NFT Coin 4 — Questions and Answers
Question 1: What is a 'wrapped coin' (e.g., WETH) and why do some NFT art platforms use it?
- A physical coin encased in plastic for preservation
- An ERC-20 version of a native coin that enables smart contract interactions like bidding (Correct answer)
- A stablecoin pegged to the price of gold
- A layer-2 coin with reduced gas costs
Correct answer: An ERC-20 version of a native coin that enables smart contract interactions like bidding
Wrapped ETH (WETH) is an ERC-20 representation of ETH that allows it to interact with smart contracts for features like off-chain bids.
Question 2: Which term describes the total market value of all NFTs in a collection, calculated using the floor price in coins?
- Total volume
- Market capitalization
- Floor market cap (Correct answer)
- Liquidity pool depth
Correct answer: Floor market cap
Floor market cap = floor price × total supply of NFTs in the collection, giving a quick snapshot of the collection's overall value.
Question 3: An NFT art collector 'sweeps the floor.' What does this mean in coin-spending terms?
- Buying the single most expensive NFT in a collection
- Purchasing multiple lowest-priced NFTs in a collection at once (Correct answer)
- Selling all NFTs to clear a wallet
- Bidding on NFTs below their listed price
Correct answer: Purchasing multiple lowest-priced NFTs in a collection at once
Floor sweeping means buying several of the cheapest-listed NFTs in a collection rapidly, often to accumulate holdings or signal demand.
Question 4: What risk does extreme coin price volatility pose to an NFT art collector's portfolio?
- It increases the rarity of their NFTs automatically
- The fiat value of their NFT holdings can drop sharply even if coin-denominated prices stay the same (Correct answer)
- It permanently deletes NFT metadata from IPFS
- It causes smart contracts to fail and burn NFTs
Correct answer: The fiat value of their NFT holdings can drop sharply even if coin-denominated prices stay the same
Since NFTs are priced in coins, a drop in the coin's fiat price directly reduces the dollar value of the NFT portfolio even without any change in the NFT's coin-denominated price.
Question 5: What is a 'Dutch auction' mint in the context of NFT art priced in coins?
- An auction where the price starts low and rises as more buyers participate
- An auction where the starting price decreases over time until someone buys (Correct answer)
- An auction reserved for collectors from the Netherlands
- An auction where coins are randomly distributed to bidders
Correct answer: An auction where the starting price decreases over time until someone buys
In a Dutch auction, the NFT's coin price starts high and decrements over time, incentivizing buyers to decide their own acceptable price point.
Question 6: What does 'coin allocation' mean in a whitelisted NFT art mint?
- The number of NFTs a whitelisted wallet is permitted to mint (Correct answer)
- The amount of coins locked as collateral during the minting process
- The royalty percentage reserved for the coin holder
- The gas limit set for a batch minting transaction
Correct answer: The number of NFTs a whitelisted wallet is permitted to mint
Coin allocation (often called mint allocation) specifies how many NFTs a whitelisted address is allowed to purchase during a presale.
Question 7: A digital coin artwork NFT is listed for 0.5 ETH but sells via a MATIC offer on a cross-chain platform. What process enables this?
- The buyer physically ships MATIC coins to the seller
- A cross-chain bridge or marketplace escrow converts or settles the trade across chains (Correct answer)
- The NFT is re-minted on Polygon automatically
- The seller manually accepts MATIC by updating the listing currency
Correct answer: A cross-chain bridge or marketplace escrow converts or settles the trade across chains
Cross-chain platforms use bridging protocols or internal settlement layers to facilitate trades between coins on different blockchains.
NFT Coin 4
What is a 'wrapped coin' (e.g., WETH) and why do some NFT art platforms use it?