NFT Terms That You Need To Know

1. In general, NFTs, each with uniqueness endowed by an algorithm, are under the ERC-721 standard. Every NFT is distinguishable and irreplaceable.

2. CryptoPunks contains 10,000 randomly generated pixel avatars, with each corresponding to an NFT.

3. CryptoPunks also opened up a new NFT subdivision field – the PFP (Profile Picture) project that occupies half of the current NFT field.

4. Some of the more popular NFTs will attract a large number of users to snap them up at the same time they are released. Since transactions with higher gas fees on the blockchain will be prioritized when trading, users who rush to snap up products will raise their gas fees one after another, triggering a Gas War for NFT casting rights.

5. Some NFT projects will also adopt whitelisting, another distribution method. The project side will include some users in the whitelist that can mint NFTs in advance according to various criteria, such as the user’s participation in the community. Therefore, users can purchase their desirable NFTs without joining the rush hour.
What is an NFT?

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NFT is short for Non-fungible tokens. In economics, the concept of "fungibility" means that different items are equivalent to each other and can be interchanged in any way. Take Ethereum as an example, each Ethereum is "fungible" and has no differences from each other. Tokens such as bitcoin may be scarce but non-fungible. Fungible tokens are generally based on the ERC-20 token standard, while NFTs are different. NFTs are generally based on the ERC-721 standard, and each NFT is uniquely endowed by an algorithm. Whether the metadata behind each NFT is the same or not, different NFTs will be regarded as different tokens from each other. Suppose that the content of each NFT in the project is not the same, they would be called 1:1 NFTs. They have the highest degree of scarcity, and each of them is unparalleled in the world.

NFT metadata is stored in different places. Some NFT projects' metadata is completely stored on the chain while some are stored on a centralized server; NFTs are only used as a pointer to the corresponding location of the server.


CryptoKities, which gained in popularity in 2017, is the earliest NFT project that adopted the ERC-721 standard. Each CryptoKities NFT is a digital cat with unique characters. Cats can also be cultivated and bred to produce new cats, that is, new NFTs. Meanwhile, CryptoKities also inspired many subsequent mainstream GameFi projects.


CryptoPunks is another NFT project that has been popular. This project contains 10,000 randomly generated pixel avatars. Each of them is an NFT. CryptoPunks also opened up a new NFT segment – the PFP (Profile Picture) project that occupies half of the current NFT field.
The latter (PFPs) imitates CryptoPunks in many ways. For example, many avatar-like projects only have a total supply of around 10,000 pieces. Such projects are collectively referred to as "10k projects". The current largest PFP project, BAYC, is also termed a 10k project. Moreover, many subsequent avatars are also partially generated by algorithms. They are divided into several "features" manually, and then randomly composed by computers. They are collectively referred to as "generative art".


Minting, circulation, and burning of NFTs

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Minting of NFTs refers to the process of issuing NFT tokens on the chain. On the contrary, burning of NFTs means giving up and disposing of the original NFTs for reasons such as obtaining a new NFT token. In addition, some project parties deliberately burn part of the total supply in order to raise the value of NFTs. For "generative art" projects, what an NFT looks like is determined by real-time algorithms during the minting. This process is generally called "Reveal". It is similar to opening a blind box when no one knows what the NFT will look like before the casting is completed.

Since the minting of NFT consumes gas fee because it requires on-chain interaction. The gas fee varies on different blockchains, for example, gas fees on Ethereum are high and on chains such as polygen and Arbitrium is relatively low. Some of the more popular NFTs will attract a large number of users to snap up at the same time when they are released. Since transactions with higher gas fees on the blockchain will be prioritized when trading users, users who join snap-up purchases will raise their gas fees one after another, triggering a Gas War for NFT casting rights.

Furthermore, some NFT projects adopt a whitelist or allow list–another distribution method. The project party will include some users in the whitelist that can mint NFT in advance based on various criteria, such as the user's participation in the community. Therefore, users can buy their favorite NFT without participating in the snap-up. Another way to obtain NFT is to participate in the airdrop of the project party. Some project parties will distribute NFT tokens for free to users who meet certain conditions in the early stage of the project in order to gain popularity and accumulate users. This activity is called Airdrop. The project will offer different conditions for users to join the airdrop, such as following their official social account, joining their Telegram, etc.


After obtaining NFTs by entering the whitelist or participating in the official sale, you can buy and sell NFTs on the NFT trading platform including OpenSea and LooksRare which are common. In addition, the Gate.io NFT Magic Box also provides a one-stop NFT service, where you can freely mint, buy and sell NFTs.

The floor price of NFT is a key concept in NFT circulation. This term refers to the price of the lowest-priced NFT in a certain NFT collection. To some extent, the floor price of NFTs reflects the value of such NFTs.


Examples of Other Typical NFT Projects

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Bored Ape
Cryptopunk is hailed as the bitcoin of the NFT project, and Bored Ape (BAYC) is praised as the Ethereum of the NFT project. BAYC is short for The Bored Ape Yacht Club, which includes a total of 10,000 ape-themed NFT avatars. These apes feature different expressions, headgear, and clothing. Some of them are rare and trade at higher prices. At launch, these Boring Ape avatars were sold at the same price of 0.08 ETH per unit. Presently, the floor price of Boring Ape has reached 111 ETH, the highest floor price on OpenSea, an increase of over 1380 times.


Yuga Labs, the parent company of BAYC, announced on March 12 that it purchased the two major IPs, CryptoPunks and Meebits. Yuga NFTs represented by BAYC have truly taken up half of the avatar-like NFT projects.

NBA Top Shot
At the end of 2020, the NFT collection project, jointly created by Dapper Labs and the NBA officially, collected the wonderful moments of NBA historical games. In March 2021, Dapper Labs also received up to $305 million in financing offered by Michael Jordan, Aaron Gordon and many other retired or active NBA stars. In this NFT series, NFTs are in the form of card packs, with each of them containing 3 to 10 virtual cards. These virtual cards, called Moment, represent the wonderful shots of an NBA star. NBA Top Shoot is an early NFT project, but it remains extremely popular until now. It is still the largest project on the Flow chain by transaction volume.


Axie Infinity
Currently, Axie Infinity is the largest and most popular GameFi project. In the game, players can raise their own NFT pets. Similar to CryptoKities, these NFT pets also have their own appearance and characteristics, just like a "crypto Pokémon". In addition, Axie Infinity also created the "Play-to-earn" mode in GameFi, which allows players to use their NFT pets to fight and earn tokens. With its own dedicated blockchain, Ronin, Axie Infinity offers extremely fast transaction speeds and almost negligible handling fees.




Author: Gate.io Researcher: Ashley H.; Translator: Cedar W.
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.



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