Regrettable acquisitions are a common occurrence in the world of NFTs. It’s only natural in the ever-evolving NFT ecosystem. Sometimes, the value of NFTs plummets, leaving collectors with a sense of disappointment. Other times, creators turn out to be fraudulent, leaving buyers in a state of uncertainty. And then there are cases where unsolicited NFTs find their way into users’ wallets without consent.
These unwanted NFTs can be burdensome, serving as a constant reminder of the less desirable aspects of the NFT space that enthusiasts prefer to keep hidden. But simply stashing them away in junk wallets or utilizing marketplace features to conceal them from public view is just a temporary fix. Surely, there are better ways for collectors to rid themselves of unwanted NFTs.
Fortunately, options do exist for those eager to part ways with their unwanted NFTs. And we’re not referring to mere destruction through burning. No, there are now platforms that offer unique rewards to holders willing to relinquish their NFTs.
Parting with NFTs for Tax Purposes
So, you’re keen on divesting yourself of some NFTs. Don’t worry; we won’t pry into your reasons, but rest assured, you’re not alone. There are numerous motives behind a collector’s desire to make an NFT disappear, with tax loss harvesting being one of the most popular reasons.
In traditional tax loss harvesting, investors sell underperforming assets at a loss and utilize those losses to offset taxable capital gains, mitigating the taxes imposed on their other investments. This strategy can also be applied to NFTs and has become quite prevalent as a means to reduce tax burdens on digital collectibles.
Naturally, various considerations arise regarding NFTs and taxes, including charitable giving, which you can explore further in our comprehensive guide on the subject. However, for those focused on offloading and offsetting, several services are available.
The NFT Loss Harvestooor
Created by CoinLedger, a prominent crypto tax software company, the NFT Loss Harvestooor is a free service. Essentially, it operates as a simple Ethereum smart contract that allows users to sell an NFT and receive a small amount of ETH (0.00000001) in return. This enables traders to realize capital losses on NFTs and lower their taxable income.
What’s more, while the Harvestooor is currently suitable for tradable collections, the service creators have hinted at a potential future offering that would enable traders to dispose of even their “illiquid, worthless, rug-pulled” NFTs.
Unsellable NFTs
Another viable option for traders seeking to harvest NFT losses is the platform called Unsellable NFTs. It functions similarly to the Loss Harvestooor but boasts the additional capability of claiming losses on hundreds of NFTs at once (up to 1,000). Users can expect to receive approximately 0.000007 ETH for each NFT, only paying transaction fees (up to a maximum of 0.08 ETH) in the process.
Considering the rise of zero-fee and high-volume trading platforms like Blur, which have garnered a significant share of the NFT market, Unsellable has become popular for tax loss harvesting due to its large batch sizes.
Alternative Methods to Part Ways with NFTs
Perhaps your primary concern isn’t saving money but rather salvaging your reputation by getting rid of those unwanted NFTs. Well, there are options available that offer equally rewarding experiences.
The Junkyard
The Junkyard presents an interesting opportunity for users to both dispose of their unwanted NFTs and potentially acquire other discarded NFTs. When users “dump” an NFT into The Junkyard, they earn Junkcoin, the platform’s native currency, instead of ETH. This Junkcoin can be used to “fish” for NFTs that have been discarded by others. The Junkyard has already seen a diverse range of high-value NFTs pass through its platform, including pieces from Clone X, Doodles, Otherside, Cool Cats, and more.
While The Junkyard could potentially be used for tax loss harvesting, its main focus is on providing a gamified trading experience. Powered by Axelar and functioning across Ethereum and Polygon, the platform also offers additional features under development, such as free-mint NFT collections, membership-based experiences, and token staking.
Another option for those looking to part ways with their unsatisfactory NFTs is the liquidity pool. Services like NFT20 allow users to deposit their NFTs into an available pool or create their own pool (which may be necessary for disposing of less desirable NFTs). In return, they receive platform-native tokens. While liquidity pools are typically used to enhance trading and reward collectors, it can still be a preferable alternative to forever hiding an undesirable NFT, even if it means sacrificing potential profitability.
If all else fails, there are a couple of band-aid fixes to consider. One option is to utilize the “hide” feature offered by NFT marketplaces like OpenSea. This feature, usually integrated into the marketplace interface, allows users to select the NFTs they want to hide and submit a transaction to conceal them. Alternatively, users can choose to send the unwanted NFT to the universal Ethereum burn address. This involves selecting the token in their wallet or marketplace profile, initiating a transfer, and sending it to the 0x address associated with burning (0x00…dEaD). It’s worth noting that this burning option specifically applies to Ethereum-based NFTs, as Tezos and Solana-based NFTs require alternative methods for disposal.
It’s essential to recognize that holding onto an undesirable NFT shouldn’t cause shame or frustration. Many other collectors still possess similar unsavory derivatives like Bloot. Remember, you don’t have to hold onto these NFTs for their perceived historical significance or any other reason. It’s perfectly fine to let go and consider using your unwanted NFT to offset losses, explore a gamified experience, or connect with others facing similar situations. Ultimately, community engagement remains a crucial aspect of the NFT space.