NFT Marketplaces and Trading Mechanics 4

Question 1

What is 'royalty enforcement' and why did it become controversial among NFT marketplaces in 2022-2023?

Accepted Answer

Some marketplaces made creator royalties optional, undermining artists' passive income

Answer

Blur and other marketplaces made royalties optional to attract traders, sparking debate about whether platforms should technically enforce or merely suggest creator royalties.

Question 2

What is a 'phygital' NFT in the art market?

Accepted Answer

A digital NFT linked to a redeemable physical artwork or object

Answer

Phygital NFTs bridge digital and physical worlds, where owning the NFT entitles the holder to claim or receive a corresponding physical item.

Question 3

What is the role of an 'escrow' mechanism in peer-to-peer NFT trades?

Accepted Answer

To hold assets from both parties during a trade until conditions are met

Answer

Escrow smart contracts lock both the NFT and payment until both parties fulfill their obligations, enabling trustless peer-to-peer swaps.

Question 4

What does 'paper hands' mean in NFT trading slang?

Accepted Answer

Traders who sell quickly at the first sign of a price drop

Answer

Paper hands describes traders who panic-sell early, often at a loss, rather than holding through market volatility.

Question 5

How does Blur's 'Blend' protocol differ from traditional NFT marketplaces?

Accepted Answer

It offers NFT-backed lending, allowing owners to borrow ETH against their NFTs

Answer

Blend is an NFT lending protocol where holders can use their NFTs as collateral to receive ETH loans without selling their assets.

NFT - Art Practice Test

NFT - Art Practice Test

NFT Marketplaces and Trading Mechanics 4