NFT Coin 4

Question 1

What is a 'wrapped coin' (e.g., WETH) and why do some NFT art platforms use it?

Accepted Answer

An ERC-20 version of a native coin that enables smart contract interactions like bidding

Answer

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?

Accepted Answer

Floor market cap

Answer

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?

Accepted Answer

Purchasing multiple lowest-priced NFTs in a collection at once

Answer

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?

Accepted Answer

The fiat value of their NFT holdings can drop sharply even if coin-denominated prices stay the same

Answer

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?

Accepted Answer

An auction where the starting price decreases over time until someone buys

Answer

In a Dutch auction, the NFT's coin price starts high and decrements over time, incentivizing buyers to decide their own acceptable price point.

NFT - Art Practice Test

NFT - Art Practice Test

NFT Coin 4