some clubs also make it challenging for customers to cancel their memberships, requiring them to go through a number of web pages and confirmation stages.

Photo credit: Country Club Singapore

In contrast, NFT-based clubs give their users flexibility in holding their memberships.

Members of crypto social clubs can resell their NFT memberships on a secondary marketplace. They may even make a profit as the price of the tokens reflect the renewed perks and benefits of the exclusive club.

Meanwhile, clubs like Mandala have a secondary source of income as they charge customers separately for venues, food and beverages, and events.

“They love the club, they’re attached to the club, they want to stay, and they are happy. And if somebody is not happy, that’s okay, too, and maybe it wasn’t for them,” says Mahtani.

Photo credit: Mandala Club

However, members like Panjwani have no plans of selling his Mandala Club membership in the near future. The club has helped him find his MetCare board of advisors among members of the community, which has bolstered his business, he tells Tech in Asia.

Like other crypto projects, NFT-based memberships, especially those that have generated hype, have benefited from the initial cash infusion from their token sales.

This may not be sustainable in the long run, what with the ongoing crypto winter leading to a 60% decline in NFT sales in the third quarter of 2022. But top-tier NFT projects might still have some fundraising cache.

“If you believe in what you’re doing, you sell out when you mint and you have your funds. Businesses can grow unilaterally so much quicker than the traditional route of raising capital,” Mahtani says.

Currency converted from Singapore dollar and ether to US dollar: US$1 = S$1.36; US$1 = 0.00078 ether.

Correction (December 7, 2:04 pm): This article was corrected to reflect Arc’s accurate membership cost.

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Deepti Sri

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